(Host) Legislative leaders say they’re intrigued by a number of recommendations from the Blue Ribbon Tax Commission.
But they also believe it will take two years before a comprehensive tax reform package can be considered in the House and the Senate.
VPR’s Bob Kinzel reports:
(Kinzel) The Commission’s plan basically broadens the base of the income tax and the sales tax in order to lower the actual rates that are used.
Vermont is the only state in the region to use so called "taxable" income to determine a person’s tax liability. This figure is calculated after including many deductions like the home mortgage deduction.
Most states use "adjusted gross income."
The AGI is a much larger number because it doesn’t include the deductions. By using this bigger number, the Commission says tax rates can be lowered without affecting overall tax burdens.
Speaking on VPR’s Vermont Edition, Senate Finance chairwoman Ann Cummings, says this change is important.
(Cummings) "So what the Commission is saying and overall it’s revenue neutral…that they would like us to go to this adjusted gross income because then our tax rates can be compared apple to apple with most of the other states in the country."
To help offset the elimination of the home mortgage deduction, the Commission is proposing up to an 800 dollar tax credit for families with incomes below 125 thousand dollars.
Janet Ancel is the chairwoman of the House Ways and Means committee.
(Ancel) "What the commission has recommended instead is a credit and a credit is dollars in your pocket a deduction works a little bit differently…so the question is that sufficient to make up for the loss of home mortgage deduction that’s the kind of think we’re going to look at."
(Kinzel) Ancel says another key question for her committee is the overall fairness of the tax proposal.
(Ancel) "I think this is an opportunity to look at that in a really serious way and see how much we can simplify and still keep things fair."
(Kinzel) Senator Cummings says many of Vermont’s income tax deductions also exist at the federal level and she says it’s time for lawmakers to consider if they want to follow federal tax policy.
(Cummings) "They think that the Vermont Legislature should be able to look at and look at on a regular basis so that these things just don’t keep accruing but that every X number of years and we can pick the number of years that we look at it."
(Kinzel) Cummings and Ancel say they are less enthusiastic about the Commission’s plan to expand the base of the sales tax to include many services. Under this proposal, the state sales tax rate would drop from 6 percent to 4½ percent.
For VPR News, I’m Bob Kinzel in Montpelier.