House Speaker Shap Smith listens to the budget address, Jan. 25, 2011. Photo by Josh Larkin
UPDATE: The miscellaneous tax bill passed on third reading as originally proposed on the floor. It now goes to the Senate.
The threat of a minor insurrection, in the form of income tax increases on upper-income Vermonters, was handily put down at the Statehouse on Tuesday – apparently long before the legislation in question, the miscellaneous tax bill, was brought to the House floor.
In the end, the House Dems, despite the best persuasive efforts of a Progressive and an independent representative, were good foot soldiers who did the speaker’s (and the governor’s) bidding: They refrained from straying too far outside the box they were given to work in.
Lawmakers, largely along party lines, voted 90-47 to raise $24 million in taxes on health care providers and increased the statewide property tax rate by one penny.
The Ways and Means proposal deviated from Gov. Peter Shumlin’s revenue plan via one crucial tradeoff – instead of raising $3.66 million through a provider tax on dentists, lawmakers increased cigarette taxes by 27 cents a pack to generate the same amount of money.
In a press conference the same day, Shumlin criticized the move. “It seems illogical to me to ask factory workers to pay 27 cents more for cigarettes, then to tell dentists who refuse to serve Medicaid patients they’re off the hook,” the governor said. He argued that the dental tax would have been used to reimburse dentists at a significantly higher rate when they take Medicaid patients .
The miscellaneous tax bill, which goes to third reading on Wednesday, includes $7.25 million in taxes on hospitals, $2.81 million on nursing homes, a $140,000 increase in levies on home health agencies and a 0.8 percent ($10.72 million) claims tax on all health insurers — self-insured companies and the state’s three major insurance companies, Cigna, MVP and BlueCross BlueShield of Vermont. House Republicans oppose the “provider tax” and say it will drive up health care premiums for insured Vermonters.
Most of the afternoon session on Tuesday was devoted to a handful of amendments to the bill, only one of which passed. Lawmakers struck a $1 million giveback provision to taxpayers in supervisory unions that met the Challenges for Change targets. Several representatives said the measure was unfair because it rewarded schools that cut budgets at the expense of the rest of the school districts.
The surtax lead balloon
The small group of lawmakers who openly planned to float an amendment for an income tax increase on Vermont households that earn more than $137,301, only garnered 23 votes. The initiative would have raised about $27.7 million in revenues that supporters wanted to use to shore up human services programs for the elderly, developmentally disabled and the mentally ill that have seen funding reductions at a time when caseload pressures are up.
Rep. Paul Poirier, I-Barre City, and Rep. Chris Pearson, P-Burlington, initially formed a beachhead of support among a group of liberal Dems, but that base eroded in part as a result of a bait-and-switch tactic that pulled critical support away from the tax amendment and gave party members who had supported the surtax an opportunity to save face with the leadership.
Lawmakers were told that the House Ways and Means Committee would be offering an income tax restructuring bill, based on the recommendations of the Vermont Blue Ribbon Tax Structure Commission, later in the session, and that then would be the time to present income tax increase proposals.
“We have a governor who has taken a no-tax pledge, but I as a legislator didn’t take a no-tax pledge. Is it too much to ask (the richest Vermonters) to pay 1.5 percent more? That’s the question before us.” — Poirier
But such a bill, lawmakers, lobbyists and other statehouse mavens said, is unlikely to make it out of House Ways and Means this session, and it would be even more difficult to pass a bill that shifts the income tax structure from taxable income to adjusted gross income if the measure included a tax increase.
If that prediction bears out, lawmakers who said in remarks on the House floor that they would vote for an income tax increase associated with such a bill are unlikely to get a chance at a second bite of that apple.
Tomorrow, meanwhile, two amendments will surface on third reading of the bill. Rep. Suzi Wizowaty, D-Burlington, will propose a $1 per-pack increase on cigarette taxes, and Pearson will pitch an 27-cent per gallon extraction tax on bottled water that could raise as much as $27 million (about 99 million gallons of Vermont water is sold out of state).
Neither amendment is expected to pass given the current party entrenchment on the issue.
On Tuesday Poirier and Pearson regaled the House members with statistics about stagnating income growth for low-income and middle class Vermonters; 70 percent increases in real household income for the wealthiest 5 percent over a 30-year period; the $190 million in tax breaks the state’s richest 5 percent will receive in fiscal year 2011 thanks to the extension of the Bush era tax cuts; the $263 million in state budget cuts over the last three years; and the 10 percent reduction in the state workforce since 2008. To no avail.
“We’re at a point where there are no more low hanging apples left in the tree, and we’re standing on step ladders,” Poirier said. “We’re down to people issues, and people look to the Democratic Party and the Progressive Party to protect them. I know this is hard. We have a governor who has taken a no-tax pledge, but I as a legislator didn’t take a no-tax pledge. Is it too much to ask (the richest Vermonters) to pay 1.5 percent more? That’s the question before us.”
Pearson told lawmakers that human services budgets have been cut for four years and that further reductions in programs are “unconscionable.”
“I believe it’s important that we begin to ask how much more we can cut,” Pearson said. “In trying economic times, it’s appropriate for us to have a discussion about where you draw the line, and I think it’s appropriate to ask neighbors to help out to protect programs in these tough times.”
The surcharge proposal would have affected the top three income tax brackets. An additional 1 percent tax (a total of 8.8 percent on taxable income – after deductions) on joint filers with incomes of $137,000 would have cost those families $264 more on average; a 1.5 percent increase on taxable incomes above $209,000 (a total of 10.3 percent) would have cost those families $1,593 more on average; a 2 percent surcharge to taxpayers married filed jointly who earn more than $373,100 a year (a total tax of 10.95 percent) would have cost those households $14,469 more on average.
The response from the chairs of House Ways and Means, House Appropriations and the Speaker? Now is not the time.
“The right time to take up that issue is when we look at income tax restructuring,” said Rep. Janet Ancel, chair of House Ways and Means. In the Democratic caucus held before the vote, Ancel said she has sympathy for the income tax increase proposal, and she said she supported a surcharge bill that passed the House two years ago that was altered in the Senate.
Ancel’s committee has taken extensive testimony on the Vermont Blue Ribbon Tax Structure Commission’s recommendation to broaden the tax base and lower tax rates, but it has yet to shape a bill of its own, and it’s anyone’s guess whether legislation will emerge in this session. Ancel said, “I can’t say for sure we’ll vote it out of committee.”
House Speaker Shap Smith points to the looming federal cuts to the Low-Income Heating Assistance Program as a reason for delaying passage of an income tax hike now. He says it would be imprudent for the state to raise taxes before leaders know how big the hole is going to be. He said when Congress is set to meet the next Continuing Resolution deadline (April 8), the state should have a better handle on the scale of the federal funding reductions. He acknowledged that there could be ongoing CRs through the summer. “We don’t really know what challenge is in front of us,” Smith said.
Federal cuts would come on top of a Vermont Joint Fiscal Office budget gap estimate of $35 million for fiscal year 2013.
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Two years ago Rep. Howard offered an amendment in the Ways and Means Committee to create a similar surtax. While it had 5 votes in the committee, Reps. Ancel and Obuchowski voted no becuase the leadership did not want it then either, ths killing the idea. It is always stated that “now is not the time”.
For the last 30 years the rich have continued to receive tax breaks, accumulate wealth and increase income and the rest of us are doing our best just to tread water.
It seems the Democrats (at all leadership levels) have accepted Ronald Reagans incorrect trickle down philosophy.
How many more people need to suffer or “make sacrifices” while the rich keep travelling to sunny places outside the country?
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On the whole, I agree that the very wealthy are taxed much less now than in the past , at other times of huge deficets, especially at the Federal Level.
There is another area which we are ignoring, that is the tax breaks, subsities, ete etc for businesses that Vermont has embedded over the years in many laws. While I am sure that they were good ideas at the time, a closs look is called for because is suspect that we are just waisting tax revineau on many of them….they are no longer serving their intended purpose.
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I completely agree with you David and am seriously considering withdrawing fromn VT Democratic Party activities. I will give the VT State Senate Democrats a chance to fix this and not act like lemings. We heard such nice things Sat. night at the Curtis Awards Dinner about Democrats not abandoning the vulnerable but this VT Party seems determined to do just that!
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To: Vermont’s Legislature
From: Dr. Thomas Hendricks
Re: Health Care Reform
Should Vermont’s single-payer health care proposal go forward as envisioned, know that I shall quit when medicine is placed under State control.
Do you know what it takes to perform a brain operation? Do you know the kind of skill it demands, and the years of passionate, merciless, excruciating devotion that go into acquiring this skill?
This is what I will not place at the disposal of Vermont’s Legislature, whose sole qualification to rule me is their capacity to spout the fraudulent generalities that got them elected to the privilege of enforcing their wishes at the point of a gun.
I will not let Vermont’s Legislature dictate the purpose for which my years of study had been spent, or the conditions of my work, or my choice of patients, or the amount of my reward.
I have observed that in all the discussions that has preceded the eventual enslavement of medicine; men discussed everything—except the desires of the doctors.
Here, when discussing Dr. William Hsaio’s single-payer proposal, in this Feb. 18, 2011 one minute video, the Vermont Legislature’s House Health Care Committee displays the arrogance to which I write of: http://www.youtube.com/watch?v=EPnxG0IUKTo&feature=youtube_gdata
These legislators supposedly consider only the ‘welfare’ of the patients, with no thought for those who are to provide it. That a doctor should have any right, desire or choice in the matter seems regarded as irrelevant, selfishness; his is not to choose, they say, but ‘to serve.’
I have often wondered at the smugness at which Vermont’s Legislature asserts their right to enslave me, to control my work, to force my will, to violate my conscience, to stifle my mind—yet what is it they expect to depend on, when they lie on an operating table under my hands?
The Vermont Legislature’s moral code has taught them to believe that it is safe to rely on the virtue of their victims.
Well, that is the virtue I have withdrawn.
Let the Vermont Legislature discover the kind of doctors that their system will now produce. Let the Vermont Legislature discover, in the operating rooms and hospital wards, that it is not safe to place their lives in the hands of a man they have throttled.
It is not safe; if he is the sort of man who resents it—and still less safe, if he is the sort who doesn’t.
(This slightly revised excerpt is from Dr. Hendricks’s original letter to his good friend, Ms. Rand.)
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zTo: Vermont’s Legislature
From: Dr. Thomas Hendricks
Re: Health Care Reform
Should Vermont’s single-payer health care proposal go forward as envisioned, know that I shall quit when medicine is placed under State control.
Do you know what it takes to perform a brain operation? Do you know the kind of skill it demands, and the years of passionate, merciless, excruciating devotion that go into acquiring this skill?
This is what I will not place at the disposal of Vermont’s Legislature, whose sole qualification to rule me is their capacity to spout the fraudulent generalities that got them elected to the privilege of enforcing their wishes at the point of a gun.
I will not let Vermont’s Legislature dictate the purpose for which my years of study had been spent, or the conditions of my work, or my choice of patients, or the amount of my reward.
I have observed that in all the discussions that has preceded the eventual enslavement of medicine; men discussed everything—except the desires of the doctors.
Here, when discussing Dr. William Hsaio’s single-payer proposal, in this Feb. 18, 2011 one minute video, the Vermont Legislature’s House Health Care Committee displays the arrogance to which I write of: http://www.youtube.com/watch?v=EPnxG0IUKTo&feature=youtube_gdata
These legislators supposedly consider only the ‘welfare’ of the patients, with no thought for those who are to provide it. That a doctor should have any right, desire or choice in the matter seems regarded as irrelevant, selfishness; his is not to choose, they say, but ‘to serve.’
I have often wondered at the smugness at which Vermont’s Legislature asserts their right to enslave me, to control my work, to force my will, to violate my conscience, to stifle my mind—yet what is it they expect to depend on, when they lie on an operating table under my hands?
The Vermont Legislature’s moral code has taught them to believe that it is safe to rely on the virtue of their victims.
Well, that is the virtue I have withdrawn.
Let the Vermont Legislature discover the kind of doctors that their system will now produce. Let the Vermont Legislature discover, in the operating rooms and hospital wards, that it is not safe to place their lives in the hands of a man they have throttled.
It is not safe; if he is the sort of man who resents it—and still less safe, if he is the sort who doesn’t.
(This slightly revised excerpt is from Dr. Hendricks’s original letter to his good friend, Ms. Rand.)
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Hey Dave its about time you showed up.
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IF a few multimillionaires, such as Shumlin, recently returned from sunny places, each chipped in $1 million, this law would not be needed.
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Tom Licata,
We were on a group tour in Frankfurt, Germany, and a lady fell, broke her left ulna near her wrist into several pieces, went to the emergency room, was immediately operated on, plate and 6 screws, was kept in the hospital for 2 days to recover, rejoined our group with a cast.
Being curious, I asked her how much did the whole thing cost. She said 3,500 euros = $4,930.
I said, WOW, I fell on the same wrist last year, a plate and seven screws, did NOT stay in the hospital, total cost Dartmouth-Hitchcock bill $23,400
Something is very much wrong with US health care system.
I lived in Europe (The Netherlands, Norway, Germany) for 26 years.
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Many of us are Democrats because we believe that society has an obligation to its most vulnerable. The last chance to demonstrate whether the Party “leadership” shares that belief rests with the Vermont Senate. for years we have been fed the line that we have to wait to act on our beliefs until we have a “real crisis”. For the poor deprived of heat, and the elderly deprived of care and the mentally challenged deprived of resources, the crisis is NOW.
The time to act like real Democrats is now. “If not now, when? If not you, who?”
John A. Burgess
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David Z, Willem P, and others:
Please, review this 2 minute YouTube Video:
http://www.youtube.com/watch?v=RWsx1X8PV_A
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Forget about waiting for the Democrats to do the right thing for the people. They have been bought and paid for by the oligarchs.
Speaker Shap Smith has shown political cowardice in supporting Shumlin’s cuts in social programs. The Democratic Party, having bought into the Reaganite supply-side myth, in protecting the wealthy, no longer is to be distinguished from the loony Republicans – we are living in a Duopoly – a delusional two party system joined at the hip – a creature properly called an Elphadonk!
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All:
Let me quote from a kindred soul:
“I’m not afraid of corporations.
They don’t have men with guns enforcing the collective will of the rent seekers, parasites and zealots who animate the government.”
All: My question to you is, which of the three, or all, are you?
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Many Democrats are begining to believe that our old friend, Al Salzman has been correct all along. The implications for the Democratic Party in the future will be bleak unless the “duopoly” is broken up.
John A. Burgess
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Our wise Speaker should consult Websters concerning Cognitive Dissonance. This State just will not admit the free ride is over.