The Vermont House of Representatives has given preliminary approval to a $50 million tax cut package that would send $1,200 per child to most families with kids age 6 or under.
Proponents say H.510 is a progressive anti-poverty measure that also takes aim at Vermont’s demographic woes. Parents with young children are less likely to have higher incomes, and supporters point to research that suggests cash payments to low-income mothers could even positively impact brain development in babies.
“As many members in this chamber have said before me, our budgets and our tax code are reflections of our values,” Rep. Emilie Kornheiser, D/P-Brattleboro, who reported the bill on behalf of the House Ways and Means Committee, said to her colleagues on the floor on Tuesday. “By passing the Vermont Child Tax Credit, we’re communicating clearly and unequivocally here that Vermont cares about kids and families — that this is the place where you can make it work.”
The tax credit is modeled on the federal child tax credit, which Congress temporarily expanded to $3,600 per child under 6 during the pandemic. The expanded credit at the federal level, which lifted millions of children out of poverty, has since expired, although families can still claim six months of payments when filing their 2021 taxes. Democratic attempts to revive the boosted credit in the Build Back Better social spending package championed by President Joe Biden have thus far run aground.
As is, the Vermont bill would benefit about 50,000 children. The benefit starts to phase out for taxpayers making $200,000 a year, regardless of filing status.
Legislative analysts estimate H.510 would cost $49.7 million a year, a price they forecast will stay steady at least until 2026. Most of that — $48 million — is attributable to the child tax credit, while a little over $1 million would cover the cost of expanding the income thresholds for Vermont’s Social Security income tax exemption by $5,000.
The vote was 102-46 in favor, with most Republicans opposing the measure. Gov. Phil Scott, a Republican, has proposed a tax cut package of his own. It carries a similar price tag, but would offer relief to a broader swath of Vermonters, including military retirees, people with student loans, low-income workers, nurses and child care workers.
“All told, his $51 million package would benefit more than a quarter of Vermont taxpayers. We estimate H.510 would only benefit around 10% of taxpayers,” Scott’s press secretary, Jason Maulucci, wrote in an email. “We will continue to encourage lawmakers to consider these important proposals as this bill moves forward.”
Rep. Heidi Scheuermann, R-Stowe, told her colleagues on the floor that while she was rarely “reluctant to support a tax decrease of any sort,” she could not vote for such a narrow measure.
“This bill, Madam Speaker, is simply incomplete,” Scheuermann said. “We should not be passing this bill and using the capacity of $48 million when it is not complete.”
Democrats have countered they would rather offer substantial relief to a more targeted population, rather than spread $50 million in tax cuts more thinly over a larger population.
Republican opposition was not unanimous. Rep. Scott Beck, R-St. Johnsbury, who co-sponsored the bill, suggested there would be more time to expand the package’s reach given expected changes in the Senate.
Beck said the main reason he was supporting the bill was because it addressed “the biggest problem facing the state.”
“We don’t have enough kids, our birth rate is too low. We are far too old. And this strikes directly at that issue,” he said.
