Economy of Connecticut facts for kids

Connecticut has a strong economy. In 2012, the total value of all goods and services produced in the state was about $229.3 billion. This was a bit more than the $225.4 billion from 2011.

People in Connecticut generally earn a lot of money. In 2013, the average income per person was estimated at $60,847. This was the highest average income in any U.S. state. However, there are big differences in incomes across the state. Connecticut had the second largest gap between the richest 1% and the rest of the people.

Many millionaires live in Connecticut. A 2013 study found that 7.32% of people in Connecticut were millionaires. This was the third highest rate in the United States. New Canaan is the wealthiest town. Its average income per person was $85,459. Other wealthy towns include Darien, Greenwich, Weston, Westport, and Wilton. Their average incomes were over $65,000. On the other hand, Hartford is the poorest city. Its average income was $13,428 in 2000.

In September 2019, the unemployment rate in Connecticut was 3.6%. This means that 3.6% of people who wanted jobs could not find them.

What Drives Connecticut's Economy?

Connecticut's economy is powered by several important industries. These industries provide many jobs and create a lot of wealth for the state.

Finance and Insurance

The biggest industry in Connecticut is finance and insurance. In 2009, it made up 16.4% of the state's total economic output. Major companies in this field include The Hartford, Travelers, Cigna, Aetna, and UBS. These companies help people with things like saving money, investing, and protecting their homes or health. The real estate industry is also very important. It made up another 15% of the economy in 2009.

Manufacturing and Production

Manufacturing is the third largest industry in Connecticut. It accounts for 11.9% of the state's economy. A huge company called United Technologies Corporation (UTC) is based in Hartford. It employs over 22,000 people in Connecticut. UTC makes things like jet engines through its Pratt & Whitney division.

Another major manufacturer is Lockheed Martin's Sikorsky Aircraft. They make helicopters in Stratford. This is the largest manufacturing plant in Connecticut. The Electric Boat division of General Dynamics builds submarines in Groton. Also, Boehringer Ingelheim is a pharmaceutical company with its U.S. headquarters in Ridgefield.

Connecticut has a long history of making guns. As of 2012, four gun-making companies still operated in the state. They employed about 2,000 people. These companies are Colt, Stag, Ruger, and Mossberg.

Arts, Tourism, and Agriculture

The arts, film, history, and tourism industries are also very important. In 2006, these areas generated over $14 billion in economic activity. They also created 170,000 jobs each year. This brought in $9 billion in personal income for residents. It also provided $1.7 billion in state and local taxes.

Two large casinos, Foxwoods Resort Casino and Mohegan Sun, are major employers. They are located on Native American reservations in eastern Connecticut.

Connecticut's farms and fisheries also contribute to the economy. In 2010, about 12,000 people worked in agriculture. A lot of them worked in growing plants for nurseries. Other farm products include dairy items, eggs, tobacco, fish, shellfish, and fruit.

Oyster harvesting was once a very big business along Connecticut's coast. In the 1800s, oystering was very successful in towns like New Haven, Bridgeport, and Norwalk. In 1911, Connecticut produced nearly 25 million pounds of oysters. This was more than New York, Rhode Island, or Massachusetts at the time. The Connecticut coast was known as the "oyster capital of the world." For many years, only sailing ships could harvest oysters in state-owned beds. This led to the building of special "oyster sloops." The sloop Hope, built in 1948, is believed to be the last one made in Connecticut.

Real Estate in Connecticut

The real estate market is an important part of Connecticut's economy. In March 2014, the average price for a home sold in Connecticut was $225,000. This was a 3.2% increase from March 2013.

Connecticut also had some foreclosure activity in April 2014. This means that some homes were taken back by banks because owners could not pay their loans. About one out of every 887 homes was in a foreclosure process.

How Connecticut Collects Taxes

Connecticut has different ways of collecting taxes to fund state services.

Income Tax

Before 1991, Connecticut had a different tax system. It only taxed income from investments, not from jobs. Investment income was taxed at 13%, which was very high.

In 1991, under Governor Lowell P. Weicker Jr., the system changed. Taxes on job income and investment income became equal. The highest tax rate was set at 4%. This new tax policy helped bring investment companies to Connecticut. As of 2014, Fairfield County was home to many large investment funds.

As of 2014, Connecticut's income tax rates for individuals vary. They range from 3% for lower incomes to 6.7% for higher incomes. Even if Connecticut residents earn money outside the state, their wages are still subject to Connecticut's income tax. However, they usually get a credit for taxes paid to other states.

Sales Tax

Connecticut has a 6.35% state sales tax. This tax is added to the price of most goods when you buy them. It also applies to leasing or renting items. Some specific items and services are not taxed. There are no extra sales taxes added by local towns or cities. In August 2013, Connecticut had a sales tax "holiday" for one week. During this time, people did not have to pay sales tax on certain clothing items.

Property Tax

All real estate and personal property in Connecticut can be taxed. This is unless a law specifically says it is not taxable. The value of property for tax purposes is usually 70% of its fair market value. Local governments can also tax an additional 20% of the value.

Connecticut residents pay some of the highest property taxes in the nation. In 2010, Connecticut had the second highest average property taxes in the U.S., after New Jersey.

Other Taxes

Overall, Connecticut residents pay a lot in state and local taxes. As of 2014, the total state and local tax burden was 11.86% of income. This was the third highest in the nation.

Connecticut also has taxes on gasoline and diesel fuel. As of 2014, the gasoline tax was 49.3 cents per gallon. This was the third highest in the nation. The diesel tax was 54.9 cents per gallon, which was the highest in the nation.