The governor and legislative Democrats still can’t agree on tax policy. That means the legislative session will continue into next week.
The question facing Democratic leaders on the tax plan was whether or not they wanted to directly challenge Governor Peter Shumlin.
Under the proposal, some personal income tax deductions would be capped, and a minimum tax rate for people who earn more than $125,000 would be put into place and the new revenue would be used to lower all of Vermont’s marginal income tax rates.
It’s estimated that roughly 250,000 tax filers would benefit from the change and about 15,000 filers would pay more money because of the two tax changes.
House Ways and Means chair Janet Ancel says her committee has been working on this issue for almost two years and that the plan was not hastily put together at the last minute.
“What we’re doing that’s different now is we’re taking the revenue that we might have raised both in the House version and the Senate version saying instead of raising revenue what we’ll do is we’ll use that money to lower rates which frankly in a lot of ways is a better way to approach tax reform is to do it without raising revenue.”
Earlier this week, the Governor and Legislative leaders agreed on a deal to balance next year’s budget without raising taxes. Shumlin says this new tax plan is a violation of that agreement.
“I made very clear that the consensus that has been built in this building which I urged is to not take action on tax policy,” Shumlin says.
But House Speaker Shap Smith has a very different view of that deal and he says this “revenue neutral” tax plan doesn’t fall under the scope of the agreement with the Governor.
“My view of the world is that the deal that we were talking about was how to close the $10 million budget gap and whether we would raise new revenue for that," Smith says. "This is actually sort of separate and apart from that this is an issue about tax fairness and equity and I think that we ought to move forward with it if we think it’s the right thing to do and if we think that it’s been properly vetted.”
Legislative leaders and the Governor also disagree on the Administration’s plan to transfer 8 workers from Reach Up, the state’s welfare to work program, to substance abuse and mental health programs.
House Speaker Smith says he’s optimistic that these differences can be resolved and that the session can adjourn on Monday.
