The Tasmanian devil is a carnivorous marsupial found in the wilds of the island state of Tasmania. Capable of surprising speed and endurance, it is known to have the strongest most ferocious bite per unit of body mass of any living mammal.
Be aware that the "Taxmanian" devils, a new Connecticut species, arrived earlier this week. Having many of the attributes of its Australian cousin, these devils are lurking around every corner of the state and are chasing down and taxing everything in sight. Connecticut employers are alerting their employees to be on the lookout as the state's historic new income tax increase goes into effect.
What you may not know is the tax is retroactive to Jan. 1, 2011. This means you will have only five months to pay a year's worth of taxes at the new rate. (A reminder of Taxmanian devil's speed)
A constituent recently asked if this is legal. The answer is yes. A retroactive tax was assessed last year, but only to very high wage earners. I voted against this retroactive tax then and now believing that it is not fair to catch people by surprise. Many taxpayers have large expenditures such as mortgages and college tuitions that make this surprise tax a difficulty unless given adequate notice.
Your employer should have a new withholding table given to them by the state Department of Revenue Services that shows exactly how much will be taken out of paychecks for the remainder of the year.
For singles making more than $50,000 it could mean an extra $70 out of their budget by the end of the year.
For married couples earning more than $100,000 a year, it could mean nearly $200 out of their budget by the end of the year.
Many companies' payroll departments have put out a notice to alert employees. (See example below)
Connecticut recently enacted legislation that raises personal income tax rates retroactive to Jan. 1, 2011. The withholding tax tables have been revised to include the catch-up amount. This will take effect August 1, 2011 and will be reflected beginning with your Aug. 15 paycheck.
Because the rate changes are effective Jan. 1, 2011, the new withholding tables contain "catch-up" calculations that spread the tax increases over the remainder of the calendar year starting Aug. 1, and will help ensure taxpayers are not significantly under withheld at the end of the year.
Some of the changes to the state's income tax include the expansion of the tax rates, or brackets, from three to six. The new brackets are: 3 percent; 5 percent; 5.5 percent; 6 percent; 6.5 percent; and 6.7 percent.
Additionally, the new calculations contain a phase out of the 3 percent rate for taxpayers at certain Connecticut adjusted gross income levels. Those are:
Over $100,500 filing jointly;
Over $56,500 filing single;
Over $78,500 filing as head of household;
Over $50,250 married filing separately.
The income excluded from the 3 percent rate will be taxed at the 5 percent rate. The income tax changes are estimated to raise $985 million to support state spending.
This change comes on the heels of yet another tax increase to sales and services on July 1. People are working hard to keep their heads above water and government is spending money like it is water.
The timing of these new tax increases could not be worse.
I continue to get frantic emails from families who are financially underwater and are drowning with nowhere to turn.
What we need in Connecticut is government restraint and a rooting out of the "Taxmanian" devils before they devour what is left of our economy.