Taxpayers in the Northeast would be hit harder than any other region in the country under the deficit-reduction package awaiting President Bush's signature, a non-profit group says.
Of the 10 states facing the highest tax increases, five are in the Northeast, the Tax Foundation says.These same five states - Connecticut, New Jersey, New York, Massachusetts and New Hampshire - already pay among the highest federal taxes in the nation on a per capita basis. And the increases come at a time when these states are limping through a recession.
"They're getting hit harder because the new budget package is more heavily weighed to high-income earners," said Paul Merski, the non-profit Tax Foundation's director of fiscal affairs. "About 45 percent of the tax increases for the new package are for high-income earners."
Many lawmakers from the Northeast supported the deficit-reduction package even though it hit their districts harder. Democrats, in particular, were anxious to position themselves in favor of higher taxes on the wealthy, even if those wealthy were their own constituents.
Rep. Barney Frank, D-Mass., said there was no irony in the voting pattern.
"If the state is wealthier than another state and you get hurt that's what you have to expect if you favor progressive taxation," Frank said. "If the state pays more as a result of being a higher-income state, I don't regret that at all."
The high tax burdens of the five northeastern states reflect their populations, which include the New York commuter-executives of suburban New Jersey and Connecticut; the Park Avenue elite; the insurance industry executives of Hartford, Conn.; highly skilled and highly paid defense workers in Connecticut; and high-tech industry executives and workers in Massachusetts and New Hampshire.
Connecticut residents, on average, will bear the largest burden in the nation and the largest dollar increase. The tax increases will cost the average Connecticut resident $174 for one year. That compares to a national average of $133.
The Massachusetts delegation voted 9-2 against the original budget summit agreement that was rejected by the House Oct. 5. That plan would have raised all federal taxes on Massachusetts residents by an average $100, according to the Tax Foundation.
Less than a month later, the Massachusetts delegation voted 10-1 in favor of the deficit reduction plan approved by Congress. It raises taxes for Massachusetts resident by an average $158, the fourth highest in the nation.
A number of provisions in the budget and tax package passed by Congress are intended to shift the burden to the rich. The proposal increases taxes on luxury items such as furs, jewelry and yachts, hikes the tax on airline tickets, and raises the wealthiest taxpayers from a 28 percent tax rate to a 31 percent rate.