Rep. Chris Pearson, P-Burlington, heralded a bill on Friday that challenges Gov. Peter Shumlin’s professed objection to increases in “any broad-based new taxes.” The intent of H.715, which has 11 sponsors, is to raise money by closing tax loopholes for high-income Vermonters. The money would be used to create some 300 jobs while, over the long-term, cutting heating costs for a substantial number of Vermonters.
For the Progressives, who are dedicated to greater “tax fairness,” these two goals justify an increase in taxes on the two top tax brackets. Though the marginal tax rates for the top 20 percent of high income taxpayers are 8.95 percent, the Progressives cited an effective tax rate of 6.8 percent for the state’s wealthiest Vermonters. The bill proposes to change the percentage rates for the two highest tax brackets so that all income of a married couple, filing jointly, up to $209,250 would be taxed at a higher effective rate — at what is now the third-bracket level, 7.8 percent. Income from $209,251 to $373,650 would be taxed at the 8.8 percent rate. Any income above that level would be taxed at 8.95 percent.
The new tax revenues would total more than $17.5 million a year. The money would be used to shore up the state’s weatherization program. Pearson says “a pot of money” for the program would leverage about $28 million through job creation and the purchase of equipment and materials.
The bill is a response to the ending of American Recovery and Reinvestment Act (ARRA) and other funding for a range of weatherization initiatives. Efficiency Vermont and the Community Action Partnership are among the organizations that will be losing roughly 37 percent of their funding. Along with not meeting the state’s goals for weatherization of 80,000 homes by 2020, reductions in funding mean job cutbacks and high heating bills for low-income and lower middle-income households.
“Increasing efficiency of our old housing stock saves between $600 and $1,900 a year” per household, according to Pearson. Asked how many houses could be weatherized with the new funding, Pearson said that’s an unknown, in part because low-income families would be subsidized at a different rate from more middle-income families. But he stressed that the goal would be to help middle-class as well as low-income families since improving energy efficiency in a house is too expensive for “strapped” middle-class families. It would be up to the Public Service Department, which has been looking at ways to preserve the weatherization program in Vermont, to decide what cap to place on family income.
Eleven co-sponsors, including Progressives, Democrats and one independent, have signed on in part because of the promise that perhaps 300 jobs would be preserved or created. But the bill, now in the House Ways and Means Committee, comes relatively late in the session.
It’s a step forward, according to Pearson, because up to now they have argued their case for new revenues to meet the needs of the poor and hard-pressed middle-class families during budget debates. H.715 gets “the discussion going now.” Pearson and his fellow sponsors are hoping this new tack will highlight the need to preserve the state’s weatherization program.
