The House Ways and Means Committee last week pulled the trigger on about $130 million from increases in personal income, corporate income, property transfer tax, and fees for those selling securities.
You might assume that these taxes are to close the over $200 million gap in the education fund, and you’d be wrong. These increases are aimed at various housing programs and Medicaid expansion, so more pain is coming.
Corporate Tax Changes
Citing recommendations from the Vermont Businesses for Social Responsibility that run counter to the rest of the business community, the committee decided to raise $40 million more in corporate income taxes to pay for H.721, a Medicaid expansion and H.880 an act relating to increasing access to the judicial system.
These bills would increase the corporate tax rate to 10% from 8.5%. JFO estimates that this tax rate increase will generate $17.7 million. The bills would also add back the amount of Foreign Derived Intangible Income (FDII) and Global Intangible Low-Taxed Income (GILTI) deducted at the federal level and increase reported net income to Vermont for those corporations with those types of income. This move would make Vermont an extreme outlier, but it would raise $15 million.
Finally, it would increase securities registration fees for filing, initial notice fees, and renewal fees. The Committee was considering worldwide combined reporting, however, with that proving infeasible, this is where they landed.
Income and Property Transfer Tax Increases
The Committee also followed the direction of Vermont Businesses for Social Responsibilities’ founders and board members to raise taxes on the top marginal bracket to some of the highest in the country and used the endorsed proposal to pay for items in H.829.
Under the bill, the personal income tax would add a new bracket of 11.75%, starting at $500,000 of income, making Vermont’s top bracket one of the highest in the country and with a lower start to the top bracket than even high-tax states. This would raise about $75 million.
If you were hoping to avoid paying your over 20% increase in property taxes this year by selling your home, the Committee has found a way to still take some tax dollars from you. The Committee advanced increases in the property transfer tax that would make it the highest in the country, raising about $18 million. The property transfer tax was already tapped in the Senate to fund proposals in S.311, their housing bill.
The Commissioner of Taxes pushed back on the last-minute additions to these bills. While not accomplished this week, a $47 million short-term rental surcharge is being considered.
Depending on how much the committee seeks to raise to bridge the education spending gap, there also is a potential tax on cloud-based services.
When the Governor signed the Budget Adjustment Act earlier this month, his message to legislators was, “I’m deeply concerned this bill exceeds my proposed budget adjustment by almost $15 million. As the House Appropriations Chair has said herself, this leaves a $15 million gap in the fiscal year 2025 budget.”
The Legislature will also need to find $15-30 million in tax revenue to replace the revenue that comes from flavored tobacco, which they stand to ban very soon.
Certainly, don’t consider this session done in May at the fall of the gavel; they will need to return for a veto session.
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Categories: Legislation
Missing from this article is a link that appeared in the lccvermont.org legislative update. The link to “Fair Share Vermont’s” letter clearly shows the effect of the donor class and lobbyist on the Vermont legislature. https://fairsharevt.org/wealthy-letter
The legislature is beholden to these organizations for campaign cash and who knows what else, required to support and introduce legislation generated by these groups for their special interests. Benevolent? Think again. It is very likely that none of the letter’s signatories will pay a dime in increased taxes- but the small family business, family farm and others will fall into these income brackets- one time or occasionally. No, ben cohen won’t worry about actually paying extra- he has accountants and financial advisers for that. Investigate further- view the FSV website and see the coalition that has tentacles into much of current proposed legislation. This is elitist virtue signaling, with the net burden being carried by others. This is but one example of how Vermont’s legislative process is corrupted by those seeking power and virtue.
Since Social Security income is taxed in VT, I wonder if the tax hungry legislators are looking ahead ten years at the possible end/or reduction of
Social Security benefits. Because a large percentage of Vermonters are retired and receive SS benefits, that loss of income would have a large impact on the education tax and the homestead property tax credit.
An increase in the death tax would take care of that little shortfall.
How much more taxopian can this get. Your city or town could and most likely will want you to pay a Rain Tax. “The municipal apparatchiks will see how much “hard surface area” you have. They define that as frivolous and unnecessary things like “roofs, asphalt driveways, parking areas and concrete landscaping.”
https://torontosun.com/opinion/columnists/kinsella-torontos-overlords-pondering-implementation-of-a-rain-tax
Just more fiscal irresponsibility, these clowns we have couldn’t balance a checkbook,
they know homeowners are like sheep in a pen, you are being controlled.
Wake up people, and make your voices heard, all they’ll understand is when they are
booted out because as of now, you just don’t matter !!
Let’s see reduced spending and a balanced budget, if not they should be fired as they would in any other company……………… inept.
I have a list of nicknames for the State of Vermont whose natural beauty I love dearly, but whose Democrat-Progressive super-majority Legislature continues to act in a manner that I interpret as disenfranchised from reality.
Based upon the content in this article, the new addition to my long list of nicknames for Vermont is the “pickpocket” State.
i am already paying a 50.00 dollar rain water run off tax per year and the water never leaves my property in st. albans town/// they hired another goat herder to control a non existing event///
More funds demanded to do more government…SOLUTION; Less government means less money confiscated.
What is the Democratic Party doing to the State of Vermont? Don’t they read that New York State, California and other formerly wealthy states are losing tax payers because they move to other states where the tax burden is reasonable. I really object to paying for someone’s childcare. The real culprit here is the anti business legislation which keeps reasonable businesses from locating to Vermont. We are told by our local Representatives to the State legislature that they do not know or evaluate the economic consequences of the bills they pass. It is time for them to replaced.