(Host intro) Senate President Peter Shumlin says he supports Governor Jim Douglas’s plan to eliminate the state exemption on capital gains.
But Shumlin says he has a very different plan for how to spend the millions of dollars the state will receive from the proposal.
Shumlin’s plan could result in a gubernatorial veto.
VPR’s Bob Kinzel reports.
(Kinzel) Vermont currently does something that very few other states do – that’s offer a tax break to individuals who accumulate capital gains through the sale of stock or business assets.
In his State of the State address, Governor Jim Douglas proposed eliminating the so called 40 percent capital gains exemption.
Speaking on VPRs Vermont Edition, Shumlin says he agrees with the concept of Douglas’s plan – that unearned income should be taxed at the same rate as earned income.
(Shumlin) "I think that most people in the Legislature recognize that it’s been a giveaway to the folks who pay the least taxes and then the next question is what do you do with the $22 million of tax increase that the governor proposed as a result of this capital gains tax."
(Kinzel) And that’s where the debate begins. The governor wants to use this money to finance an income tax cut for middle and upper income people. Shumlin says that’s a mistake because the money is going to be needed to help the state maintain essential programs in a difficult budget year:
(Shumlin) "Let’s talk for a minute about the challenges of the session because it’s going to take money to solve them. This state is less affordable than it was when the governor took office almost six years ago… Every single sector of the economy is making their lives more difficult. Vermonters are feeling fear. They’re frightened, they’re scared. They want to know what government’s going to do for them."
Shumlin’s approach is unacceptable to Douglas:
(Douglas )"Vermonters are the most heavily taxed people in America we have the highest state and local tax burden per capita………this is a time when legislators will have to make some choices we just can’t do everything we’ll have to decide what’s most important."
(Kinzel) Douglas will outline his budget priorities in a special speech to lawmakers next Tuesday afternoon.
For VPR News, I’m Bob Kinzel in Montpelier.