From the transcript of the Connecticut Senate - June 25, 2007 - debate on the budget:

"SEN. LOONEY:

Yes, thank you, Mr. President. I'm rising to speak in support of the bill. Would like to join my commendations* to those of others in talking about the extraordinary hard work and visionary work of Senator Harp and Representative Merrill and Senator Daily and Representative Staples in this process."

"SEN. DAILY:

Thank you very much. The Finance Committee considered and passed out a tax reform bill earlier in this session. Due to the changes in revenue, we were able to present tonight a highly improved tax reform bill.

The undeniable and prevalent feature of our new income tax package is that we provide income tax relief for the vast majority of Connecticut residents.

Our bill restructures the income to go from a range of 3. 00 to 595 in the first year, and 650 in the second year with an effective tax rate of 6. 2.

It increases the minimum and the maximum property tax credit from $ 500 to $ 1,000. It increases the phase out of the property tax credit by salary structure. It goes from now $ 150,000 to $ 240,000.

It provides an earned income tax credit of 20% for our working poor. It eliminates the sales tax exemption for clothing, for partial sales tax exemption of funeral expenses, and exempts all EDP services from the sales tax.

Those three eliminations are so that we can join the interstate compact and receive tax revenues from those companies that now voluntarily contribute and, in the future, be in a position to receive any income on Internet sales should the federal government finally take action.

This exempt health club charge is from the sales tax. It extends the sales tax exemption for weatherization products. It exempts items sold through honor boxes from the sales taxes. It changes the liability that businesses can take with their credits from 70% to 60%.

It increases the cigarette tax from $ 1. 51 to $ 2. 00 a pack. It modifies the state tax to eliminate the cliffs that have been so troubling to many. And it also removes the tax on out-of-state property.

It raises public safety fees that haven't been changed in a number of years. Very importantly, it modifies the petroleum gross earnings tax that was scheduled to increase July 1^st.

This is a real gas tax relief because it's an increase that will not happen.

SEN. DAILY:

Thank you very much, Mr. President. And I would thank my friend and Ranking Member, Senator Nickerson, for both his points and his questions. It provides the opportunity to answer those.

I don't think there is argument that we have a moderately progressive income system at this juncture. We don't have a steeply progressive one, and this certainly provides us with a very progressive tax structure.

And there is not an increase until the $ 500,000 mark. And for those at $ 225,000 in salary, the current effective tax rate is 4. 8. It goes to 5. 3. So that certainly is a much more progressive tax than what we've seen in the past.

And for those that might be adversely affected, the lower end of our scale by, adversely effected by the elimination of the property tax, we do have in this bill an earned income tax credit, which provides money directly to these people so that they can balance their books in a much better way than they've ever been able to in the past.

And yes it does affect LLCs and sub chapter S's that have decided to form their business in that manner for other tax breaks. I mean, that's a personal decision, but it doesn't affect them until the incomes are up at the level that I mentioned.

So I, again, suggest to you this is a very fair, very progressive, and wonderful tax package for the State of Connecticut."