House committee agrees to draft income tax proposal

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(Host) A key committee of the Vermont House plans to draft a bill that would shift a lot of education funding to an income tax.

Leaders of the Ways and Means Committee say the decision does not commit them to an income tax.

But committee members say it does give the entire Legislature an opportunity to consider how an income tax for education would work.

Representative Shap Smith is a member of the committee and one of the Democrats’ leaders on education funding.

(Shap Smith) “I think we all agree that this issue is an important enough one, that it’s one that everybody should have a chance to have a full review of and comment on before we take a vote within a committee on a bill.”

(Host) The committee asked its lawyers to draft a bill, which the panel will review in meetings before the Legislature returns to session in January.

The bill would replace the statewide property tax on Vermont residents’ primary homes. They would pay an income tax, instead.

Owners of non-residential property, including businesses and second homeowners, would continue to pay a property tax.

Michael Smith is Governor Jim Douglas’s top budget aide. He says the committee’s decision is a bad one.

(Michael Smith) “If you move to the income tax you haven’t done anything with cost. And here’s the plain fact: If you don’t lower the cost, the revenue growth will never keep up with the cost.”

(Host) But members of the Ways and Means Committee say they think the idea is worth continued discussion.

All but two members of the committee agreed to have a bill drafted. The panel will meet again next week to begin reviewing it.

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