Tax Hikes to Fund Childcare and Paid Family and Medical Leave Include Corporate Income, Personal Income, and Payroll

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.