by Don Keelan
Sooner or later it was bound to occur in Vermont. House Ways and Means Committee chair, Emile Kornheiser, a Democrat, from Windham, has introduced H-827. It is a tax bill that if passed and survives a Governor Scott veto would be the first of its kind in the nation. It is meant to tax the unrealized gains on assets that are held by individuals that exceed $10 million at the end of each calendar year.
H-827 will be entering new territory in the field of taxation that is aimed at wealthy Vermonters—they have the wealth and the State wants it. The tax is not based on income, which is already taxed at a rate close to 9%. This bill proposes to assess a tax on the gains a resident has on her/his assets that are still being held, meaning not sold.
The complexity of the tax proposal is such that at least seven other states have taken it up and since tabled it. The Vermont Ways and Means Committee engaged the services of Stephen Land, a recognized expert in the field of taxing unrealized gains. The NY attorney, (now a resident of Vermont) and connected to many liberal causes noted in his 30 page review of H-827,
“COMPLEXITY—Federal-state disconnect. The taxation of unrealized gains at the state but not the federal level will require taxpayers to perform calculations, and obtain appraisals, that would not otherwise be required and they will have to maintain separate federal and state basis amounts for each asset. Since the tax imposed at the modest rate, the recordkeeping and compliance burden will be great in relation to the tax actually due.”
To put simply, if a taxpayer owns art, real estate, investment in a business that is not a publicly traded company, empirical data (independent sources) will be needed to obtain to justify whether one is subject to the tax on the unrealized gain of each asset owned.
Today the cut-off is any estate over $10million in value. It is common knowledge, that once such a tax can get into the Vermont statutes the threshold will be reduced. In the short-term future, the cut-off will be any resident’s wealth over $500,000. Why would that be, there are not enough wealthy Vermonters to go around.
But what is really happening is that the 2024 disciples of Senator Bernie Sanders are now advocating for what he has long preached—get the wealth of the “rich” and give it to others. The socialist senator did not have sufficient control over the Vermont Legislature to get his life-long passion adopted. The make-up of the members in the Legislature has since changed and their mantra is that of the Senator, go after wealthy Vermonters for their income and accumulated wealth.
The first inclination of wealthy Vermonters, if H-827 ever became law, would be to pack up and leave. I know of several families who have done just that—changed their legal residence to South Carolina, Florida, and Texas.
Rep. Kornheiser, according to the Wall Street Journal’s editorial on the Vermont tax proposal, even anticipated this response by quoting a sociology professor from Cornell University, whose study on the matter indicated no such issue( folks leaving) comes from such taxation. I will leave that to others to debate.
I hope the wealthy who might be subject to H-827 stay in Vermont and not move their legal residence. Furthermore, I would be hopeful that those wealthy taxpayers continue to fund the millions of dollars to Vermont’s cultural, educational, medical and other nonprofit institution. They have for generations been the life-blood of many Vermont organizations.
Vermont has over 6,000 registered nonprofit organizations and many are barely able to function without help from the generosity of Vermont’s wealthy. However, rarely, if ever, are the nonprofits in the forefront advocating for the wealthy when they come under attack for their wealth by the Sanders’s army.
Another lesser-known fact is that the top one percent of wealthy taxpayers in Vermont, it is reported, account for 20% of the State’s income tax receipts. We can’t afford to lose this group. Then there are their contributions to our State’s nonprofits. Rep. Kornheiser, find another target by going after the spending splurge that is taking place in Montpelier. H-827 would not be necessary if you would.
The author is a U.S. Marine (retired), CPA, and columnist living in Arlington, VT.
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Categories: Commentary
take your state and shove it/// i am not paying taxes in this state any more/// please do not leave/// can we offer you a bribe/// any thing, we will do any thing///
They will leave Vermont because they are wealthy enough to do so. Just like they are leaving NY & CA. It’s the “regulation” people that can’t leave.
Well, instead of making laws to restrict growth and overwhelming businesses with red tape and taxes, maybe cut waste in as what I’ve heard as the “State’s largest employer”. You’ve got deputy positions and layers of management that waste taxpayer dollars for starters. Keep the people that answer the telephones and get rid of the three managers that listen to how many times the phone rings before the overworked employee answers.
My supervisor said he knew of 4 wealthy families who had moved out of Vermont by 2019. It figures that Vermont will try to pass this law even though rejected by 7 other states.
Why would someone with the wherewithal to accumulate millions of dollars allow someone like Kornheiser to arbitrarily help him/her/ them/its self to 10% on an annual basis? Unrealized?!
Vermont’s beautiful, but not THAT beautiful.
Math: 10% of a $billion is $100 million.
10% of a $million is $100,000
Annually. For the scenery. No billboards!
Buh-bye billionaires.
Considering how California and New York are seeing the fruits of their lawfare warfare, other States are reaping the rewards of big business, big investments, and big time prosperity. It will be interesting to see if Vermont’s new currency will be the Yuan or dead fiat fed notes – which States have invested heavily in vapor paper only to be left holding a giant bag of dung and insolvent IOU’s?
“Another lesser-known fact is that the top one percent of wealthy taxpayers in Vermont, it is reported, account for 20% of the State’s income tax receipts.”
A lesser, lesser-known fact is that the top one percent owns 32.3% of the countries wealth, so they indeed do not pay their fair share. I for one aren’t going to lick their boots like some other commenters. You want to move to Texas or South Carolina? Don’t get shot
Who gets to decide fair share? Would the wealthy’s fair share be reduced if the government shrunk and and generational welfare became non existent? Would it be necessary to tax everything that moved if the government itself was not a ponzi scheme? Asking for a friend….
I’m not by any means wealthy but I’m leaving Vermont and never looking back. Taxes are high and going up, state is controlled by progressive garbage. Never thought I’d even think about leaving being born here and a resident for 54 yrs. Sad what has happened to a once great state.
“When the Federal Income Tax first arrived, only 1/2 of 1% of American income earners actually paid any income tax. In today’s dollars, you would have had to have an income of $250,000 or more to feel the first 1 percent pinch. A 7 percent rate would kick in for those making more than the equivalent of $6 million a year” The Fairtax Book, pg 15. It’s always incremental and will crush us all – but it’s not primary reality. Render unto Caeser…
Cant ‘wealthy’ individuals just declare themselves as NON residents? to avoid additional taxes? Making their Vt homes that they’ve had for perhaps many years as not first residences.? Or I guess they’ll just sell their million dollar homes and LEAVE. So all those who have gainful employment there, house and grounds keepers will be out of work, too? Doesnt anyone in this state have a brain??? I am looking to leave as well, and those I employed will also be out of work, oh well…. all you progressives have a choice/ And oh what about Bernie’s millions??? and 3 houses???
Oh, but wait a minute. You will have to get Bernie’s millions now! He is part of that population. Oh, but everything is in Jane’s name! When are people going to wake up? There is no housing but Rutland got a $1.75 million grant to, once again, pay people to come, be homeless, and get on welfare. That ought to work out real well for the state. I think it is high time to vote these people out. But you didn’t!