Douglas opposes school income tax shift

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(Host) House Speaker Gaye Symington says she’d like lawmakers to consider a plan to shift all school taxes from the property tax to the income tax.

The Speaker says the proposal would give Vermonters a much clearer understanding of the link between tax rates and school spending.

But Governor Jim Douglas opposes the approach, because he says a higher reliance on the income tax will hurt the state economy.

VPR’s Bob Kinzel reports:

(Kinzel) Symington says the proposal isn’t a major change for a majority of Vermonters. That’s because roughly two thirds of all households in the state already pay their school tax based on their income through the income sensitive provisions of Act 68.

Now she wants to extend this approach to all homeowners.

A subcommittee of the House Ways and Means Committee is backing a draft plan that would eliminate the local and statewide property tax for education and replace them with roughly a 2% income tax rate for all Vermonters.

This rate would be adjusted to reflect how much a town spends on education.

Symington says the plan provides a direct link between tax rates and local spending. She says the current system can be hard to understand.

(Symington) "I think when you’re looking at a proposal that eliminates the statewide property tax and with it the confusion of the CLA and has the potential to more clearly connect what Vermonters pay in school taxes to what they spend per pupil, I think there’s a lot to be gained by making this change."

(Kinzel) Governor Jim Douglas strongly opposes this approach – he argues it will result in a higher tax burden for many Vermont households:

(Douglas) "I don’t think anyone believes that the architects of Act 60 are going to simply transfer liability from one tax to another. This is a way to raise taxes and the Joint Fiscal Office, in its report last year, made it clear that this would be a tax increase on the middle class. We don’t have enough wealthy taxpayers in Vermont to pay for public education without raising taxes on working families."

(Kinzel) Topsham Rep. Bud Otterman disputes the Governor’s analysis. He says the plan doesn’t raise any additional money and uses a tax that’s a better barometer of a person’s wealth.

(Otterman) "It more nearly is assessed on the basis of ability to pay than any of our other taxes. I would say I don’t think property tax is based on ability to pay. In fact, I think it’s quite regressive, especially in the lower income brackets."

(Kinzel) Shelburne Rep. Joyce Errecart is part of a group of lawmakers that wants to repeal Act 60 and Act 68. She says the Legislature needs to adopt tougher laws to control school spending and she says this plan will hurt the state’s economy:

(Errceart) "This is really being busy with something that sounds good. But I really question whether it can be done and if it can be done, I think it would be just devastating to Vermont’s economy."

The Full Ways and Means Committee is scheduled to hold a series of hearings on the plan this fall.

For VPR News, I’m Bob Kinzel in Montpelier.

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