The House Ways and Means Committee unveiled a plan for doubling state funding for the childcare system by increasing the top corporate income tax bracket rate to 10% and increasing all personal income tax brackets by 0.5%. Testimony from the Joint Fiscal Office detailed how the corporate and personal income tax hikes would fund the $100 million expected annual cost. These increases would be in addition to the 0.55% payroll tax that the committee passed to pay for an expansive paid family and medical leave program.  

If passed, the legislation would establish Vermont as having the highest corporate tax in the nation and would apply to the 2,000 Vermont businesses with a net income of over $25,000. This comes only a year after the legislature made changes to the corporate tax system that benefits corporations that have a Vermont-based workforce. This proposal would wipe out those benefits with a higher corporate tax rate. Changes to corporate income structure multiple times in a short period would further exacerbate what is already an unpredictable business climate.  

The House Human Services Committee previously passed the bill out of committee by a vote of 10-1. Notably, the parental leave provision passed by the Senate was removed from the bill. 

The Vermont Chamber continued its testimony in support of healthcare legislation that would keep the small group market separated from the individual market throughout 2025. S.54 would ensure small businesses benefit from not shouldering the added weight of subsidizing premiums for the individual market, the state wins by accessing more federal funds, and individuals benefit from additional subsidies. The bill was voted out of the House Health Care Committee and is expected to be on the House floor next week. While S.54 is considered a win-win, the Vermont Chamber reminded legislators that this bill does not address the root problem.

The problem of cost-shifting will remain in the years ahead and stakeholders will have to return to the table later to fully understand what re-merging the market would mean financially to small businesses that represent only 6% of the health insurance landscape. The Vermont Chamber will remain engaged to ensure policymakers work towards a plan that ensures small businesses do not get burdened with the full cost of holding the individual market harmless in 2025.

S.54 will keep the small group and individual markets separate for the duration of the federal premium tax credit expansion through 2025. The Vermont Chamber, a successful leader on this issue, continues to support keeping the small group market separated from the individual market, and while the issue is momentarily addressed, cost-shifting questions beyond the next few years remain to be addressed. 

In testimony, the Vermont Chamber reminded members of the Senate Finance Committee that the small group market represents only 6% of the overall health insurance landscape. Amid economic uncertainty, legislators were also asked to consider the small business financial implications of re-merging the market and to work towards a plan that ensures they are not burdened with the full cost of holding the individual market harmless in 2025.