Vermonters face avalanche of new taxes

original artwork by Rob Roper

by Rob Roper

When Democrats won super-supermajorities in both chambers of the Vermont legislature in November’s election, they brought with them a host of legislative priorities that come with massive price tags for Vermont taxpayers. While debate over these ideas tends to be siloed in committee hearings, it is important to take a look at them together to understand just how much new and ongoing spending these legislators have in mind – and how they expect us to pay for it all.

The Clean Heat Standard (S.5). $300 million per year “carbon tax”. This law would force dealers of fossil heating fuels (oil, propane, natural gas, and kerosene) to buy “clean heat credits” in order to sell their products. The credit is essentially a carbon tax on fuel dealers that will be passed along to customers. The revenue from the credits would go to fund things like low-income home weatherization and subsidizing heat pump installation. To fund these projects at the scale required by the Global Warming Solutions Act the Scott Administration estimates the total cost of heat credits over the first four years of the program would be $1.2 billion, causing an increase in home heating fuel of roughly 70¢ per gallon, or on average (assuming 700 gallons of heating oil per year) a de facto $500 carbon tax per household.

Universal Childcare. $279 million per year. For nearly two decades Vermont has been ratcheting up state government’s role in childcare from birth to five with an eye on the ultimate prize of incorporating four new grades into the public school system. This year they expect to make a big jump in that direction, and the RAND Corporation was hired to do an in-depth study of what it would take to fulfill the wish list of Let’s Grow Kids. Short answer, an additional $279 million in new taxes. This number is too big for any one pool of money, so it would have to be broken up with the biggest chunk coming from a new 1 percent payroll tax ($196 million), and some combination of an increased sales tax (from 6 to 8 percent), an expansion of the current sales tax to services, a dedicated sales tax on services of 10 percent, and/or a tax on soda to make up the other $83 million.

It is important to note that this is a year-one estimated cost. The expectation is that the annual cost to maintain this program would grow faster than the rate of inflation, more in line with the growth rate of k-12 public education spending.

Paid Family Leave (H.66). $116 million per year payroll tax. Governor Scott successfully vetoed a Paid Family Leave bill in 2020, but now it is back. As with its predecessor, this would be a mandatory program for all employees paid for with a new 0.58% payroll tax (total: $116 million), automatically deducted from everyone’s paycheck.

The bill would allow an employee to take up to twelve weeks (three months) of paid leave in a 12-month period for the birth of a child, to care for a sick family member or their own health, or to grieve the death of a loved one (limited to two weeks). One wonders what the fatality rate will be for favorite aunts during deer season as a result of this bill.

It is also important to note that S.66 states, “Notwithstanding subsection (a) of this section [setting the 0.58 percent tax rate], the General Assembly shall annually establish the rate of contribution for the next fiscal year. The rate shall [emphasis added] generate contributions in an amount equal to the sum of the projected amount necessary to provide benefits pursuant to this chapter during the next fiscal year plus a reserve equal to at least nine months of the projected benefit payments for the next fiscal year plus the projected cost to administer the Program during the next fiscal year….”

So, no, that 0.58% payroll tax number isn’t going to be that low for very long. As high as $116 million is, this is just the camel’s nose under the tent that mandates future spending increases. Expect the cost of the program and the payroll tax rate supporting it to explode very quickly.

The bill has 103 sponsors – more than enough votes to override a veto.

Single Payer Healthcare Redux (H.156)($2.5 billion plus?) As with its doomed predecessor this version of Single Payer Healthcare would be financed by a payroll tax levied on all employers and a tax on self employment income, and an income tax surcharge, and by whatever other means necessary as may be determined by the General Assembly.

Although H.156 doesn’t spell out what the program would cost, Governor Peter Shumlin’s attempt at single payer died in 2014 when the year-one bill came to $2.5 billion requiring an 11.5 percent payroll tax plus a 9.5 percent income tax surcharge. The cost of healthcare has only gone up in the intervening decade. Unlike the original bill, full implementation of H.156 would phase in over three years instead of all at once, but this is still a very short time-frame to ramp up that much taxing and spending.

These are just the big-ticket items. Vermont taxpayers will also be subject to the usual “death by a thousand cuts” (although “cuts” is probably not the best choice of words while discussing Vermont tax policy), as other pet projects move forward, and programs until recently funded by federal emergency funds need to be extended with state tax dollars — or ended.

One example of this is the universal free school meals program, which federal funding supported during the Covid pandemic. That funding ended last summer, and Vermont taxpayer picked up the tab to extend it for another year to the tune of $29 million. Now legislators want to make the program permanent – with Vermont tax dollars.

Another is the housing program that currently pays for about 2800 homeless to live in hotels. Federal funds for that program are set to run out, so the Vermont House Appropriations Committee just voted to allocate $21 million of Vermont tax dollars to keep it afloat through June of this year.

$21 million here, $29 million there…. It begins to add up!

Keep in mind that of Vermont’s roughly $8 billion annual budget, roughly $6 billion is paid for with federal dollars, and of that $6 billion about half is “one-time” emergency funds. Vermont taxpayers (apart from the fact that we all pay federal taxes) are only required – so far – to pony up a little more than $2 billion of all that spending – and that is tapping us out. According to WalletHub, in 2022 Vermonters lives under the 4th highest state tax burden in the country. If the Democrats pass their agenda, just wait til 2023.

Share Behind the Lines: Rob Roper on Vermont Politics

Rob Roper is a freelance writer who has been involved with Vermont politics and policy for over 20 years. This article reprinted with permission from Behind the Lines: Rob Roper on Vermont Politics, robertroper.substack.com

Categories: Legislation

35 replies »

  1. Name for me one town, county, state, or country that has taxed itself into prosperity, I’ll wait.

    • It has nothing to do with prosperity, and everything to do with power and control. But the average Vermont voter is blissfully ignorant of this fact and will keep voting for Democrats until they have no clothes on their back or roof over their head. That is the only way truly ignorant voters will be able to connect the dots between cause and effect. Sad, really.

      • some will still have roof, clothes. food………these will not be the average low-middle income vermonter though!!

      • I will soon be leaving this state, after moving here 47 years ago. This place is not like the place it was then. All you newbies ruined paradise.

    • Exactly, just like the current administration. You can’t spend your way into prosperity

  2. Get your money Grabbing HANDS out OF MY 80 YR OLD.pockets!! I am on Social Insecurity> Do you want to KILL ME.?

  3. I had no idea that for the 2nd smallest population of the union, it’d cost so much to have groomers fondle our state’s kids.

  4. Of all the articles, news stories and commentary that have been and will be published during this legislative session, this is the most alarming, dangerous and frustrating that any Vermont resident, taxpayer or not could read.
    Roper gets it right, his dire warnings are deadly accurate.
    And fall on deaf ears.
    Vermont voters have elected the most socialist group ever to “represent “ them and this super majority, falsely believing there is some sort of mandate will now torpedo and sink the ship of state that is Vermont. In the name of social justice, equity, human rights and a dozen other catch phrases and platitudes, the majority will now spend tax dollars, borrowed dollars and dollars purloined from existing programs and funds to cement Vermont as the queen of socialism, with the dirty fact of cost and taxation forgotten. Should the programs Roper outlines above pass, and they will- our “representatives “ will almost double the tax burden on Vermont residents. In 2025, as federal funding begins to expire for current ARPA programs-another legislature will again be tasked with further increasing the tax burden on us to replace federal funds.
    That any fiscally conservative person would even want to run for state office in 2024 is crazy stuff, they get left holding the bag for the insane spending being proposed and enacted today. Just today our liberal friends at VTDigger tell us that almost 100 million of additional spending passed out of committee, to be added to this years budget. 71 million for more housing and 9.2 million to bail out organic dairy farmers. Crazy stuff indeed- and our representatives tell us we are out of touch.

    • The governor needs to block anything they bring to him if he plans on being reelected.

      • The governor cannot block anything. The Legislature now has a supermajority of communists, er, democrats. That means anything he vetoes they can just override. It was in all the papers, including this one.

      • Jim Douglas saw the writing on the wall and left the Governor’s office in 2011, after the legislature overrode his budget veto and gay marriage veto in 2009.
        As is happening now, that super majority legislature went on a spending spree and later with peter shumlin as governor continued spending voraciously. Remember single payer health care? The savior system that required more taxation than even shumlin thought he could get away with? We’ll, here we go again.
        Scott might just decide he’s had enough too.
        I certainly would.

      • The majority of Vermont voters swiped the veto pen from the Governor’s hand last November… The legislature is salivating and every item from their wish list will be given a good airing. Apparently, the voters thought this would be a good idea.

  5. No point in writing a lengthy post as the majority of Democratic / Progressive voters don’t read VDC. I will say anyone who voted for these clowns has relinquished the right to complain about tax increases. You got exactly what we told you was coming.

    • But! Some moderate D politicians do read VDC. That they might read and find accurate analysis in Rob Roper’s words
      And others who write and comment here- and remember that as they debate and vote- make the effort worthwhile.
      So to, the apathetic voter, fed up with current conditions might get out and vote, starting with town meeting day is a small start toward improvement.

  6. I’m wondering if there will be any money left for those who are going to pay all those taxes?

  7. What do you expect when the left controls the election process lock,stock and barrel and outside forces are let in to influence elections like the Zuckerbucks that flooded into the town governments in cahoots with the Sec of State then VIOLA! This is the result. Such a shame that such a great state is going down the tubes and the people allowed it to happen saying,my vote does not count…why vote? VOTE THE LEFT OUT before they game the system for good then you are all slaves to them.

    • We had quacks running for office in the past, mostly they were laughed at, as they should have been. But the likes of a leaky Leahy, unaccomplished non millionaire Bernie, Welch, all kept plugging away and unfortunately, prevailed. Now we have all loonies and they just keep coming.

  8. To everyone who voted for these people I’d like to say thank you for being idiotic. This state 8s already expensive and you just made it worse by voting for these liberal/socialist fools.

  9. Unfortunately, Vermont’s ship will have to sink, before the progressives will abandon ship.

  10. And the state government can’t understand why people and corporations leave. Stop pandering to the fools.

  11. This is ridiculous. we were told there was a $60 million dollar tax surplus this year…now this. Those in legislature now must be raking it in somehow to shaft there neighbors so badly. Nevermind secede from the union…can those with common sense secede from whats happening now with our executive branch?

  12. I was looking for a reason to stay? NOW I know I need to leave this stupid state. You are forcing people to leave. All we do is pay for the under privileged. After those of us who produce and income? WHO is going to foot the bill? really???

    • And they can’t figure out why people don’t stay in Vermont after high school. Doesn’t take a rocket scientist to figure it out. Free child care and the rest of these bills are idiotic, you had the kids then you pay for them not the responsibility of the taxpayers.

  13. As the story goes: the hippies moved here in the 60s because the livin’ was cheap and nobody told you how to live your life. Now they have grown up and gotten elected to the legislature, made Vermont unaffordable and like to tell you how to live your life…
    I hope the majority of Vermont voters who got that special feeling by voting for democrats and progressives get that special feeling again when they get their fuel bills and when they get hit with the “avalanche of new taxes” to fund the proposed additions to Vermont’s already overflowing handout cornucopia…

  14. Grow some real Vermont balls 🏀 I suggest we succeed: VermontIndependent.net
    A 2nd Vermont Republic where Vermont lives count.

  15. In the private and business world you have so much income, so much unavoidable costs and then a balance of funds available plus borrowing to meet desirable operating costs and make limited capital investments.
    A good first step is to require the review of all existing programs, perhaps with an assumed 10% budget cuts.
    Then, use a review of all new projects with a Net Present Value (NPV) period of 10 years or less and high discount of 25% or more to compare apples and oranges.
    There are always more projects than money – and that is where you need an adult in the room.
    No one, including the State of Vermont, can spend based only on a utopian wish list.

  16. Mr. Roper is right …AGAIN. Neighbors, PLEASE! Face it we’ve created a culture where we sincerely believe our government should be dealing with our heating problems, our child care problems, our contracts with each other, our healthcare… and an ever growing list of life’s vicissitudes. The difficulties we face pursuing our happiness are problems we’ve turned over to our elected officials. We’re invested in the delusion that they will relieve us of these burdens of liberty. Look what we’ve made. This is not the individual liberty/participatory governance ideal put forth at our founding. This will not end well.

  17. The notion that the current influx of liberal and progressive politicians in Vermont is solely responsible for the state’s affordability issues and that the solution is to cut existing programs and shift responsibility to citizens is misguided and oversimplified. The reality is that the state’s issues are complex and multifaceted, and a one-dimensional approach is unlikely to solve the problem. Furthermore, the VTGOP has neither the solutions nor the electable candidates necessary to address these issues in a meaningful way. Rather than offering comprehensive and well-thought-out proposals, they simply offer blanket statements and empty promises that lack substance and fail to address the root causes of the problems facing the state. In order to truly make a positive impact, the VTGOP must put forth actual solutions and electable candidates who are equipped to tackle the complex challenges facing Vermont.

  18. This sounds like Liam Madden writing as anonymous Tom Arnold. More gibberish to ignore!

  19. Don’t forget the free Healthcare they are voting for themselves. They don’t care about Vermonters they care only for themselves. Remember the infamous quote from senator McDonald about letting us wear another sweater.

  20. Why do you think they have machines counting our votes?? Do you really think these people were voted in.I knew this would happen, saw it coming!!! Let this ship sink and see what happens……