Battles Over Taxes Never End

JOHN MCCLAUGHRY: TAX PROSPECTS FOR 2017

VTDigger, September 26, 2016 – Four months from now the 2017 Legislature will hear the new governor’s budget message for FY 2017. Each fiscal year over the past five the Legislature has been presented with an opening general fund deficit projection. Each year, by hook and crook (including a host of tax increases and aggressive fund robbing) the governor and Legislature have managed to produce an arguably balanced budget.

To Shumlin’s credit, he did not sign laws to increase income tax rates or sales tax rates. He did, however, sign laws that increased the residential school property tax rate no less than five times, and also laws that raised taxes on hospitals, nursing homes, home health agencies, insurance claims, use value property transfer, and liquor and cigarette sales.

He proposed, but couldn’t get, increases in payroll taxes, and increases in provider taxes on independent doctors and dentists. When he finally came to grips (three years too late) with the glaring fact that installing his signature government program – single payer health care – would require over $2 billion in new state tax dollars, he conceded defeat.

But battles over taxes never end. Here’s a quick survey of some likely tax battles of 2017:

Income taxes: Democratic Govs. Dean and Shumlin and Republican Gov. Douglas understood the danger of pushing up the top marginal tax rate. None did so, and it’s not likely that even a more liberal successor would attempt to go beyond the present 8.95 percent. Conceivably a tax-hungry new governor could try to change the tax brackets to capture more tax dollars from the middle class, as Shumlin did.

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