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AI tax targets the wrong signal
Revana Sharfuddin
Apr 29, 2026
As Connecticut lawmakers debate Senate Bill 515, they are asking a question more states will soon face: As artificial intelligence changes work, what happens to workers whose jobs change or disappear?
The bill would create a “workforce and productivity gap” surcharge. If a company’s payroll falls while each remaining worker appears to produce more, the state could impose a new tax. Companies that keep staffing steady and use “collaborative technology” meant to help workers rather than replace them would be exempt.
That sounds like a way to protect workers. But it would likely do more harm than good for Connecticut workers over time. The bill directs the state to design a surcharge around a “productivity gap,” meaning firms could be taxed if they appear more productive while employing fewer workers.
The bill does not specify how this would be measured, but in practice such approaches rely on some version of falling payroll alongside steady or rising revenue. Those figures move for many reasons other than technology replacing workers, including reorganization, shifts in product mix, or higher prices. The result is a policy that risks taxing adjustment rather than harm, discouraging investment and slowing the wage growth that usually comes with a more productive economy.
A drop in payroll does not have one meaning. It can reflect weaker demand for a company’s product, a shift toward different lines of business, work moving to contractors or other locations, or better internal organization. In all of those cases, measured output per worker can rise. The bill treats those very different situations as if they were the same.
Technology usually reshapes tasks before it eliminates entire jobs. Despite common claims, firms do not typically replace an occupation all at once. They change pieces of work. Some tasks disappear, some become more valuable, and new ones emerge. The real question is not whether a firm has fewer workers than it did three years ago. It is whether workers are moving into more valuable roles as the work itself changes.
The bill tries to account for that by rewarding “collaborative technology,” meaning technology that helps workers do their jobs instead of simply replacing them. The instinct is sound. The trouble is that the line is hard to observe from the outside. The same software can reduce the need for some roles while raising the value of others. A payroll statistic cannot tell you which is happening.
What the policy can do is change behavior. If firms need to stay close to an old staffing baseline to avoid a surcharge, many will manage to that line. They may delay layoffs, change hiring plans, or move work outside payroll. That may make the numbers look better without leaving workers better off.
There is a second problem, and it goes straight to workers’ pocketbooks. When firms face unclear rules around new technology, they hold back on investment. That means less experimentation, slower adoption, and weaker productivity growth. Over time, weaker productivity growth usually means weaker wage growth.
There is also a broader economic point. When technology makes a service cheaper, people often use more of it. Economists call this Jevons paradox. Lower-cost AI legal research, for example, can reduce the time spent on each task while expanding demand for legal services overall. A tax built around preserving current payroll pushes in the opposite direction. It nudges firms to hold onto existing roles instead of helping workers move into higher-value work, often in different roles, firms, or sectors.
A functioning labor market depends on exactly this kind of movement. Workers change jobs. Firms expand and contract. New tasks show up in places the old jobs did not. A policy that tries to hold the labor market still ends up reducing opportunity.
None of this diminishes the concern that motivates the proposal. If the goal is to support workers through these changes, the most direct tools remain the most reliable. Strengthening training and career mobility does more than penalizing firms based on imperfect signals. It helps workers move into the new roles that technology creates. Policy can also do more to align incentives. Today, it is often easier to expense investment in machines than investment in people. Allowing immediate expensing of employer-provided training would put worker skill development on similar footing. Connecticut largely follows federal rules here, so progress would require action at both levels.
Connecticut’s proposal recognizes a real challenge. But treating lower payroll as clear evidence of harmful displacement is too blunt for a dynamic economy. The goal should not be to freeze today’s jobs in place. It should be to help workers move into better ones over time.
Revana Sharfuddin is a research fellow at the Mercatus Center’s Labor Policy Project at George Mason University.
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America’s wartime economy
Bill Schmick
Apr 29, 2026
In April, the White House asked Congress for $1.5 trillion more in defense spending for 2027. This is a 40% increase over the Pentagon’s spending in fiscal year 2026. Half the funding will come from cuts to education, housing, and health programs. Welcome to the war economy.
While the stock market celebrates another two-week extension of a cease-fire between the U.S. and Iran, the wars are not over. There will be more, in my opinion, and preparing for them will cost money. The Pentagon needs $4.5 billion to replenish its Tomahawk cruise missile stockpile. The Navy wants more boats, and the $250 million in planes and helicopters we lost rescuing two downed flyers need to be replaced.
As more military resources disappear, the need to replace them grows. That never-ending story fuels a wartime economy. The money earmarked for defense may not be enough. At a private lunch last week, according to the New York Times, the president said we need to prioritize military protection. Otherwise, he said in a since-deleted video, the country could not continue to shoulder the financial burden of services including day care, Medicare, and Medicaid.
For those, like my daughter, who vaguely remember the term “wartime economy” from their history books, let me start with a definition. A wartime economy is an economic system that is reorganized by a nation to prioritize military production and resource allocation during periods of armed conflict.
What that means is that all the resources, including production, distribution, and financial systems, are adjusted to support military efforts while maintaining overall economic stability. If you are old enough to remember, it can and did mean rationing, price controls, centralized planning, inflation, and deficit spending here in the U.S.
For Americans, World War II is usually the go-to example of a wartime economy. Defense spending surged from 1.6% of Gross Domestic Product (GDP) in 1940 to over 40% four years later. By the end of the war, that number climbed to 119% of GDP. Non-military auto production was halted. Seel, rubber, and aluminum were rationed. Price controls artificially suppressed inflation, and black markets in everything from food to fuel proliferated.
Historians say this wartime economy pulled the U.S. out of the Great Depression. It sped up GDP growth and built the military-industrial complex. The war and draft created a job boom. By 1944, unemployment fell below 1%, the lowest ever. Women joined the workforce in large numbers. War also sparked major advances: radar, jet engines, computers, medicine, and the nuclear bomb.
All this is true; however, that is not the whole story. Under the hood, both private consumption and investment lagged badly. Civilian living standards were lower during the war than in 1940. That was before rationing and quality deterioration.
Much of wartime economic growth came at the private sector’s expense. Tanks, ammunition, ships, and planes—many lost in combat—could have built schools, hospitals, housing, or consumer goods. Instead, Americans waited in line for basics like gasoline, meat, and shoes. The national debt more than doubled as a share of GDP during the war.
Could we see the same results 80 years later? It seems doubtful. War may not deliver the benefits people expect. War spending gives an output boost, and we may fight for a “good cause,” whatever that means now. Yet do not expect the same job gains as before.
Next week, I will address the inflationary fallout from wartime economies and how countries worldwide are being forced to alter their own economies due to shifting post-war strategic alliances and geopolitics.
Bill Schmick is a founding partner of Onota Partners, Inc., in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners, Inc. (OPI). None of his commentary is or should be considered investment advice.
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Sharon officials advance development plan, focus on downtown, walkability and safety
Alec Linden
Apr 29, 2026
The Sharon Farm Market grocery store is a centerpiece of the Sharon Shopping Center, which was proposed as the town’s “uptown” commercial hub during an April 22 meeting.
Alec Linden
SHARON – Town officials are moving forward with an update to Sharon’s Plan of Conservation and Development (POCD), a state-mandated document that will guide land use and growth over the next decade. At an April 22 meeting, the Planning and Zoning Commission focused on economic development – one of three core priorities identified for the update, alongside conservation and farmland preservation, and housing.
Officials and residents centered their discussion on the importance of preserving the unique tranquility of the downtown, with plans to accentuate the existing infrastructure and improve walkability. Some even proposed the creation of a farmer’s market at Veterans Field.
The POCD, which is required to be updated every decade, is due at the end of this year. It was last updated in 2006.
Janell Mullen, a local land use professional, has been consulting with the Commission, and meeting with local interest groups since last fall to gain input on how to modernize the plan.
The April 22 session focused on walkability, commerce, culture, infrastructure and safety. These items were selected based on results from a public survey distributed by Mullen and the P&Z Commission last winter. The town received 190 responses representing approximately 7.5% of Sharon’s population.
Mullen asked the Commission to propose terminology to describe the economic hubs in town. Stanley MacMillan Jr., longtime building inspector and fire marshal, proposed the distinction of an “uptown” and “downtown.” Uptown, a term he used for the area when he was growing up in Sharon, would be the shopping center and surroundings on Gay Street. He posited a “downtown” district as the stretch of Route 41 between the intersections of Hilltop Road and Route 4, including the Sharon Playhouse.
P&Z Vice Chair Betsy Hall stipulated that the residential homes along the Sharon Green should be largely protected from conversion to commercial ventures. “We don’t want to be Salisbury, we don’t want to be Kent,” she said.
Mullen said the survey results indicated a desire to preserve what residents see as the tranquility of Sharon’s village life.
She said that spurring “vitality,” a key word in the survey results, doesn’t necessarily mean more business, but “accentuating” existing businesses via walkability and community infrastructure that promotes people being out and about amongst the town’s various hubs.
Safety, she said, is a key aspect of vibrant town life, which spurred conversation about parking issues on West Main Street and speeding through the center of town.
Several commissioners brought up the robust arts and crafts community in Sharon, and how to promote cultural programming. Mullen brought up the possibility of a farmers and makers market in Sharon, similar to seasonal fixtures in nearby Northwest Corner towns like Kent and Cornwall. Veterans Field was suggested as a possible location for such an event with access to restrooms, parking and children’s play facilities.
Mullen and the Commission will resume the conversation at next month’s planning session, scheduled for May 27, with a focus on conservation and farmland protection. As with all planning sessions, the meeting will be open to the public.
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After punishing winter, towns confront costly road repairs
Debra A. Aleksinas
Apr 29, 2026
Cornwall highway department foreman James Vanicky, left, and David Dwyer from Seymour Sealing Service of Wallingford, check the viscosity of a layer of crack sealer during a 1.5-mile road resurfacing project on Dibble Hill Road last Friday.
Debra A. Aleksinas
After 38 years, you kind of know what’s under the roads. It’s like tree rings. You can track its history.
CORNWALL — Local road crews are tackling winter damage across the Northwest Corner, but with tight budgets, small staffs and rising costs, towns are feeling the strain as the spring repair season begins.
On a steep, narrow stretch of Dibble Hill Road, the smell of hot oil hung in the spring air as a crew worked methodically along the winding route, sealing over a winter’s worth of cracks and scars left behind by snowplows, ice and relentless freeze-thaw cycles.
Last week, working alongside private contractors, Cornwall highway department crews began resurfacing sections of the roughly 1.5-mile scenic road, applying a thick base layer of asphalt to damaged pavement before coating it with stone chips and compacting the surface — a process known as chip sealing.
Road foreman James Vanicky, who has spent more than 38 years on the job, coordinated the multi-step resurfacing process on Dibble Hill Road as crews and outside contractors worked along the hilly, winding terrain.
Vanicky said that while potholes have been relatively minimal this season, the problem has been extensive cracking on roads due to frost heaves.
“When the frost heaves settle down, salt water seeps under the pavement making it soft, and then you have traffic pounding on it, and it creates cracks,” Vanicky said.
The scale of the work is compounded by limited staffing with 62 miles of roads and only three employees.
Budget pressures are also mounting as towns move from winter operations into repair season.
“This year our numbers came in at about $75,000 for winter,” said Vanicky.“For the amount of miles that we have, that number was actually comparable to past years. But we’re kind of running on fumes right now until July 1, when the new fiscal year begins,” he said.
Even so, careful planning helped stretch limited resources.
Experience, he added, plays a critical role in deciding where to focus limited funds. “After 38 years, you kind of know what’s under the roads,” he said. “It’s like tree rings. You can track its history.”
In neighboring Canaan, road foreman Tim Downs described similar conditions and budget challenges.
“The dirt roads took quite a hit this winter,” Downs said, as did his equipment. “We had a lot of truck problems and spent a lot on repairs. At one point, we were down two trucks during a heavy storm.”
In North Canaan, which has 33 miles of town roads, road officials report widespread cracking caused by frost and freeze-thaw cycles.
“This winter was pretty tough,” said Mike Simmons of the North Canaan Highway Department. “We had a lot more freezing underneath the roads, and some of them cracked quite a bit.”
Rising material costs are compounding the challenge. Salt usage alone pushed the town beyond its planned budget, Simmons said.
“Asphalt went up $5 a ton,” he added.
Crews have begun patching roads as conditions allow, but larger repairs loom ahead, including work on Sand Road and Tobey Hill Road.
“The roads took a beating. Some of the paint is coming off the roads,” said Simmons, who noted that line repainting is sorely needed.
State roads, too, have seen widespread pavement damage.
According to the Connecticut Department of Transportation (DOT), as of late March, the state has seen a sharp increase in pothole reports, with 101 reported to the DOT in the first 16 days of March, surpassing the total from the entire month of March 2025.
As towns move deeper into the spring repair season, officials say the full extent of winter damage, and its financial toll, will continue to unfold.
“We have a lot of repairs to make,” said Downs.
And, as repair work ramps up, officials warn that spring is also one of the most dangerous times of year for road crews.
Gov. Ned Lamont recently urged drivers to slow down and stay alert.
“A moment of distraction can have serious consequences,” he said.
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Yale law professor challenges history at Salisbury Forum
Ruth Epstein
Apr 29, 2026
Akhil Reed Amar, the speaker at Friday’s Salisbury Forum, handsout complimentary copies of his book ‘Born Equal, Remaking America’s Constitution, 1840-1920’ to audience members.
Ruth Epstein
SALISBURY – Akhil Reed Amar urged a crowd of about 400 to rethink long-held assumptions about American history during a Salisbury Forum talk Friday, April 24, at The Hotchkiss School.
Amar, a professor of constitutional law and political science at Yale University, spoke on “America at 250,” centering his remarks on the idea that all men are created equal.
“What we all have in common is history,” he told the audience, which marked a record turnout for the Forum. “What we have in common is the Constitution and the Declaration of Independence.”
Amar lamented that children, including his own, are not reading history books. He quizzed the audience on when the Declaration of Independence was signed, correcting those who answered July 4, 1776. Independence was declared on July 2, the language of the document was agreed upon on July 4, and it was signed in August of that year.
He then asked the audience what they felt was the most important sentence in the Declaration. Numerous answers were called out, but Jonathan Costa, director of EdAdvance, identified it as “...that these United Colonies are, and of right ought to be free and independent states.”
“That’s the key – to be sovereign,” Amar said.
After declaring independence, members of the Second Continental Congress “pledged their lives and sacred honor to the cause,” said Amar, and if they lost, they were signing their death warrants.
From the British perspective, the colonists were committing treason.
“All wars are supposed to have a purpose,” Amar said, which was met with snickers from crowd members reflecting on the present-day wars.
“Just wars have just purposes,” Amar clarified. “Reducing the ground to rubble is not winning a war.”
The professor also challenged assumptions about the Declaration’s authors. Jefferson, Franklin and Adams were not the only ones responsible for writing the Declaration of Independence, he said.
“People lied,” he added. “Thomas Jefferson lied more than most politicians – to friends, to Washington himself.”
Amar moved ahead to 1863 and Abraham Lincoln’s Gettysburg Address, describing the 16th president as “an originalist” who rooted his argument in the Declaration of Independence and the idea that “all men are created equal.”
Touching on the subject of slavery, Amar said its abolition was first conceived by the Quakers in Philadelphia in 1775.
“Don’t believe it was the British who first wanted to end slavery; it was the Americans,” he said. “We need to know what Americans did in its origins.”
Birthright citizenship is of special interest to Amar, having worked on several court cases on the issue. He praised U.S. Supreme Court Justice Hugo Black – who served on the court from 1937 to 1971 and presided over several landmark cases involving equality – calling him an originalist. Amar also described himself as an originalist and held up a pocket copy of the Constitution that he always carries with him.
Amar closed by pointing to the constitutional amendments that abolished slavery, established birthright citizenship and expanded voting rights to women and Black Americans, reinforcing his central theme that equality is rooted in shared humanity.
Amar is the author of several books. His second in a series of three is titled “Born Equal: Remaking America’s Constitution, 1840-1920.” Complimentary copies were given out to the audience.
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Falls Village celebrates National Poetry Month
Patrick L. Sullivan
Apr 29, 2026
Lev Sadeh (left) and Eli Sher read Shel Silverstein’s ‘It’s Dark in Here,’ at the Hunt Library Friday, April 24.
Patrick L. Sullivan
FALLS VILLAGE — Nearly a dozen students from Lee H. Kellogg School crossed the lawn to the David M. Hunt Library on Friday, April 25, to celebrate National Poetry Month with readings of published and original works. Adults joined students for the all-ages event.
Library director Meg Sher welcomed attendees with a reading of Wendell Berry’s “Peace of Wild Things.”
Among the student presenters, Lev Sadeh and Eli Sher delivered a crowd-favorite and spirited performance of Lewis Carroll’s “Jabberwocky,” a nonsense poem from “Through the Looking-Glass.”
Eli followed with Shel Silverstein’s “Sick.”
A group of students then shared their own short poems, touching on subjects ranging from school, a red squirrel, to imagining life as a wolf.
Kent Allyn, a 1961 graduate of Lee H. Kellogg, delivered a poem he wrote about a decade after leaving the school. The untitled poem was about the sights and sounds of nature. In it, he asked readers if they had experienced moments like“water of a splashing brook laughing.”
The poem concluded:
“Listen and you will hear
Touch and you will feel
Look and you will see.”
Community member Mark Gozonsky read his own poem, “I’m Sorry I Killed You,” about an unsuccessful attempt to grow squash.
John Holland, also a member of the community, recited William Carlos Williams’ “The Red Wheelbarrow” and Ezra Pound’s “In a Station of the Metro.”
Near the end of the program, Lev and Eli returned with a trick up their sleeves. They returned to the stage, barely suppressing grins, and read another Silverstein poem, “It’s Dark in Here.”
The twist was the boys read it with each taking every other word.
Anna Pattison, the children’s librarian, wrapped up with her own poem, which she said came to her in the shower.
It was a catalog of interesting things, ending with “all can be found at the library.”
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