By Rep. Rob LaClair and Rep. Brian Savage
For the past 5+ years, Vermont House Republicans have been working to exempt military retirement pay from state income taxes. Governor Scott has included this commonsense measure in every single budget he has proposed to the Legislature. In fact, Vermont is one of only three states that fully taxes military retirement income. Yet each and every year, the majority in Montpelier refuses to let this bill even be debated by the full House of Representatives. It simply dies slowly in committee.
But this April, things changed. The Vermont Democrats were eager to get a revenue-raising bill out of their committee, Senate Bill 53. This bill raises mutual fund fees by $6 million, the highest levels in the nation, and creates a new “cloud tax” on prewritten software. Bear in mind that these tax and fee increases are being proposed in a year when Vermont is receiving billions in unanticipated revenue windfalls and federal COVID-19 support. Let us be clear: there is absolutely no rhyme or reason to raise Vermonters’ taxes at a time when they need economic relief more than ever.
In order to maintain the illusion of affordability, the majority party attached an exemption of the first $10,000 in military retirement pay from state income taxes to this bill. This is an insulting half-measure. It would create one of the weakest military retirement relief schemes in the nation, and by far the weakest in the New England states.
A bipartisan group of legislators tried to raise this exemption to the first $30,000 of military retirement pay; a more reasonable step in the right direction. This modest amendment failed. Even though more than 90 percent of Republicans supported the measure, it died on the House floor because more than 75 percent of Democrats voted against it.
This is not about money. The cost of a $30,000 exemption would have been less than $2 million per year, while the cost of a full repeal would have been less than $3 million per year. This is a microscopic portion of Vermont’s $7 billion budget, which will be boosted by even more federal aid dollars this year.
Now more than ever is the right time to give our military retirees a break. Refusing to do so not only sends a poor signal to military retirees already living in Vermont, it also discourages military retirees from around the country from looking to Vermont as a place to settle down.
In the midst of our efforts to reboot our economy and, in light of billions in extra revenue, we should not be raising taxes. We should be finding ways to provide relief. That starts with giving our military retirees a long overdue break, just like nearly every state in the country has already done.
Representative Rob LaClair (R-Barre Town) is the Vermont House Co-Assistant Minority Leader. He serves on the House Committee on Government Operations
Representative Brian Savage (R-Swanton) is the Vermont House Co-Assistant Minority Leader. He serves on the House Transportation Committee