By Joseph De Avila 

The top lawmaker in the Connecticut state Senate is calling for a new tax on homes with a market value of $430,000 and more to help pay for property-tax relief in the state's cities and rural areas.

Senate President Martin Looney, a Democrat, said the proposed tax would raise $73.5 million annually that would be funneled to cities for property-tax relief. A homeowner with a $500,000 home would pay about $50 under the proposal, while a homeowner with a $1 million property would pay about $400.

Mr. Looney also said the bill would make property taxes more equitable across Connecticut.

"Many communities will benefit from it and see a significant decrease in their property-tax liability," Mr. Looney said Tuesday.

The property-tax proposal comes as lawmakers need to pass a budget closing deficits of more than $1 billion in each of the next two fiscal years. Gov. Ned Lamont, a Democrat, will submit his budget proposal and plan to close those budget holes in February.

Mr. Lamont has been reluctant to go down the road of raising taxes. A spokesman for the governor said he opposes the proposal and remains against broad-based tax increases.

Mr. Looney said he hasn't formally met with Democratic senators to gauge their support, but said his caucus has broad interest in property-tax reform.

Senate Republicans came out against the bill. Republican Senate Minority Leader Kevin Kelly said Mr. Looney's proposal would hurt middle-class families.

"During this pandemic, middle class families are struggling financially and need our help, not more burdens," Mr. Kelly said.

Cities would receive the bulk of the tax revenue generated by the proposal to help mitigate high property-tax rates. Urban centers like New Haven tend to have high property-tax rates to make up for the swaths of land occupied by hospitals and universities, which are tax exempt.

Cities like Hartford and Bridgeport would benefit under Mr. Looney's plan while wealthy homeowners in towns like Fairfield and Greenwich would face higher tax bills. Rural towns would also get revenue from the new tax, Mr. Looney said.

Mr. Looney has also proposed a new surcharge on capital gains, which would produce $131 million in annual tax revenue, a portion of which would also fund property-tax relief, he said. The proposed 1% surcharge would be applied to the sale of capital assets for individual tax filers earning $500,000 and up annually or for married couples earning $1 million.

Capital gains are currently taxed at 6.99%, which is the top income-tax rate in the state. The proposed 1% surcharge would be on top of the rate currently charged. A similar proposal for a capital gains surcharge failed to gain traction in the state legislature in 2019.

Mr. Looney said his proposal would help the governor keep his campaign pledge to bring property-tax relief to the state.

Write to Joseph De Avila at joseph.deavila@wsj.com

(END) Dow Jones Newswires

January 26, 2021 17:18 ET (22:18 GMT)

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