Democrats prepare alternative tax cuts

Print More

(Host) Democratic leaders at the Statehouse say it’s likely that they’ll propose an alternative to Governor Jim Douglas’s tax cut plan. One possibility under review would reduce the state sales tax from 6 to 5 percent.

VPR’s Bob Kinzel reports.

(Kinzel) The Democrats are actively exploring options because they believe the governor’s proposal will have very little impact on most working families in the state.

Douglas wants to institute a small across-the-board personal income tax cut. He wants to pay for this change by eliminating a current exemption on capital gains tax revenues. The governor has also proposed a small reduction in corporate income tax rates. Douglas says this can be financed by taxing multi state companies on the profit that’s generated by their Vermont businesses.

Senate President Pro Tempore Peter Welch says he supports the way that Douglas raises new revenue but Welch is concerned that the distribution portion of the plan benefits wealthier taxpayers:

(Welch) “There’s no question that people who’ve been hit hard in taxes [are] working Vermonters. They’re the ones who did not really receive a lot of the benefits of the capital gains explosion in the 90s. And they’re people whose payrolls taxes have gone up, who’ve been paying higher co-pays and premium contributions for health care. So I think it’s safe to say that our primary concern is to make sure that average working folks are the ones who are winners on this as much as the wealthy people.”

(Kinzel) Rather than implement a small personal income tax cut, Welch says it may make more sense to reduce the state sales tax:

(Welch) “And see if there is a way we could reduce the sales tax, which obviously would have a benefit to everybody in the state and to our businesses. And of course when we passed the education funding reform bill last year and went form 5 to 6 cents on the sales tax it was with a promise that we would soon return to five cents. Now I don’t know any Legislature that’s made good on that promise and I think a number of people think maybe that’s the place we should look.”

(Kinzel) House Democratic leader Gaye Symington agrees with Welch’s analysis and Symington says her caucus is exploring several major changes to the governor’s tax proposal.

For Vermont Public Radio, I’m Bob Kinzel in Montpelier.

Comments are closed.