NEW YORK (Reuters) - Connecticut's middle-class would get a $300 property tax credit -- down from the current $500 break Governor Dannel Malloy initially wanted to abolish, under a revised budget plan he unveiled Thursday.
The Democrat, who has bucked the anti-tax stands of the governors of New York and New Jersey by recommending an income tax increase, told reporters he decided to keep part of the property tax credit after holding town hall meetings.
"Twenty hours of hearing citizens of Connecticut talk about issues is a good and humbling experience," Malloy said.
If the legislature approved his new plan, couples who earn less than $100,000 a year would get the $300 property tax credit. But higher-income residents would pay more taxes: an extra $500 for those whose earnings top $500,000 and an extra $2,000 for those whose incomes exceed $1 million.
Though Malloy is out of snyc with the two states with which Connecticut directly competes for jobs -- New York and New Jersey -- his proposal to raise income taxes on the wealthy mirrors part of President Barack Obama's deficit-reduction plan. Obama on Wednesday called for ending the Bush era tax breaks for people whose earnings exceed $250,000.
Under Malloy's plan, Connecticut's highest income tax rate of 6.5 percent would be about two percentage points below the top rates in New York and New Jersey.
Referring to his revised property tax credit, he said: "It will apply to the vast majority of the members of the middle-class."
Malloy must close a $3.3 billion deficit. Like governors of other cash-poor states, he is squeezing unionized public workers to accept cuts in their pay and benefits.
On Thursday, he was firm in opposing any more tax increases. He has already proposed a long list of tax hikes, on items ranging from cigarettes to luxury cars.
"I've made it very clear that we've capped the tax side, I've made it clear that the only other way to deal with an inability to get a negotiated settlement would be large scale layoffs as well as programmatic reductions," he said.
(Reporting by Joan Gralla; Editing by Andrew Hay)