Final Reading: House bills now carry $100 million-plus in new wealth and corporate taxes

It appears the Legislature and administration’s sparring over state spending — and taxing — are coming to a head.

Upon begrudgingly signing this year’s budget adjustment last week, Gov. Phil Scott warned that “there just isn’t any money” in state government — or, at least, not enough to fund the Legislature’s appetite for spending.

He may be about to see more.

New spending proposals are headed for the House floor next week that would invest in long-term housing programs, expand Medicaid coverage and increase judicial branch staffing. In order to pay for that, the House Ways & Means Committee has added language that would also put significant new taxes on wealthy Vermonters and corporations.

There are at least three bills that include significant new taxes. One, H.829, would raise funds by creating a new top personal income marginal tax bracket for Vermonters who earn more than $500,000 in a year, at a rate of 11.75%, and increasing the property transfer tax to 3.25% for property valued over $600,000. Two other bills, H.721 and H.880, propose increased corporate taxes and securities registration fees.

In total, the changes would increase tax collections annually to the tune of more than $100 million, according to the Scott administration. (The majority of that increase would take effect in fiscal year 2026, the Joint Fiscal Office notes show.)

For Scott, raising taxes at all is a nonstarter.

“This is while the projection for property tax increases in FY25 are over $241 million, and the childcare contribution payroll tax begins in July with a projected revenue estimate of over $80 million for FY25,” Commissioner of Taxes Craig Bolio wrote in a Thursday letter to lawmakers.

The bill proposing a new tax surcharge on high earners comes on the heels of an open letter signed by 31 wealthy Vermonters this week, including Ben & Jerry’s co-founders Ben Cohen and Jerry Greenfield.

“We are willing to pay additional taxes to raise revenue for fundamental government services,” they wrote, adding that the state finds itself in an “urgent moment” with “an acute housing crisis, chronic underfunding of state services, and a need for immediate investments in our infrastructure and environmental protection.”

Scott acknowledged the letter at his weekly press conference on Wednesday but remained a skeptic given the relatively small number of signatories. In his letter to the committee on Thursday, Bolio took a swipe at House Ways & Means for taking testimony “mainly from advocates and proponents of the new personal income tax bracket, saying that tax flight of high-income individuals is a myth.”

“To be clear, the Administration is not raising questions about this policy as an attempt to shield high-income earners from taxes, or to make a claim that such a tax will result in those taxpayers becoming destitute; they’re going to be fine,” Bolio wrote. “The question is not can they afford it; the question is how does the policy impact the tax base of Vermont?”

By Thursday afternoon, the administration was blasting the committee’s proposals on social media, writing in a post on the governor’s Facebook page, “There they go again. Today, the House Ways & Means Committee just voted to raise another $100 million in taxes.”

The post did not specify who would pay the brunt of the tax hikes: high earners and corporations.

“State government needs to live within its means, just like Vermont families and small businesses do,” the post added.

Even the state’s Agency of Agriculture jumped in on the social media brouhaha, republishing the governor’s message with the unusually political post, “More taxes proposed from the Vermont House.”

House Ways & Means Chair Emilie Kornheiser, D-Brattleboro, told VTDigger on Friday afternoon that what is important is where those taxes come from: Vermont’s wealthiest.

“At the end of the day, what I believe Vermonters want is for their communities to work — for the roads to be paved, or graded, depending on which kind of road you live on, and for someone to answer the phone when you call to ask a question,” Kornheiser said. “That’s what taxes pay for, and I think most Vermonters know that.

“And so I think when we talk about all taxes in blanket terms as a bad thing, we’re eroding trust in government,” she continued. “And in Vermont, trust in government is trust in our own communities, right?”

— Sarah Mearhoff

IN THE KNOW

A bill moving through the Vermont House would reduce the salary that the state pays a county sheriff if that sheriff’s police officer certification is permanently revoked — the latest in a slate of legislative efforts to change how county officers do business.

The legislation, H.585, broadly proposes to adjust which state pension plans certain sheriffs and deputy sheriffs are eligible for. It has been approved by three key House committees and is slated for a vote in the full chamber early next week.

ON THE MOVE

In a 21-8 vote on Friday, state senators advanced a controversial bill that would reform Vermont’s Fish & Wildlife Board and ban the practice of hunting coyotes with dogs.

Currently, the board votes to approve, deny and change hunting and trapping rules. It is made up of a panel of 14 residents who are appointed by the governor, and those seats have historically been held by people who hunt, fish and trap.

The bill, S.258, would strip the board of its rulemaking authority and instead make it an advisory body to the Vermont Fish & Wildlife Department.

MARCH MADNESS

When it came time to fill out my March Madness bracket for the Statehouse pool this year, I decided to phone a friend for assistance: my dad.

To get a call from your daughter asking for help on her NCAA bracket is likely every Girl Dad’s dream. Getting a call from your reporter daughter asking you to go on the record, however, is probably more of an acquired taste. Lucky for me, Dad Mearhoff was thrilled to hear he’d be making his Final Reading debut.

In crafting our bracket, we attempted to strike a delicate balance of strategy, superstition, ’80s and ’90s-era sports history, and general vibes/personal preference. One thing about my dad and I: We love an underdog. For some of our picks, we opted to simply will an unlikely win into existence.

“Well, I want them to win,” he’d say.

After about a half-hour of fiddling, we settled on our winner, Marquette University.

“Huh,” he said when all was said and done, surprised by the outcome he had constructed himself. “Well, should we CHANGE it?” I responded. “No no,” he said, digging in his heels. “You just might win.”

And if anyone questions our picks, Dad Mearhoff advised: “Don’t take shit from anyone. Give it straight back to them. Never let them see you sweat. Dead serious.” I assured him that I can hold my own.

— Sarah Mearhoff