Taxes

House and Senate tax committees considered several new or expanded revenue sources to supplement a projected 20% increase in the average property tax bill for the next fiscal year. Addressing the persistent shortfall in the education fund, which struggles to meet the needs of a school system serving fewer students but requiring more resources, is not a new challenge. Introducing new revenue sources without accompanying solutions merely serves as a temporary fix. The Vermont Chamber agrees with the committee members willing to stand up and say that more money is not the solution and that hard conversations about cost containment measures need to happen this session. Specifically, those identified by the Joint Fiscal Office that would allow the education fund to support students without increasing the tax burden on Vermonters, which would only further drive the workforce from the state.

Options under discussion include an excise tax on sugary beverages, increased taxation on candy (including maple), a 6% sales tax on remotely accessed software, and potentially increasing Vermont’s sales tax. Last week, several business organizations sent a joint memo to the chairs of key committees to raise these concerns and request that they implement the changes provided by the Joint Fiscal Office to curtail education spending. Cost containment measures can’t take a back seat, while legislative proposals for increasing the burden on Vermonters are discussed.

House Ways and Means Committee Chair Rep. Emilie Kornheiser (D-Brattleboro) announced her new tax proposals shortly after the Governor’s budget address. These new taxes come into consideration as businesses and workers will soon feel the $100 million first-ever state payroll tax to be levied starting July 1. This tax proposal is also in tandem with statewide concern for double-digit property tax increases and the confusion around how school spending works.

New taxes that have been introduced include:

• A wealth tax of 3% aimed at tax filers, filing single or jointly, earning over $500,000.
• A new personal income tax on unrealized capital gains.
• Moving to a worldwide combined reporting corporate tax.
• A cloud tax containing tax on software as a service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS).

Raising these taxes will not reduce the tax burden on middle-income Vermonters. To make meaningful progress on improving affordability for middle-income Vermonters we can instead address the root causes of what is making the state unaffordable. The Vermont Chamber will continue to raise concerns about these tax proposals and share with businesses with the potential impact they would have on the Vermont economy in the weeks ahead.