Showing posts with label Tax Reform. Show all posts
Showing posts with label Tax Reform. Show all posts

Legislative Report /Word in the House 5/16/2018 - Not Quite the End of the Session



The last two weeks of a legislative session are a whirlwind of activity. Dozens of bills that have been worked on during the previous 16 weeks of the session in both the House and the Senate reached final stages of passage. Most traveled back and forth between the two bodies as amendments were made to reflect the different concerns of the responsible committees. Twenty-eight bills this year required a conference committee made up of three representatives and three senators to resolve disagreements in language that couldn't be settled by amendments. 

The budget is the final bill passed in a session. Any bill that was still outstanding when the budget passed would be dead. As the session ended just after midnight Sunday morning, we managed to complete all of those bills as well as many more. The bills included raising the minimum wage, providing paid family leave, establishing toxic materials responsibility, protecting sexual harassment victims, funding clean water efforts, setting appliance efficiency standards, helping Vermont manufacturers improve energy efficiency and productivity, providing free tuition for National Guard members, several consumer protection and economic development bills, and an income tax reform and education funding bill as well as the budget.

Our legislative agenda reflected in the bills we passed promote a caring economy that makes Vermont more affordable for lower and middle income families, protects all Vermonters from various social and environmental impacts, and provides opportunities for economic growth. While we did not adopt the Governor's proposal for using one-time money to keep our education property taxes from increasing, the funding changes made by the legislature will hold the residential property tax rate increase to two cents in a sustainable way that avoids the need to find one-time money again next year. One-time money is just that. There’s no guarantee that it will be there next year, which just defers a tax increase. Instead, this year's one-time money will be used to pay for one-time expenses like fully funding our reserves and paying down the teachers' retirement fund obligation saving Vermont taxpayers $100M in future budgets. Our income tax changes will return $30M in extra tax revenue generated by the federal income tax changes back to Vermonters by lowering the income tax rates for everyone. Overall state spending increased less than 1 percent, significantly lower than the rate of inflation. Here are links to the details of the tax changes and to the budget.

Unfortunately, the Governor has stated that he plans to veto the budget as well as several other bills that address affordability and the health and welfare of Vermonters. The budget passed with a tri-partisan vote of 117 – 14. If he does carry out his veto promise, he will have to call the legislature back into session. There have been plenty of opportunities for the administration to engage with the legislature to work out a compromise, but that didn't happen. Now we are faced with the additional expense of an extended session.

Finally, I would like to make a correction. It was called to my attention that in my previous article about the minimum wage bill, I reference some total wage numbers that seemed to be based on different assumptions. The $15/hour total should have been $31,200 based on the same 40 hours/week and 52 weeks/year used for $10.50/hour.

As always, I can be reached by phone (802-233-5238) or by email (myantachka.dfa@gmail.com).

Legislative Report - 1/23/2011

For the past two weeks the legislative session has been in full swing with several major newsworthy events taking place.  The biggest event was the report of Dr. William C. Hsiao and the Health Care System Design Study Commission.  Dr. Hsiao presented a summary of the report before the legislature and the commission’s recommendation that a system of a public-private single-payer system would be most effective in lowering costs while providing access to basic health care to all Vermonters.  His presentation as well as the draft of the full report can be found at the Joint Fiscal Office website, http://www.leg.state.vt.us/jfo/healthcaresystemdesign.aspx.  Health care is complex, expensive, and affects everyone.  Much work will have to be done by Health committees in both the House and Senate to rigorously examine the full report and take testimony before any legislation is formulated.  Any implementation of the proposals will have to achieve these goals: 1) control health care spending which has been increasing about a million dollars per day, 2) provide coverage for the  32,000 Vermonters who have none today, and 3) reduce the cost to employers of providing coverage for their employees.  The report indicates that these goals can be accomplished and provide a model for reform on a national level.  I encourage you to read the report, or at least the presentation, and let me know what you think about it.

The Joint Fiscal Office, a non-partisan research arm of the legislature, also presented to members of the legislature an overview of the report of the Blue Ribbon Tax Structure Commission.  This report can be found at http://www.vermonttaxreform.org/wp-content/uploads/2011/01/WEB-REPORT-2.pdf.  Taxes have been a persistent issue in Vermonters’ minds, and Charlotte is no exception.  We often find Vermont compared unfavorably to our neighbor, New Hampshire, which has no income or sales tax.  As a tax preparer I hear the same comments from many of my clients.  The commission considered all the types of taxes assessed by Vermont, including the income tax, the sales tax, excise taxes, fees, and property taxes, and compared them to the other New England states and New York.  The commission found that the vast majority of Vermonters pay taxes, and that Vermont’s taxes are distributed rather evenly across income classes when considering all types of taxes together.  Taken as a percentage of household income, sales taxes are regressive with lowest 20% of incomes paying 5.5% of total income and the highest 1% paying about 0.5%.  The income tax, on the other hand, is progressive, ranging from -1% (a tax benefit) for the lowest 20% to 5.5% for the top 1%.  The property tax is slightly regressive, ranging from 3.8% for the lowest 20% to 2.2% for the highest 1%, with a bump showing the top 60-95% at about 4.2%.  The distribution of the total tax contribution at all income levels averages 9% +/- 1%.  New Hampshire, on the other hand, places the highest burden of total taxation on the lowest 20% at about 8.5% of income and the lowest burden on the top 1% at about 1.7%, relying primarily on property taxes.  The commission made several recommendations including changing from taxable income to federal adjusted gross income as the starting point for the Vermont income tax.  Assuming no increase in income tax revenues, this would allow tax rates to be lowered and permit an apples-to-apples comparison with other states’ tax rates.  

In the Natural Resources and Energy Committee we are reviewing the elements of H.56, the Energy Bill of 2011.  This work will continue as we take testimony from various stakeholders.