1-14-15 – Tax Issues of 2015

by John McClaughry

(The following originally appeared as part of a symposium on tax issues of 2015 in the Free Press of January 10, 2015)

Gov. Shumlin’s abandonment of his single payer health plan — at least for now — affords Vermonters a reprieve from truly enormous increases in payroll and income taxes. However, tax issues will continue to be prominent in 2015.

The major pressure is to diminish the burden of the homestead school property tax. There are four options.

First, increase the General Fund transfer to the Education Fund and reduce the property tax rate. But with what? The General Fund already faces a $100 million deficit.

Second is the Democrats’ intention to add an income tax surcharge to replace part of the homestead tax revenues. That will spur fierce resistance not only from upper income taxpayers, but from those who view with alarm the effect of high income tax rates on the state’s economy. (Governors Dean, Douglas and Shumlin all shared this concern.)

Third is reorganizing the public school system and mandating “savings.” Getting real “savings” would require a state takeover of public schools and enforcement of spending caps and mandates — something like Lt. Gov. Phil Scott’s Green Mountain Care Board for education. Even Democrats and Progs are leery of the politics of “One Big School System.”

Fourth is the really innovative solution. Let public schools, charter schools, independent schools, and other providers compete for the parents’ tuition dollars. (Example: the vibrant charter school competition in Houston, San Jose and Washington DC.) A lot of parents will choose alternatives that cost far less than overgrown and complacent monopoly public schools.

An environmentalist coalition is pushing hard for a carbon tax, to make Vermonters reduce spending on gasoline, diesel fuel, propane, natural gas and heating oil. This, they say, will make Vermont a leader in the battle against “climate change.” As proposed, it will also allow the renewable industrial complex to skim off ten percent of the take to subsidize their interests. This is likely to be a non-starter.

But there’s a related measure that would subsidize renewable electricity in a way that won’t be obvious to ratepayers: the Renewable Portfolio Standard. The RPS will require Vermont utilities to get specified percentages of their power from renewables like wind and solar. Since those two energy sources are as much as four times as costly as grid power, ratepayers will be hit with another tax, hidden in their utility bills.

My recommendation for the legislature: parental choice in education, and no tax increases, visible or hidden.

– John McClaughry is vice president of the Ethan Allen Institute

{ 5 comments… read them below or add one }

Eloise Hedbor January 14, 2015 at 5:26 pm

You did not mention the increased “Energy Efficiency Charge” – effect Feb. 1, the EEC rates are increasing by 7.5% for resident customers. Rates are also increasing for all classes of commercial and industrial, even street lights.

Reply

Doug Richmond, Underhill January 16, 2015 at 9:24 pm

I recently called to object to the ‘nanny note’ from Efficiency Vermont, telling me I was being an average energy hog, and telling me that I was using more electricity than some of my neighbors.

I objected to a private organization mining, spying, on my private electric records.

I also objected to the news that much of the $ 100 a year extracted from me by this private organization was being used to spend $million$ to replace most of the snow making guns for many of the ski areas, as well as for every new factory or warehouse! I was told……….. Nothing in reply

Reply

jim bulmer January 16, 2015 at 6:26 pm

Tax, tax, tax, tax. I’m afraid the super majority in Montpelier is made up of a bunch of “johnny one notes”. Has it ever ocurred to these idiots that the other side of the tax coin is REDUCE spending. Hope springs eternal.

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jim bulmer January 16, 2015 at 6:41 pm

Speaking of taxes, I suggest all participate in an exercise dealing with identifying and totaling all the hiden taxes and fees they are sending to Montpelier in ADDITION to sales, income, and property taxes. My guess is you will be shocked. Ms. Hedbor has identified one. How about your phone bill, how about each visit to the gas pump, how about each time you buy paint (the sales clerk didn’t have a clue about this hidden 2.9% gem), watch out for the upcoming rules on garbage collection, the increase on “fees” for vanity plates, the dropping of the renewal sticker on your front license plate, the $40 “fee” for a 25 minute vehicle inspection. sticker. I’m sure there are several more.

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Doug Richmond, Underhill January 16, 2015 at 9:16 pm

“No increases in broad based taxes?!” Just fees, contributions, assesments, and how many other weasel words.

Yeah, I just wrote a check for $81 for renewing my 4 year drivers license. That is not broad based! Or is it?

Reply

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