House Passes $59 million Income Tax Increase, Property Tax Cut

Roll Call Graphic
PASSED
in the State House of Representatives
on March 21, 2018, by a vote of
85-54
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Purpose: This is a two part bill. The first part shifts some responsibility for funding Vermont’s pre-k – 12 education system from the property tax to the income tax. The second part negates a roughly $30 million tax increase resulting from changes in the federal tax code. 
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Analysis: Why are two things that seemingly have nothing to do with each other bundled together in this bill? A little background…. Despite (or as a result of) Act 46 and other public education reforms passed over the past few years Vermonters are facing a 5.5 cent/$100 increase in property taxes under the current funding system. The primary motivation for changing the formula at this time is to obscure notice of this massive overall tax increase, and the failure of past legislation to contain education costs/taxes as promised. The $30 million fix to the federal tax changes is attached to this as a “hostage.” Attempts to divide the two issues and vote on them separately were blocked.
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Part 1. The original objectives of the education finance piece were to control costs and eliminate complexity. In the end this bill does neither of those things. It includes a new $59 million income tax increase, called a “surcharge,” eliminates the current General Fund transfer to the Education Fund, and dedicates 100% of the sales and use tax to the Education Fund. This allows for a cut in homestead property tax rates lower most property tax rates by 15 cents/$100 of assessed value.
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Part 2. The “federal tax fix” compensates for the $30 million tax increase by lowering each of Vermont’s marginal tax rates for personal income taxes by at least 0.2%, expanding the earned-income tax credit, and eliminating the tax on Social Security benefits for low and middle income Vermonters.
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Those voting YES are in favor of reducing the reliance on the property tax for the purpose of funding pre-k-12 education spending, and shifting that burden to the income tax, which they believe better reflects ability to pay.
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Those voting NO note that H.911 does not address education spending, it merely shifts the costs without reducing or curbing the total tax burden. The income tax surcharge will give Vermont the third highest marginal income tax rate in the nation. The income tax is historically a volatile revenues source, ill suited for education funding. The shift to income taxes is unfair to renters who end up paying higher income taxes, but get no property tax relief (landlords get no property tax deduction to pass along as non-homestead properties are not subject to the property tax cut). This new funding scheme is unfair to 30,000 non-residents who chose to work in Vermont and will now be paying this new education tax with not compensating property tax decrease, making it more difficult for Vermont employers recruit and retain cross-border workers. H.911 leaves all the complexity of the current system in place (CLA, per pupil spending, income sensitivity etc.), and adds even more complexity by introducing new income tax surcharge. And, finally, they worry that lowering the property tax will create a feeling that there is excess capacity in the property tax, and property taxes will quickly rise to re-fill the gap.
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As Recorded in the House Journal, Friday, March 21, 2018: “Shall the bill pass? was decided in the affirmative. Yeas, 85. Nays, 54.” (Read the Journal, p.788-811.)

How They Voted

(Click on your Rep’s name to send an email)

David Ainsworth (R-Royalton) – ABSENT
Janet Ancel (D-Calis) – YES
Bob Bancroft (R-Westford) – NO
John Bartholomew (D-Hartland) – YES
Fred Baser (R-Bristol) – NO
Lynn Batchelor (R-Derby Line) – NO
Scott Beck (R-St. Johnsbury) – YES
Paul Belaski (D-Windsor) – YES
Stephen Beyor (R-Highgate Springs) – YES
Clement Bissonnette (D-Winooski) – YES
Thomas Bock (D-Chester) – YES
William Botzow (D-Bennington) – YES
Patrick Brennan (R-Colchster) – NO
Timothy Briglin (D-Thetford) – YES
Cynthia Browning (D-Arlington) – YES
Jessica Brumsted (D-Shelburne) – YES
Susan Buckholz (D-White River Jct) – NO
Thomas Burditt (R-West Rutland) – NO
Mollie Burke (P/D-Brattleboro) – YES
William Canfield (R/D-Fair Haven) – NO
Stephen Carr (D-Brandon) – YES
Robin Chestnut-Tangerman (P-Middletown Springs) – YES
Annemarie Christiansen (D-Perkinsville) – YES
Kevin Christie (D-White River Jct.) – YES
Brian Cina (P-Burlington) – NO
Celene Colburn – (P-Burlington) –  NO*
James Condon (D-Colchester) – ABSENT
Peter Conlon (D-Cornwall) – YES
Daniel Connor (D-Fairfield) – YES
Charles Conquest (D-Wells River) –  YES
Sarah Copeland-Hanzas (D-Bradford) – YES
Timothy Corcoran (D-Bennington) – YES
Lawrence Cupoli (R-Rutland) – NO
Maureen Dakin (D-Colchester) – YES
David Deen (D-Putney) – YES
Dennis Devereux (R-Belmont) – NO
Eileen “Lynn” Dickinson (R-St. Albans) –  NO
Anne Donahue (R-Northfield) – NO
Johannah Donovan (D-Burlington) – YES
Betsy Dunn (D-Essex Jct.) – YES
Alice Emmons (D/W-Springfield) – YES
Peter Fagan (R-Rutland) – NO
Martha Feltus (R-Lyndonville) – NO
Rachael Fields (D-Bennington) – YES
Robert Forguites (D-Springfield) – YES
Robert Frenier (R-Chelsea) – NO
Douglas Gage (R-Rutland) – NO
Marianna Gamache (R-Swanton) –  NO
John Gannon (D-Wilmington) – NO*
Marcia Gardner (D-Richmond) – YES
Dylan Giambatista (D-Essex Jct.) – NO
Diana Gonzalez (P/D-Winooski) – YES
Maxine Grad (D-Moretown) – YES
Rodney Graham (R-Williamstown) – NO
Sandy Haas (P/D-Rochester) – YES
Jim Harrison (R-Chittenden) – ABSENT
Helen Head (D-So. Burlington) – YES
Michael Hebert (R-Vernon) – NO
Robert Helm (R/D-Fair Haven) – NO
Mark Higley (R-Lowell) – NO
Matt Hill (D-Johnson) – YES
Jay Hooper (D-Brookfield) – YES
Mary Hooper (D-Montpelier) – YES
Lori Houghton (D-Essex Jct.) – NO
Mary Howard (D-Rutland) – YES
Kimberly Jessup (D-Middlesex) – YES
Ben Jickling (I-E. Randolph) – NO
Mitzi Johnson (D-S. Hero) – PRESIDING
Ben Joseph (D-N. Hero) – YES
Bernard Juskiewicz (R-Camdridge) – YES
Brian Keefe (R-Manchester) – NO
Kathleen Keenan (D-St. Albans) – YES
Charlie Kimbell (D-Woodsock) – NO
Warren Kitzmiller (D-Montpelier) – ABSENT
Jill Krowinski (D-Burlington) – YES

Rob LaClair (R-Barre Town) – NO
Martin LaLonde (D-South Burlington) – YES
Diane Lanpher (D-Vergennes) – YES
Richard Lawrence (R-Lyndon) – NO
Paul Lefebvre (R-Island Pond) – YES
Patti Lewis (R-Berlin) – NO
William Lippert (D-Hinesburg) – YES
Emily Long (D-Newfane) – YES*
Gabrielle Lucke (D-White River Jct.) – YES*
Terence Macaig (D-Williston) – YES
Michael Marcotte (R/D-Newport) – YES
Marcia Martel (R-Waterford) – ABSENT
James Masland (D-Thetford) – YES
Chris Mattos (R-Milton) – NO
Curtis McCormack (D/W-Burlington) – YES
Patricia McCoy (R-Poultney) – NO*
James McCullough (D-Williston) – YES
Francis McFaun (R/D-Barre) – NO
Alice Miller (D-Shaftsbury) – YES
Kiah Morris (D-Bennington) – YES
Mary Morrissey (R-Bennington) – NO
Michael Mrowicki (D-Putney) – YES
Barbara Murphy (I-Fairfax) – NO
Linda Myers (R-Essex) – NO
Gary Nolan (R-Morrisville) – NO
Terry Norris (I-Shoreham) – NO
Daniel Noyes (D-Wolcott) – YES
Jean O’Sullivan (D-Burlington) -NO
Carol Ode (D-Burlington) – YES
Kelly MacLaury Pajala (I-S. Londonderry) – NO
Corey Parent (R-St. Albans) – NO
Carolyn Partridge (D-Windham) – YES
Albert “Chuck” Pearce (R/D-Richford) – YES
Paul Poirier (I-Barre) – YES*
David Potter (D-Clarendon) – YES
Ann Pugh (D-S. Burlington) – YES
Constance Quimby (R-Concord) – NO
Barbara Rachelson (D-Burlington) – YES
Edward Read (I-Fayston) – ABSENT
Carl Rosenquist (R-Georgia) – NO
Brian Savage (R-Swanton) – NO
Robin Scheu (D-Middlebury) – YES
Heidi Scheuermann (R-Stowe) – NO
David Sharpe (D-Bristol) – YES
Charles Shaw (R/D-Pitsford) – NO
Amy Sheldon (D-Middlebury) – ABSENT
Laura Sibilia (I-West Dover) -NO
Brian Smith (R/D-Derby) – NO
Harvey Smith (R-New Haven) – NO
Trevor Squirrill (D-Underhill) – YES
Thomas Stevens (D-Waterbury) – YES*
Vicki Strong (R-Albany) – ABSENT
Valerie Stuart (D-Brattleboro) – YES
Linda Sullivan (D-Dorset) – YES
Mary Sullivan (D-Burlington) – NO
Curt Taylor (D-Colchester) – YES
Thomas Terenzini (R/D-Rutland) – ABSENT
George Till (D-Jericho) – YES*
Tristan Toleno (D-Brattleboro) – YES
Catherine Toll (D-Danville) – YES
Maida Townsend (D-S. Burlington) – YES
Matthew Trieber (D-Bellows Falls) – YES
Chip Troiano (D-Hardwick) – YES
Donald Turner (R-Milton) – NO
Warren Van Wyck (R-Ferrisburgh) – NO
Gary Viens (R-Newport) – ABSENT
Tommy Walz (D-Barre City) – YES
Kathryn Webb (D-Shelburne) – YES
Cindy Weed (P/D-Enosburg Falls) – NO
Janssen Willhoit (R-St. Johnsbury) – YES
Theresa Wood (R-Waterbury) – YES
Kurt Wright (R-Burlington) – YES
David Yacovone (D-Morrisville) – YES
Michael Yantachka (D-Charlotte) – YES
Samuel Young (D-Glover) – YES

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