New spending would boost Vermont tax percentage from fourth to third highest in U.S.
By Guy Page
Paying for the new and current programs the Legislature wants in the 2024 budget will boost state and local taxes to an average of 14.57% of Vermonters’ income, Commissioner of Taxes Craig Bolio told the House Ways & Means Committee today.
Bolio singled out H.66, the paid leave bill sponsored by Ways & Means Chair Emilie Kornheiser (D-Brattleboro), as one of the tax-boosting spending proposals.
Vermonters currently pay 13.6% of their income in state and local taxes, higher than any other state except New York, Connecticut, and Hawaii, Bolio said. An additional $365 million tax hike would boost Vermont to the third-highest state and local tax percentage in the nation.
“This year, on top of a more than $80 million property tax increase that Vermont taxpayers are expected to pay, the Legislature is considering over $285 million in additional taxes, including an unprecedented $178 million income tax increase under consideration in this Committee that raises both personal income tax and corporate income tax rates, and a $107.4 million payroll tax in H.66,” Bolio said in a written draft of his testimony. “Altogether, this more than $365 million tax increase would increase the share of Vermont income paid in state and local taxes to 14.57%, moving us up to the 3rd most taxed state in the country.
Vermonters are already hard-hit by the ‘hidden tax’ of inflation, Bolio said.
“At a time when Vermonters are paying more thanever for basic necessities, like food and housing, the Administration remains concerned about the impacts of these tax increases on Vermonters who are trying to get by, and the overall tax burden in the state,” Bolio said.
Bolio also painted a gloomy near-term economic future for the state’s finances:
- Revenue forecast predicting a more than 7% general fund revenue reduction in FY24.
- News of economic uncertainty including multiple bank failures around the country
- Concern about the national debt ceiling
- Personal income tax receipts from April were $43 million lower than expected
Bolio’s warning about the dire consequences of overspending could be understood as a warning from the Scott administration that if the Legislature packs its entire wishlist into the 2024 budget, it may face a veto. A veto session for S.5, the Affordable Heating Act, has been tentatively set for June 20. An attempted override of a vetoed budget could be added to the agenda.