House Education Committee Chairwoman Johanna Donovan, D-Burlington, said the State Board of Education would play an advisory role under the new structure. Photo by Josh Larkin.
House representatives in the two money committees are taking last-minute testimony, staring hard at spreadsheets and trying to put two and two together; that is, lawmakers are examining the relationship between people (those affected by tax changes and cuts) and money.
Members of the House Appropriations Committee are wading through $88 million worth of cuts to the state budget while the House Ways and Means members look at generating $24 million in revenues through taxes on health care providers.
Both committees have the different paths toward the same goal: The number zero, in the face of a $173 million budget shortfall for fiscal year 2012.
How they’ll meet in the middle on spending and revenue will likely remain an open question until next week when the miscellaneous tax and the budget bills move forward. The miscellaneous tax bill is expected to be voted out of committee tomorrow.
The Democratic leadership in the Legislature and Gov. Peter Shumlin have said they won’t raise broad-based taxes to reinstate cuts to programs for the elderly and services to the mentally ill and developmentally disabled.
Meanwhile, in defiance of leaderships’ position on the matter, a loosely formed, tripartisan confederation of lawmakers is pressing forward with a separate bill that they hope will shift the balance of cuts and revenue generation.
This breakaway group of about 20 lawmakers is calling for a 1.25 percent increase in income taxes for Vermonters in the top two income tax brackets. This surcharge would sunset after two to three years and would apply to household incomes of more than $75,000.
In all, the proposal, an amendment to H.401, would generate about $40 million.
Three lawmakers — Rep. Paul Poirier, I-Barre City, Rep. Chris Pearson, P-Burlington, and Rep. Johanna Donovan, D-Burlington — went to House Ways and Means to make a pitch for the plan. They also presented it to a group of about 20 interested legislators in an informational session.
Poirer told lawmakers that they have explained their proposal to the leadership team (and in fact, the chairs of the two money committees, and the majority and majority whip were present for the impromptu meeting in Room 10). “We have been trying to be as transparent and as up front as possible,” Poirier said.
Pearson pointed out that Vermont’s richest 5 percent have seen a 70 percent increase in income since 1980, based on calculations from Tom Kavet the Legislature’s economist. This year alone, this group of taxpayers will see a $190 million break thanks to an extension of the Bush tax cuts.
The new income tax proposal from House Ways and Means would, he said, continue to reward wealthy Vermonters.
House Ways and Means is poised to vote out the miscellaneous tax bill, which includes the elimination of itemized deductions. Pearson said the shift creates winners and losers. Some people who earn $1 million a year, he said would effectively get a tax break if the committee’s revenue neutral proposal goes through.
“Why we are holding these people harmless is beyond me,” Pearson said. “This is (a matter of) basic economic fairness.”
The idea of taxing the wealthy may be unpopular among pols, but the concept is widely accepted by Vermonters, Pearson said.
He pointed to a recent poll from the Center for Rural Studies at the University of Vermont that found that 78 percent of respondents support tax increases on Vermonters who earn $250,000 or more a year.
Pearson also said since he introduced H. 401 a few weeks ago, he has received an “astonishing” number of phone calls from wealthy individuals who have chastised him for not raising taxes even higher.
Rep. Johanna Donovan, the chair of the House Education Committee, one of the small minority of Democrats who are sponsoring the bill, told her colleagues that Vermonters need to come together and support programs that ensure the mentally ill are not on the streets. In the end, taxpayers in cities like Burlington and Barre will have to pay the price when those Vermonters end up in jail.
Raising taxes to ensure that the most vulnerable Vermonters are cared for “is a values statement,” Donovan said.
“What I see in front of us is the moral imperative to respond in some fashion to cuts,” Donovan said.
“We are a small community,” Donovan said. “In Vermont every day people are aware of the hardships of our neighbors. It would be beneficial for us all to pay more.”
Donovan said for example, cutting $1.6 million for the student assistance professional program, which is designed to keep kids off drugs, will cost the state more in the long run.
“We’re all in this together, and we all need to pay,” Donovan said. “We all praise the progressive tax system. There are always winners and losers. I learned long ago life isn’t fair. I’m not about to create class warfare, but we need to have everyone pay in.”
Poirier said the city of Barre will see more demand for municipal services as a result of the cuts to human services.
“We know we’re going to have to deal with this at the local level,” Poirier said. “We will have more people coming out of corrections on the streets the burden gets passed on us.”
He recalled that in the early 1980s, in the worst recession in decades, Gov. Richard Snelling asked a Democratic minority then to support a bill to raise taxes so that the state could avoid dropping what he deemed to be essential services.
“We restored key programs,” Poirier said. “Shumlin says this is a different time. I don’t buy that argument.”
In House Ways and Means, Rep. Jim Masland asked Pearson how rank-and-file lawmakers could negotiate with the “corner office” that the bill was essential when Shumlin has already put in an anti-tax stake in the ground.
Pearson said lawmakers need to challenge assumptions “that allow the governor to declare the bill dead on arrival and decide that’s it.”
“You don’t get to point where you can trade or negotiate when you’ve already folded your hand and I think that’s where we’re headed,” Pearson said.
Editor’s note: A write-through of this story was posted at 7:18 a.m.
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Thank you Rep. Paul Poirier, Rep. Chris Pearson, and Rep. Johanna Donovan. I have been disgusted with Obama’s backsliding on sun-setting the Bush Tax cuts. Then while looking for local hope the governor and democratic leaders in Montpelier made fast with that hope, out of fear that the rich would move away. Give me a break! Thank you for standing up for what is fair and moral.
I have had the honor of assisting some of Joey’s constituents over the years, in the capacity of a psychiatric clinician and later as a vocational counselor. I know that she really get’s just how vital the mental health safety net is. Thank you Joey, Chris and Paul. You have helped to restore my faith.
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Let me add my thanks, Joey, Chris, and Paul.
Article 9, VT Constitution (in part) – That every member of society hath a right to be protected in the enjoyment of life, liberty, and property, and therefore is bound to contribute the member’s proportion towards the expense of that protection . . .
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How about stopping the over crowded correctional centers. You have first time non violent offenders who could do community services instead of taking up space and tax dollars in jails, and the need for probation officers . You have court cases in the system for barroom fights which use to be handled by police and fines as well flooding the courts costing tax dollars.The list is endless. New as of yesterday the VT drug task force wasted its time and our tax dollars on a marijuana case. Which involved an informant and three months of time they could of spent on other areas such has narcotics which is the drug we need off the streets. Now its a court case so now its court time, this is ridiculous. With the cost of fuel, more police could be patrolling on foot and bikes as in the past, to reduce cost. I would also suggest you make the ones that are out of shape work on foot to get them in physical shape to also lower our cost of their medical care. Use our assets in Vt to help drive down costs. Our forests are full of dead trees and fallen ones, use first time offenders /nonviolent to cut and haul them and use for people who use wood in Vt to heat their homes. You now have saved on the correctional system and Fuel asst. program. Their are so many things you can do and don’t, instead you want to tax an already tax to death state again. Stop the abuse and start using your heads and find solutions. Also this is also not about who’s party is right or wrong, this is about VT and it’s people, not YOU!
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A 2-year pay and benefit freeze for all state workers and a single-payer healthcare system covering all Vermont and all state, county and local government workers would save enough money to pay for budget shortfalls of social programs and reduce the deficit without tax increases.
There should be increased taxes on sugared drinks, tobacco products and alcohol products; such taxes would reduce health care costs.
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Shumlin and his admin. , need to look at the UVM survey that says 78% of Vermonters favor a tax increase on the wealthy. His statements that people will leave and go to NH,FL and that this is a different time show that he is out of touch with the people of Vermont! What happened to the VT that values Inclusion for all? Where is our sense of community?
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I want to echo all of these responses with a huge THANK YOU to our “break away legislators.” May their numbers increase!
I also want to challenge Chris Pearson’s statement, “The idea of taxing the wealthy may be unpopular among pols.” It may be, but it isn’t. On a national level a recent poll cited by Senator Sanders indicates that 80% of Americans support taxing upper incomes and corporate profit to help states balance budgets. And the Times Argus reported similarly last week on a Vermont poll. That report was supposed to be released this week, but I haven’t seen anything more about it. On the other hand, yesterday’s Times Argus editorial echoes Pearson’s (false) sentiment, gave commentary space for Governor Shumlin to assert his “no increase in taxes” stance, and isn’t publishing letters or commentary that oppose that view. (Note that their article by Peter Hirschfeld similar to this story is on page A7)
Beware when a few powerful men and their media allies control the message.
Thank you vtdigger and others willing to participate in a fuller dialogue.
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I went to the state legislature and tax department websites and read the bill and reviewed the tax brackets.
http://www.leg.state.vt.us/docs/2012/bills/Intro/H-401.pdf
http://www.state.vt.us/tax/pdf.word.excel/individual/2010TaxTables.pdf
When I reviewed those and compared them to the article. I saw two discrepancies. First, this would apply to single filers earning more than $171,850, married filing separately earning more than $104,625, married filing jointly earning more than $209,250, and head of household earning more than $190,550. Second, I did not see a provision in the bill for the sunsetting of these rates after two or three years.
I am, however, in favor of either version.
Please correct me if I am wrong or have misunderstood something in this article or legislation.
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Edward Pas is correct. I read H.401 text, for which he provided weblink, and I see no mention of sunset, expiration or termination date. As written this would be a permanent tax increase.
Also, the article mentions $75K, which is in the bottom-middle of the tax brackets (per the other link provided by Edward). The H.401 apparently only applies to the top two brackets, for which in the case of married filing jointly is $171,850 and over.
The article states: “Pearson also said since he introduced H. 401 a few weeks ago, he has received an “astonishing” number of phone calls from wealthy individuals who have chastised him for not raising taxes even higher.”
If so, how about a “Shared Sacrifice Question” on the VT Income Tax form (IN-111) instead of a permanent or temporary tax increase? This question could be an optional fill-in-the-blank amount that “any” Vermont taxpayer could volunteer to give an extra amount.
So, for those wealthy Vermonters who want to contribute an extra amount (perhaps even above what H.401 proposes, as Rep. Pearson alluded to), they could voluntarily do so while the economy is recovering, and when times are better, they can choose either No ($0.00) extra or continue to volunteer to give some extra amount.
For those who are in the middle tax brackets, if they are still employed and having an OK or good year, they could also volunteer if they wish to give an extra amount.
If someone is unemployed or can’t afford it, they could just ignore the question or write down $0.00, and it would be OK.
This would be more of a “carrot” approach, than a “stick” approach.
I am somewhere in the middle bracket, so H.401 as written does not apply to me. But while the economy is still bad and while State of Vermont has a deficit, I could volunteer to give a little more without much affect. In fact, I would rather see my tax money go to Vermont than Washington DC. If the extra amount is considered part of your VT Income Tax, than the next year you could deduct your state tax from Schedule A (including the voluntary extra amount).
This approach might provide some amount of “community spirit” in that it would be voluntary.
While I am not against H.401 per se, I also have to agree with Deb Ty, that we need to think “outside of the box” for some creative solutions to our shared problems.
I had proposed a “Shared Sacrifice Question” for IRS Form 1040, but that was before President Obama and Congress compromised and continued the Bush Tax Cuts. But the very same idea could be applied to Vermont Tax Form.
We already have question for voluntary contribution to Nongame Wildlife Fund, Children’s Trust Fund and VT Veterans Fund. So a “Shared Sacrifice Question” could be also added. It would be VOLUNTARY, open to any taxpayer in any tax bracket, and could remain on IN-111 form indefinitely.
Obviously, some will choose to ignore or write in $0.00. But others might volunteer to give more to OUR state of Vermont in these tough times. Plus, this avoids the whole class-warfare argument, because ALL Vermonters in all financial situations would be asked to help, when they are able.
A voluntary “Shared Sacrifice Question” on form IN-111 would coincide with the slogan, “Freedom and Unity”. We are all in this together, rich and poor and middle class.
If a “Shared Sacrifice Question” does not raise enough, than the Legislature could try the H.401 approach in a future year. But who knows, it might just work. We’ve already tried the tax cut, and budget cut and tax increase approaches. Why not try another approach?
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Thanks Chris Pearson et al! Let the people reclaim the rhetoric in the class war – and it is indeed class warfare. We must have the courage to use the power of language in the cause of economic justice. For instance, the rich have ‘soaked’ both the middle and working classes for decades – it is time to ‘soak’ the rich and compel them to pay a fair share of the financial burden to keep our country from descending deeper into an inhumane oligarchy! Between 1995 and 2005 2/3 of corporations paid no income tax. Again, in the battle of words, let’s reclaim the idea of ‘socialism for the people’ and not just for corporations. And ‘welfare’ should be used by every thinking politician to denote a compassionate concern for the plight of those less fortunate, rather than the distorted meaning put forward by the Reaganite brown-nosers who are pawns for the obscenely rich. The word ‘betrayal’ directed at the Shumlin crew is not overheated rhetoric but an accurate description of what has occured. Finally, ‘special interests’a phrase used by the neo-cons to smear working people who are trying to restore fairness in the workplace. The true ‘special interests’ are those multi-billionaires who have bought and paid for our government nationaly and who pump money into the Republican coffers in Vermont.
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I am not necessarily against H.401, but I agree with Deb Ty that we need to think more creatively to solve problems.
Given the 2008 financial collapse, I can understand some folks being frustrated and angry with Wall St. and thereby vent their anger at ALL the wealthy people in Vermont, whether they had anything to do with financial collapse or not.
So if people are going to get angry with wealthy people, then let’s be consistent and also get angry at those who are EMBEZZLERS, FRAUDSTERS, TAX EVADERS. Just see the example weblinks below (just Google for Vermont and ‘tax evasion’).
I would NOT be affected by H.401, as I am not in those two upper tax brackets. But, I am MORE upset with TAX DODGERS (in any tax bracket) than I am with people who pay their taxes and also happen to make more than I do.
Those that commit tax evasion will continue to do so under H.401!!!
Perhaps H.401 should channel a percentage of the new proceeds to ENFORCEMENT of existing tax laws, to catch more of the tax cheats.
There was an article in the Sunday Rutland Herald and Times Argus a few years ago, under Gov. Douglas tenure, about the outstanding taxes to be collected in Vermont, due to tax evasion (sorry, can’t find that weblink). There was not enough manpower then to enforce the laws already on the books. I suspect that this situation has not improved as far as tax enforcement personnel, given Vermont’s state budget.
http://vtdigger.org/2010/11/19/is-trust-enough-embezzlements-rattle-faith-in-accounting-practices/
http://www.fbi.gov/albany/press-releases/2009/alfo031009.htm
http://www.boston.com/news/local/vermont/articles/2011/03/03/apnewsbreak_former_vt_worker_to_plead_guilty/
http://www.vpr.net/news_detail/87255/
http://www.wcax.com/Global/story.asp?S=5859164
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Dear Democratic Leadership,
I urge you to listen carefully to Joey, Paul and Chris. Many Vermonters need you to stand up for true Democratic principles. Trying to out-Republican the Republicans is not the way to do that. Listen carefully and you will hear the pleads to heed their call.
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Yes !
Yes to Pais, Salzman and Pulcer yes.
Thank you.
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‘Pol’ is an abbreviation of ‘politician’, not ‘poll”. The statement contrasted the appetite of elected officials for raising marginal tax rates with that of the electorate. You don’t disagree with the statement; you misunderstood it.
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This is another one of those unsustainable bills.
Think of it like the “Quit Smoking, but tax smokers” situation we’ve got in VT and the US. We’ve built a system reliant on smokers but keep telling them to stop smoking thereby creating a need to keep increasing taxes on a small amount of people in order to sustain the flow of income into the government.
What this type of bill does is the same thing. Don’t be rich because being wealthy is evil, but tax the rich and please make money (and not even a lot) so government can increase taxes on your income now as well as over and over again in the future.
“Tax the rich” is the vehicle through which you are being scammed out of your hard earned money. It’s one of the most effective marketing ploys I’ve ever seen because so many people buy into it rather than question the premise. It’s YOU who are the targets now. Not some pie-in-the sky millionaires.
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Finally! We have leaders that are willing to lead!
Paying taxes is no fun and, along with a whole lot of other responsible grown-up activities, it is the task we accept when we choose to live in a civilized society. We are no longer a bunch of spoiled 16-year-olds and it is about time we stop whining like one. We have jobs. We have income. If this applies to you, then we ALL can afford to pay a bit more each year to ensure that our state functions in a manner in which we all can take pride.
(And please do not tell me that all the rich people will flee Vermont. Florida and Texas have NO state income tax. If these people were so tax sensitive, they would have gone south long ago. Personally, if anyone leaves Vermont based solely on this small tax increase, I say good riddance!)
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Here is a list of those who are supporting H0401. If you don’t see your rep. on this list please contact them. This is a small group that needs help.
Pearson, Christopher
Davis, Susan
Donovan, Johannah Leddy
French, Patsy
Haas, Sandy
Lorber, Jason P.
McCullough, Jim
Mitchell, Mark B.
Mrowicki, Michael
Nuovo, Betty A.
Poirier, Paul N.
Ram, Kesha K.
Stevens, Tom
Weston, Rachel
Wizowaty, Suzi
Woodward, Mark
Yantachka, Mike