A proposal to increase taxes on the highest-earning Vermonters has new life in Montpelier after rank-and-file Democrats in the House of Representatives bucked their own leadership this week.
At about 9:30 p.m. Wednesday evening, nearly six hours into a busy floor session, House Speaker Jill Krowinski unexpectedly postponed action on a tax bill that had been scheduled for a vote that night.
An email obtained by Vermont Public revealed why.
“There is talk that votes are changing on the proposed amendment,” House Majority Whip Karen Dolan wrote in a message to Democratic lawmakers Wednesday night. “We need a vote count to see where we are at.”
“This is the single-most popular thing that I have received demands from constituents to get passed in this building.”Bradford Rep. Monique Priestley
The proposed amendment to the bill, which Bradford Rep. Monique Priestley and White River Junction Rep. Esme Cole planned to offer, would increase state income taxes by 3% on household income over $500,000 a year, and by an additional 2% on income over $1 million. A preliminary estimate by legislative fiscal analysts indicates the proposal could raise in excess of $110 million in new revenue annually.
In a Democratically controlled legislative chamber in the home state of U.S. Sen. Bernie Sanders, you might think leaders delayed the amendment because they feared it might fail. In fact, they were worried about how many of their own members might support it.
“The caucus position is to vote NO on this amendment,” Dolan wrote to her colleagues.
Though the House approved a similar measure by a decisive margin almost exactly two years ago, Democratic leadership has been less keen on the legislation this year. Krowinski said Thursday morning that she would prefer the Senate take up the cause in 2026, though there’s no indication that chamber will do so. She also said she was reluctant to devote legislative energy to a bill that faces an inevitable veto by Republican Gov. Phil Scott.
“That is also an important calculation for us to be talking about in the building,” Krowinski said.
House leaders met with Democratic lawmakers in a closed-door meeting Thursday morning that was off limits to media. Majority Leader Lori Houghton later told Vermont Public she agrees with the proposal “in concept.” But she said the amendment hadn’t been vetted in committee. She said she also feared a ‘yes’ vote would become a political liability for Democrats during the upcoming midterm elections.
“We passed this out of the House last biennium and it went nowhere and we paid for it,” Houghton said. “There is absolutely a political cost to this, because the message won’t be that we passed taxes on the wealthy. The message from the opposition will be, ‘They raised your taxes.’”
Democrats such as Barre City Rep. Teddy Waszazak disagree.
“I think that … as Democrats and as members of the general assembly, we need to get caught fighting for working class folks,” said Waszazak, one of the amendment’s architects.
A 2021 poll of more than 2,000 likely voters, commissioned by the Vermont-National Education Association, found that 77% support raising taxes on wealthy residents and corporations. Those figures include 69% of self-identified independents and a near-majority — 47% — of Republicans.
Waszazak said the argument in favor of taxing the rich is stronger now than ever. An Institute on Taxation and Economic Policy analysis found the top 1% of earners in Vermont will enjoy about $200 million annually in tax cuts under the tax and spending package President Trump signed into law last summer, or roughly $57,000 for each of their households.
“The issue of taxing folks who are making the most, the top 1% in our state … that’s not a left-versus-right issue, it’s a working-class-versus-everybody-else issue,” Waszazak said. According to ITEP, the top 1% of income earners in Vermont make at least $588,500.
That message has gained traction with a critical mass of House Democrats, some of whom bristled at leadership urging them to vote against a proposal that many of their constituents support.
“This is the single-most popular thing that I have received demands from constituents to get passed in this building,” Priestley said. “We already are struggling as a caucus and a body to fix really hard things. And this is a way that we could unify to solve problems and help our most vulnerable Vermonters.”
A broad coalition of influential labor unions and advocacy organizations — the AFL-CIO, Vermont-NEA, Vermont State Employees Association and Planned Parenthood of Vermont, for example — has united around the proposal. Action alerts from those groups this week saw lawmakers’ inboxes surge with demands from constituents to approve the measure.
At about 5 p.m. Thursday, after a series of closed-door meetings, Houghton announced that leadership had reached a deal. Priestley and Cole would withdraw the amendment and the House would hold a clean vote on the underlying bill. In exchange, the House Committee on Ways and Means will take up the amendment as standalone legislation during the second half of the session and hold a vote on it. The committee will also vet and vote on another proposed amendment from Burlington Rep. Kate Logan, a Progressive/Democrat, which would increase state taxes on unearned income.
Houghton said the amendments would not have survived a floor vote. But she said it’s become clear that many House Democrats want to continue the conversation.
“As a leader, I have to take that all into account and then figure out how we can find a path forward,” she said.
Washington County Sen. Ann Cummings, the Democratic chair of the Senate Finance Committee, told Vermont Public this week that Vermont already has some of the highest top marginal income tax rates in the country. While she’s open to recalibrating income-tax brackets so that people making between $300,000 and $500,000 a year owe less and those making over $1 million owe more, she said any plan that comes out of her committee this year will be “revenue neutral.”
Gov. Scott said Thursday that he believes high earners will flee the state for friendlier jurisdictions if Vermont raises their income taxes.
