How Taxes And Economies Works

Less then 8% of taxes levied in Waterbury are on business. Now that is somewhat a small number compared to the rest of the budget, but for the businesses paying them it's a lot. And since businesses don't vote in the ballot box they do vote with moving vans and leases in other towns and states.

Here's a short lesson on how things work (wtbyspecblog can do this). Business's exist to hire people to do things. These people get salaries to pay taxes buy cars, homes and food (from other business's) and this is what we call economy.

Lets say something really radical happened and Waterbury eliminated its business tax. Well there would be such an uproar because us poor working suckers would have to pay the difference and that's no fair. But this is false and here's why.

First of all you don't cut taxes in the city. It can be done but city taxes aren't like income or sales taxes. Those taxes are set by a number, a percentage added to payroll or consumer items. City taxes are set by mill rates which are tied to property assesments (in business, inventory and property) and the mill rate is set by whatever the budget needs it to be to pay the bills. So you don't cut taxes you cut the budget, if the budget grows then the mill rate grows and visa versa. So in order to cut taxes you would first have to cut spending in this case by 7-8% first. This is why there is no reshuffling of the tax burden.

So lets say Waterbury cut its budget to eliminate the business tax, what would happen? What won't happen is businesses leaving the city to lower cost in taxes, like what is happening now. You can't get lower then zero. In fact since you can't get lower then zero other employers may look to Waterbury to get in on zero and bring with them employees. The effect will be is that by Waterbury eliminating a tax it can actually increase the number of businesses which will need employees who will spend money on cars, houses, socks, video games, bagles, see how this works. If zero brings in business that brings in people who spend money and pay taxes, then that 7-8% cut in taxes could actually yeild more revenue because of a healthier economic base. You cut taxes and increase revenue, imagine.

Waterbury has one of the highest taxes in the state. Did you know that Waterbury leads the state in unemployment?