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Connecticut Voices for Children's Doug Hall: The rich can afford to pay more.

Forget about spreading the wealth around. It won't happen here in Connecticut as long as Jodi Rell is governor. She likes our wealth right where it is — in the hands of the wealthy.

Connecticut is staring into the economic abyss of a $1 billion state budget deficit, and the Republican governor made clear last week that raising taxes on the rich is off the table as a solution.

Big surprise. But a new report from the New Haven–based think tank Connecticut Voices for Children, an economic justice organization, exposes just how regressive the state and local tax systems are and how urgently they need fixing.

The average family income in Connecticut is $65,967. A family earning that amount would pay $7,256 in income, sales and property taxes, equal to 11 percent of their salary. After paying for groceries, housing, daycare and gas, they'd be lucky to sock away a few hundred bucks a year.

Meanwhile, the wealthiest 1 percent, say a family making $3.2 million, would pay $144,000 in taxes, equal to 4.7 percent. Hardly enough to have any impact on quality of life, except we hear Jaguars are expensive to maintain.

The bottom line: Families on the lowest rungs of the income ladder are paying twice what the wealthiest are paying in state and local taxes, when calculated as a share of their income. Doug Hall has a simple solution: Spread the wealth around.

"Those whose incomes are in that top range can afford (to pay) more," says Hall, acting managing director of Connecticut Voices, who co-authored the report with D.C.–based Center on Budget and Policy Priorities.

Hall speaks in soft, measured tones but he's saying pretty radical stuff. Connecticut's tax system is a dinosaur, Hall says during an interview in his New Haven office, and leaves less affluent families in the dust.

We're the only New England state without an earned income tax credit, a tax break for the working poor that's widely regarded as among the most successful anti-poverty measures in recent history. Because of that, a family of four living on $24,100 a year could still be liable to pay income tax in Connecticut.

The baseline for being eligible to pay income tax hasn't been raised since the tax was enacted in 1991. The federal poverty level has gone up as the cost of living climbs. That means that if nothing is done, families living at the federal poverty level ($21,650 for a family of four) will owe state income tax in just a few years' time.

Hall's fix: a multi-tiered income tax that exempts a greater number of the poorest families and makes upper-income earners pay more. The idea's more popular than you may think. A Gallup poll released last week found 58 percent of Americans want wealth distributed more evenly, with 46 percent saying we should do it through "heavy taxes on the rich."

The revenue potential for the state is huge. One model estimates that hiking taxes by no more than half of one percent on the top 7 percent of wage earners (those earning $200,000 and up) would net $470 million in new revenue.

Democrats in the legislature passed such a bill in 2007, but Rell vetoed it because the state had an $800 million budget surplus at the time. Now the state is almost $1 billion in the hole and Hall says the time's right to give the millionaire's tax another spin.

The governor's not biting. Rell has fiercely opposed raising taxes to deal with the budget crisis, instead trimming tens of millions of dollars from around the edges by yanking money from state services, retired state employee benefits and her own $2 million discretionary fund.

Outside a ribbon-cutting ceremony at a Wallingford retirement home last week, Rell dismissed the findings of the Connecticut Voices for Children report while acknowledging she hadn't yet read it.

I tell her what the report recommends: raising the limits for who pays income tax; enacting a state earned income tax credit; enacting a progressive income tax that charges the wealthy more.

"I'm not sure I would go there," Rell says. "It's not a recommendation that I'd be comfortable with."

Rell says the state's facing "very difficult times." Tax revenues are down across the board from incomes, retail sales, capital gains, even casino slot machines.

"I recognize there are a lot of needs and we're trying to address many of those needs, but we're also trying to make sure that people who have no additional free income or disposable income can be able to safeguard what they have right now," Rell says. "So I'm kind of talking without having read their report."

No kidding. Presumably the very people Rell's talking about, those without "additional free income," are the same ones whose wages are getting socked by taxes that take a bigger bite, proportionately, out of their paychecks. Asked about raising taxes on the wealthy to close that gap, Rell chuckles.

"I think you could make the numbers work on any category that you like, and frankly, I'm not sure how they come to that," Rell says. "I don't know where the figures come from, but I can also say people right now are having a difficult time paying taxes no matter what your income level."

The figures come from The Institute on Taxation and Economic Policy, a non-partisan research center that's one of the best in the business. I don't have time to tell Rell this before the brief interview is over, and she hops into her car and is driven away.

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