February 20, 2024

House Ways & Means Committee,

We agree that the ‘Who Pays’ report showing that our state’s tax burden is flat, and even slightly regressive, for taxpayers with incomes in the top 40% is concerning. Middle class Vermonters are struggling to make ends meet and inflation, taxes, and other impacts on cost of living have not been kind to them. Learning that they also shoulder an outsized share of the tax burden adds insult to injury. It is also important to highlight, as the report authors did, that this distribution of tax burden is not because our income tax system is inadequately progressive, but rather that we have a number of other taxes that are quite regressive.

Joyce Manchester (Senior Economist, Joint Fiscal Office) presented a wealth tax proposal to the Senate Finance Committee on Tuesday. The bill is also referred to as the "Fair Share for Vermont" proposal. The proposal is to increase taxes on the wealthiest Vermont residents to "build a better Vermont." The proposal will increase taxes on the top 2% of Vermont taxpayers, and raise nearly $100M each year in state revenue. According to Manchester, a wealth tax is usually defined as an annual tax levied on the net worth, or total assets net of all debts, of an individual or household above an exemption threshold.

The House Ways & Means Committee reviewed income tax analysis and the potential for a “wealth tax” on Tuesday with the Joint Fiscal Office (JFO). Chairwoman Kornheiser started the meeting by pointing out the Governor has not proffered a “revenue package” which, according to her, required by statute. When asked, she added that she has never seen one in his time in office.