The Property Tax Cost Shift – Some Win, Others Not So Much

Power Alley is about what goes on in key legislative committees where legislation is crafted before voted on by the full House and Senate. This Power Alley profiles a property tax cost shift from one set of property tax payers to another by the House Ways and Means and Senate Finance Committees.

Income sensitivity is zero sum. The property tax subsidies given to eligible taxpayers are paid for by higher property taxes on others. The current cost of the program is $166.3 million. Simply put, non-residential property owners and those not eligible for income sensitivity pay $166.3 million more in taxes, allowing those who are eligible to pay $166.3 million less. For a sense of scale, this 2010 Federal Reserve Bank of Boston study of property tax relief programs in New England shows that Vermont, by far, spends more than all other New England states combined. (See page 26)

Kenyon Langley Property Tax Relief

The change in law was little noticed until this observation in a recent VTDigger state house article.

“Outside the House chamber, Rep Heidi Scheuermann was a little stunned looking at a state tax form. She said “income sensitivity” now extends to households with incomes as high as $137,500. (Rep.) Ancel explained the Legislature made the change last year with the intent to have that benefit decrease gradually, like a slope, instead of ending at a certain income level like a cliff. There’s so little benefit at that high-income level, she said, it may not be even worth applying. Scheuermann thought it sent a bad message.”

The fact is that income sensitivity has for years incorporated a benefit that decreases gradually from the full benefit level of $90,000. For tax year 2008, the slope ranged from $90,000 to $97,000. By 2014 it had extended to $109,000, a 2% annual increase. But, for 2015, the current tax season, it jumped by 26% to $137,500. (See Section B of these 2014 and 2015 tax forms)

The increases prior to 2015 were due to underlying economic factors built into the law. However, the major increase for 2015 was due to a simple, though expensive, one line change tucked deep in H.884, a miscellaneous tax bill. (See section 64)

Draft Bill H.884

The two key committees sponsoring H. 884 were House Ways and Means and Senate Finance. These two Power Alleys profile their respective votes on H.884.

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  • Carolyn Branagan
    commented 2016-04-03 14:58:58 -0400
    In the future I would be happy to explain to your reporters what exactly was happening behind the scenes with these votes. The votes you show in your link to House members is the committee vote for Ways and Means when the question was , ‘shall the bill move out of committee?’ . This was not the vote approving a the bil itself, but was the vote on which Minority Leader Don Turner had asked me to vote yes. He wanted me to try to get on the conference committee. So I voted as he had asked me to , out of respect for him and the hope that on conference committee I could do something to blunt the damage being done by this bill. I was eventually named to the conference committee. Sadly on the very first day the conference committee was to meet, my dear father died, and I was unable to attend any of the meetings. Rep. Bill Johnson was named to replace me on conference. I did however vote no on the 2016 budget and have voted no on the 2017 budget.
    If you report the facts correctly, your news will be more powerful.
    Rep.Carolyn Branagan
    Franklin-1, Georgia

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