Democratic Leaders & Governor Disagree On Tax Reform

May 28, 2013

After fighting about this issue in the final days of the session, the two sides did agree to work together over the summer but some major disagreements have emerged right at the start.

The two sides do agree on one thing. To determine a person’s tax burden, they want to shift from using an individual’s “taxable income,” to what’s known as “adjusted gross income.” This number is larger because it comes before applying a series of deductions. 

If you use this “adjusted gross” number, and most states do, you can lower the tax rate without changing a person’s tax burden.

Here’s where they disagree. Speaker Smith also wants to include a provision in the package that lowers tax burdens for most Vermonters by raising new revenue from a small group of wealthy people.

“I think that if we put something on the table that reduces tax rates for all Vermonters and results in hundreds of thousand getting a tax break,” said Smith. “That’s both good policy and it’s good for Vermonters.”

The Governor doesn’t support this approach because he says changes were made to the tax code several years ago to make the Vermont system the most progressive in the country.  “You can’t do it twice. We’re already doing it. We have the fairest tax code in the country,” said Shumlin. “So this notion that some of my progressive friends have, and I’m the most progressive governor in America, that I am refusing to fix something that should be fixed is what puzzles me. We fixed it. Our wealthier Vermonters pay the most.”

For Speaker Smith, this is one of the top issues for the 2014 Legislative session.

Shumlin says his top priorities are health care, creating new jobs and pursuing an education agenda. The passage of this plan is well down on his list.

Both the House Ways and Means and Senate Finance committees plan to work on this issue in the coming months and Legislative leaders hope they can design a plan that will eventually win the support of the Governor.