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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{ 4 comments… read them below or add one }
The Sucking Sound is the “Golden Dome Dwellers” Revenue Vacuum – Cleaning the Last Coins from the Taxpayers Pockets !
The Vermont tax end-game is to make the whole tax system so complex and convoluted that nobody understands how it works or what outcomes it is intended to produce !
The only way they can attempt to provide everything for everybody is by taking everything from everyone !
Education spending is a joke. Almost 75% of that ‘spending’ is nothing more than money going to teacher benefits…….NOT the kids. Money grubbers who pump out less than stellar students. But they have taxpayers on a guilt trip, having them believe they are underpaid. BS. They are paid VERY WELL and have WONDERFUL BENEFITS that most of us would kill for. Frigging teachers are the problem
Agreed!
Hi Jeanne Norris,
The extra charges of a government on the purchasing of property in the form of general country tax can be eliminate easily with in a seven days according to the rules and regulations of a government,If you write an application with the authentic reasons for a elimination of property tax and also attached a legal documents of a property tax pairs after that submitted in the government office by the tax layers which is helpful for you to approved the claim of your property tax in the seven days without any allegations of a government on the application of your property tax ,Remember don’t write any irreverent reasons in the applications of property tax you want to submit in the office of government and also don’t attached any illegal or extra document of property which increase the chances to refuse or neglect your claim application ,So keep it in your mind all the instructions and requirements given to you by the tax layer after concerning this kind of matter according to the current policy of government .
Thanks