By Paul Bean
Members of the Vermont State Employees Union are not required to pay the employee share of the new Child Care payroll tax.
The VSEA informed their members August 23 by email newsletter they are not required to pay any part of the new state mandated “Child Care Contribution” 0.44% payroll tax implemented by last year’s Act 76.
Vermonters who don’t pay close attention to their state legislature may have been surprised last month (July 2024) to find a slight decrease in their pay – The result of a new payroll tax passed into law last year (Act 76). According to the Joint Fiscal Office, this 0.44 percent tax (0.11 percent for the self-employed) applies to everyone who earns a paycheck and will collect a total of around $100 million per year in new revenue for the legislature to spend.
However this payroll tax does not apply to any of the 6000 VSEA members. “VSEA has been contacted by several members about Act 76 of 2023, which created the Child Care Contribution (CCC) under 32 V.S.A. Chapter 246 that requires Vermont employers to pay a 0.44% payroll tax on their employees’ wages beginning July 1, 2024,” wrote VSEU in their weekly email newsletter, Week in Action. “Employees are not required to pay the CCC, but employers may choose to deduct and withhold up to one-quarter of the contribution from employee wages or not more than 0.11%.” State Employees include anyone that is Non-Management, Corrections, and Supervisory bargaining unit employees.
Their reasoning for not having to pay the tax? “Since state employees are represented by a union, the State cannot simply require bargaining unit employees to pay any portion of the CCC unless there is a mutual agreement between the State and VSEA.”
Throughout the 2023 session, Act 76 was one of the more controversial bills to get through the legislature. Back in May 2023, Governor Phil Scott vetoed the bill because he considered the bill to be yet another unsustainable raise in taxes and fees. “Vermont already has one of the highest tax burdens in the nation,” wrote Governor Scott in his veto letter. “The last thing we should be doing is making it worse. Raising new revenue from taxes and fees should be a last resort, not a first step.”
Proponents of the bill beg the question, what’s the big deal? It’s just a half of a percent tax.
“Fortunately, overwhelming majorities in the House and Senate have made it clear that the Governor’s rhetoric on this issue will not be the last word,” said D. Senate Pro-tem Phil Baruth in May 2023. “This bill will be our number one priority for the veto override session, at which time we will speak loudly, in the only way that matters in the end. We will vote to end the childcare deserts in our state, and we will vote to pay childcare professionals a respectable wage. Vermont’s kids can’t wait any longer.”
House Speaker Jill Krowinski added: “The Governor vetoed a bill that would have cost an individual Vermonter, earning the median wage less than $1.00 dollar per week. That is a truly significant benefit for Vermonters at a minimal cost. This bill, along with base funding invested in the budget vetoed by the Governor, would allow for increases in child care subsidies, which would provide for families to find and afford quality care while guaranteeing higher wages for early childhood educators and staff.”