Indiana tries to lure Connecticut firms amid tax controversy

The state of Indiana ran a full-page ad Wednesday in a national newspaper, suggesting three major Connecticut employers that openly criticized planned state tax increases consider moving their operations to the Hoosier State.

The ad in the Wall Street Journal specifically mentioned General Electric Co., Aetna Inc. and the Travelers Cos. Inc. Both GE and Aetna said they would consider leaving Connecticut if the tax increases included in a two-year, $40.3 billion Democratic budget become law.

Indiana pledged to "offer our support in the wake of Connecticut's looming tax increase, because friends don't let friends pay higher taxes." Indiana's motto is, "A state that works."

The ad comes more than two months after Connecticut Gov. Dannel P. Malloy signed an executive order barring state spending on travel to Indiana and any other states that enact legislation that intends to protect religious freedoms but could discriminate against gays and other groups, as critics claimed with an Indiana law enacted this spring.

Malloy, the incoming chairman of the Democratic Governors Association, called the law signed by Republican Indiana Gov. Mike Pence, "disturbing, disgraceful and outright discriminatory."

The measure had prohibited state laws that "substantially burden" a person's ability to follow his or her religious beliefs. After other states and various businesses threatened to boycott Indiana, Pence signed a revised version that attempted to clarify it doesn't discriminate against gays and lesbians.

Appearing on MSNBC, Malloy said Pence was "incredibly stupid" for promoting the legislation and later added, "When you see a bigot, you have to call them on it."

Devon Puglia, Malloy's spokesman, revisited the contentious issue in a statement Wednesday that stressed how Connecticut has one of the lowest effective corporate tax rates in the U.S.

"While we've grown more than 75,000 jobs over the past several years, Indiana's focus is on passing laws that discriminate against sexual orientation," he said. "While we have one of the most attractive corporate tax structures in America, Indiana passes some of the most discriminatory laws in the nation. That's ultimately the contrast we're talking about here."

The Indiana Economic Development Corp. said Pence also sent a letter to each of the companies’ chief executives, inviting them to consider the Hoosier State for their business.

“Businesses in Indiana grow with confidence, while businesses in high-tax states like Connecticut operate in fear of seeing their piggy banks raided,” Pence said in a written statement. “On behalf of 6.7 million hardworking Hoosiers, we are constantly meeting with companies around the world that are choosing Indiana and enjoying an instant spike in earnings. With Connecticut taxes skyrocketing, it’s important to remind businesses that Indiana is here to help as a state that works.”

Joe Brennan, president and CEO of the Connecticut Business and Industry Association said other states also have contacted the three companies since last week, when the General Assembly passed the Democratic budget that increases taxes on data processing, limits tax credits and changes tax reporting requirements, among other things. The pharmaceutical company Boehringer Ingelheim also issued a statement last week warning the tax changes would "undermine the financial feasibility of continued capital investments at our Ridgefield/Danbury site."

"I do know for a fact that other states are reaching out to Connecticut corporations in addition to Indiana," Brennan said.

He said he hopes to meet with Malloy this week to discuss the tax situation. A meeting date has not yet been announced. Republican lawmakers have criticized Malloy for not including GOP and Democratic legislative leaders in the private meeting.

Malloy has not yet signed the budget bill into law, but is expected to do so. The governor has said, however, that he is open to making some tweaks to the tax law changes during the special legislative session. The General Assembly is expected to reconvene during the next couple weeks to finish up various bills, including at least two that spell out the details of the budget.

Brennan contends more needs to be done than just tweaks, however.

"We have to respond in a decisive and aggressive way to show we're going to keep these companies here," he said. "They understand that this is about the state of Connecticut."