Income-based school taxes key to passing reform package

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The bipartisan leaders of the House Ways and Means committee say they’re committed to passing a comprehensive property tax reform package during the 2007 session.

One of their key goals is to expand the number of Vermonters who pay school taxes based on income and not property values.

VPR’s Bob Kinzel reports:

(Kinzel) At first glance, it might seem unlikely that the leadership of the House Ways and Means committee would be unified on their views concerning property tax reform.

The vice chairman of the panel, Topsham Rep. Bud Otterman has a reputation as a conservative Republican, while the chairman, Rockingham Democrat Michael Obuchowski, is at the other end of the political spectrum.

But when it comes to property tax reform, Obuchowksi and Otterman see eye to eye.

They believe property tax burdens for many Vermonters are out of control and they want to shift this burden over to one of the state’s broad based taxes.

Rep. Otterman says the state wouldn’t need homeowners rebate and prebate programs if individuals paid their school taxes based on their income:

(Otterman) “So it’s get worse and worse all the time. And if we went to an income tax as far as homeowners are concerned we would automatically have taxation on the basis of ability to pay. We wouldn’t have to collect the extra and turn around and send it back because what was paid in the first place would be the correct amount.”

(Kinzel) The Vermont League of Cities and Towns has endorsed a plan to impose a 1 % income tax surcharge to help lower property taxes. The League says the statewide property tax rate could be reduced by two thirds if their proposal is adopted.

Ways and Means chairman Obuchowski says this plan and many others should be on the table for consideration.

(Obuchowski) “At this point everybody keep an open mind. This is a huge problem. Vermonters have spelled out the parameters of the problem to us. We have to agree what the problem that we’re trying to solve is and please, let’s not draw any lines in cement. Let’s work together and to try and find a way hat this works for all of us.”

(Kinzel) Lawmakers may have a difficult time convincing Governor Jim Douglas to back their plan. Douglas agrees that property tax burdens are too high but his solution is the imposition of a cap on local spending. He doesn’t support shifting property tax burdens to the income tax.

(Douglas) “It really is a spending problem. We have to focus on that and not think about ways to transfer the tax obligations to some other source.”

(Kinzel) Rep. Obuchowski also thinks the state should consider taking over financial responsibility for special education programs as a way to reduce local property tax burdens. That’s an idea that the governor says he opposes because it would require additional state tax revenues.

For Vermont Public Radio I’m Bob Kinzel in Montpelier

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