Is GE using Conn. tax hikes as cover for layoffs?
State Senate president thinks so as GE explores relocation options.
HARTFORD, Conn. — The war of words between Connecticut’s Democratic leadership at the state capitol and General Electric Co. heated up June 4, hours after the state Legislature passed a $40 billion budget that includes new taxes on businesses.
GE CEO Jeffrey Immelt sent an e-mail to employees saying he has assembled an “exploratory team” to review the company’s options for relocating from its Fairfield headquarters to another state with a “more pro-business environment.”
He cited “significant and retroactive tax increases for businesses” passed the night before despite unusual lobbying earlier in the week by GE and several other top Connecticut employers, including Aetna Inc., which also said it would reconsider its presence in the state if the budget passed.
State Senate President Martin Looney, D-New Haven, dismissed the threats.
“I think they doth protest too much,” he said. “GE in particular, we understand that they have been planning some layoffs and may be using the bill that we passed as a cover for that.”
Looney said state business taxes are quite moderate and that companies are likely to benefit from some of the budget’s provisions, including a planned reduction in car taxes.
He said the revenue that comes from the corporate tax in Connecticut is less than 6% of the budget, down from 17% or more 25 years ago.
Looney added that the state also has cut dividends taxes and capital gains taxes in recent years.
He also said the budget is designed to give people in Connecticut a better quality of life, which makes Connecticut a better place for businesses to be.
“If people were only looking for low taxes and low costs, everybody would be moving to Mississippi, but that’s not the case,” he said.
The departure of GE would be a significant blow to the state economy.
The conglomerate, which manufactures appliances, aircraft engines, wind turbines and other large industrial products buys $14 billion in goods and services from Connecticut companies, Immelt said.
Gov. Dannel P. Malloy said he has been in discussions with business leaders, including GE, and is open to tweaking the tax package when the Legislature returns for a special session to deal with bills to implement the budget.
He also said there may be a misunderstanding as to what is in the $2 billion two-year tax package.
“Things in the Capitol change minute by minute, hour by hour, day by day, week by week,” he said. “So without prejudging, we will be actually engaged in, monitoring and quite frankly, negotiating all of those things.”