STUMP » Articles » Connecticut Update: No Billionaire Left Behind » 3 June 2016, 02:03

Thanks to the reader who sent this story, along with that title.

But first, a thank you to all my recent referrers:

• Pension Tsunami
• Wirepoints
• The Other McCain

….and whoever is linking from facebook. I can’t tell where on facebook it’s coming from, but howdy!

PITY THE POOR HEDGE FUNDS

I happen to work in Connecticut, and have to pay income taxes there. Whoopee.

Let’s see who gets shoveled some of my tax money:

Bridgewater secures $22m in state aid

The world’s biggest hedge fund has secured $22 million of financial assistance from the government of Connecticut, in the latest sign of stretched US states vying to retain their wealthiest taxpayers and prevent jobs moving elsewhere.

Ray Dalio’s Bridgewater Associates, which has $146 billion of assets under management, secured the funds four months after GE responded to a steep increase in Connecticut’s business taxes by moving its headquarters to Boston after 41 years in the state.

Bridgewater had told the state it was evaluating a move to neighboring New York, spurring Governor Dan Malloy to offer the package of economic incentives to entice it to stay.

Oh, ffs.

A meeting of Connecticut’s bond commission on Friday approved $5 million in grants for Bridgewater and a $17 million loan that will be forgiven if it creates 750 jobs, which would represent a more than 50 per cent expansion from the 1,400 staff it now has in its Westport headquarters.

Mr Dalio’s group, which is renowned for a culture of “radical transparency”, originally asked the state for $130 million to build new offices in Stamford, but those plans were scrapped after a local backlash. Instead, it will expand and update its existing headquarters.

“It doesn’t send the right signal to the people of Connecticut,” Christopher Davis, Republican state representative, told the meeting, asking why the state was “granting $22 million of public funds to a company that is quite capable of funding this type of expansion themselves.”

Mr Davis, the ranking member of Connecticut’s finance, revenue and bonding committee, added: “They have that type of money; they’re coming to us as a lender of first resort, rather than the lender of last resort. I don’t know if that’s really the direction we should be going.”

This certainly seems weird to me.

States have become increasingly dependent on revenue from hedge funds and their wealthy founders, however. New Jersey is reeling after its wealthiest resident, Appaloosa Management founder David Tepper, relocated to Florida, putting at risk hundreds of millions in state tax revenue.

Oh, that’s not true at all.

Some states have become dependent on their wealthiest tax-payers.

Somehow I think this isn’t happening to Texas or Florida, where they don’t have income tax.

BRIBE THE BILLIONAIRES

This reminds me of the old saying — if you owe the bank $100K but have trouble paying it back, you have a problem. If you owe the bank $100 billion and have trouble paying…. the bank has a problem.

If the state has a lot of rich people/companies it can soak, and you’re a rich person concerned about taxes, you have a problem; if the state finds this revenue source drying up, it has a problem:

Connecticut’s Hedge-Fund Bribe
First soak the rich. Then subsidize the richest. Meet the progressive state business model.

Connecticut lost General Electric’s headquarters to Massachusetts earlier this year, so Governor Dannel Malloy is now trying Illinois’s business model: Raise taxes, and then when businesses threaten to leave, write a check to other businesses so they’ll stay. Behold his $22 million taxpayer gift to Ray Dalio’s Bridgewater hedge fund.

Last week the Governor presented Bridgewater with $5 million in grants and $17 million in low-interest, forgivable loans to renovate its headquarters in Westport along the state’s Gold Coast. Mr. Malloy said that other states including New York were trying to lure Bridgewater, and Connecticut couldn’t afford to lose the $150 billion fund or its 1,400 high-income employees. We’ve got nothing against Mr. Dalio, but he could probably dig up $22 million from petty cash.

…..
Mr. Malloy’s Republican predecessor Jodi Rell raised the top marginal tax rate to 6.5% from 5% on individuals earning more than $500,000, and Mr. Malloy raised it again to 6.99%. Hilariously, Ms. Rell said last month that she’s also moving her residence to Florida because of the “downward spiral” in Connecticut that she helped to propel.

…..
Connecticut has lost 105,000 residents to other states over the last five years while experiencing zero real economic growth. Last year it was one of seven states including Maine, Mississippi, Illinois, Vermont, New Mexico and West Virginia with population declines.

Democrats in Hartford this spring attempted to close a $960 million deficit—equal to about 10% of the state general fund—by cutting 2,500 state government positions and creating supposed efficiencies. One result: Six legislative commissions studying the struggles of blacks, Latinos, Puerto Ricans, Asian-Pacific Americans, women, children and seniors were consolidated into two 63-member study groups.

Yet a $1.3 billion gap will blow open in 2018 because the legislature’s budget patches don’t resolve imbalances driven mainly by worker pay and pensions, which this year cost about $1.5 billion. Pensions are less than 50% funded, third worst after Illinois and Kentucky.

Oh look. The pensioned people outnumber the “rich”. Almost 100 billionaires in New York, and CT has to hobble along with only 12.

I can see why they have to bribe any of them from leaving with their yummy revenue sources.

Even if NY is better.

Compilation of Connecticut posts