What you should know about Vermont's proposed wealth taxes
Vermont is the latest state to propose new taxes on its wealthiest residents. Nearly a dozen other states are also attempting to add new taxes on assets and incomes for their wealthiest residents. The goal is to increase revenue and decrease income inequality.
Two bills are currently under discussion in the House. One would increase taxes for people who have $10 million dollars in assets. The other would add a 3 percent income tax surcharge on income over $500,000 dollars.
Democratic Rep. Emilie Kornheiser of Brattleboro, the chair of the House Ways and Means Committee, is the sponsor for both bills. She said that these taxes would create a fairer tax structure.
"What we see is that middle-class Vermonters are paying more than their fair share right now," she said. "They're paying a higher percentage of their income than the wealthiest Vermonters. We just want everyone to have a fair shake, so we can have a Vermont that works for all of us."
A listener named Tim wrote in asking if taxes could be lowered for recipients of programs such as Social Security and disability. Kornheiser said that they're working on lowering the tax burden for the lowest income Vermonters every day.
"The majority of Social Security benefits are not taxed in Vermont," she said. "We try to do our best again [...] to make sure that our tax refunds and our tax rebates are about the total income that a Vermonter has or declares rather than a particular category of income."
Sen. Kesha Ram Hinsdale of Shelburne, a Democratic member of the Senate Finance Committee, said she's hesitant about the idea of an income tax surcharge.
"When you are going to increase someone's taxes, people want to know what it's for," she said. "Three percent just kind of glued on top for those who make more than 500,000 dollars is not a very surgical approach. So I think we should be looking more at much more connected policies."
Some Vermonters, including Gov. Phil Scott, worry a wealth tax would lead rich Vermonters to move out of state. Others, including some high-income Vermonters like Ben Cohen, the co-founder of Ben & Jerry's, say they support the idea. For Cohen, a tax increase would not be enough for him to cut ties with the state.
"People go around saying they're Vermonters and they love Vermont," Cohen said. "If an incremental expense on their taxes is going to drive them out of Vermont, they didn't really want to be here that much anyhow."
Cristobal Young, an associate professor of Sociology and researcher at Cornell University, said that it's a misconception that high earners are likely to move.
"The most mobile people are low-income earners who are struggling to find a way to make ends meet," Young said.
Broadcast at noon Monday, Feb. 12, 2024; rebroadcast at 7 p.m.