12-5-14 – Here Comes the Tax Parade!

Posted by Rob Roper

Payroll Taxes, Income Taxes, Property Taxes Carbon Taxes, Sugar Taxes….

Vermont Digger reports that sources leaked Green Mountain Care will be paid for in part with an 8% payroll tax, which is estimated to raise $936 million dollars. This is way short of the $2 to $2.2 billion estimate needed to pay for the program, which may itself be way short of the actual mark.

If this is what the payroll tax figure will be, an income tax increase will have to raise over a billion to cover the remaining expenses. The Digger report references a 9% cap on income taxes for Green Mountain care for households earning over $50,000, however the math doesn’t appear to allow for such a cap.

The total income tax revenue projections for 2014 were $738 million (and they’re coming up short!!!) With an 8% payroll tax generating $942 million, even if you doubled today’s income tax revenues you’re still below $1.7 billion. Where’s the other .3 to .5 billion going to come from?

Here are Vermont’s current tax brackets. Add 9% to each and see what you get, knowing that it’s still not enough:

Tax Bracket (Single) Marginal Tax Rate
$0+ 3.55%
$36,250+ 6.80%
$87,850+ 7.80%
$183,250+ 8.80%
$398,350+ 8.95%
Tax Bracket (Couple) Marginal Tax Rate
$0+ 3.55%
$60,550+ 6.80%
$146,400+ 7.80%
$223,050+ 8.80%
$398,350+ 8.95%

The story also indicates the insurance plan bought with this tax revenue will likely have an 80% actuarial value, meaning the policy holder will still be on the hook for 20% of medical costs, and probably be in the market for an expensive supplementary insurance policy as well.

The Shumlin administration has already announced that property taxes are set to rise by 2 cents to $1.00 per $100 of assessed value for homeowners and $1.54 for non-residential properties in 2015. And, Speaker of the House, Shap Smith has indicated that he would like to shift more of the $1.5 billion education budget onto the income tax as part of education finance reform.

Also on the front burner for the 2015 legislative session is a $250 million carbon tax, which would translate into a 45¢ to $1.35 tax on every gallon of gasoline, and something similar for home heating fuel.

In addition, a group called Alliance for a Healthier Vermont (is there no end to these liberal groups and the money that flows to them?) is ready to wage a $200,000 campaign pushing for a 2¢ per ounce tax on sugar sweetened beverages.

So hang on to your wallets, folks. Your elected representatives are coming back to town!

– Rob Roper is president of the Ethan Allen Institute


Please support the Ethan Allen Institute in the New Year as we fight against these and other government overreaches. DONATE TODAY! Thank you. Contributions are TAX DEDUCTIBLE.


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{ 3 comments… read them below or add one }

Kathy Chaffee December 6, 2014 at 12:14 pm

What about minor children that do not meet Medicaid? Speaks about singles, couples, but what about couples with underage children?


Mike Powers December 6, 2014 at 1:47 pm

As I have noted before, the health insurance single payer plan coupled with the cost of education will effectively bring our small businesses to their knees say nothing about any growth of new businesses. Couple this with an increase in the income tax rates and the remaining tax payers not subject to income sensitivity (approximately 35%) will leave the state. In the meantime our bond rating will continue to decline. Not a pretty picture. When are Vermonters going to wake up and return reason to our management of the state finances. Our resources are not infinite and are already at the breaking point.


John Montgomery December 7, 2014 at 5:12 pm

I truly do hope that the people who voted for Shummy like what they’re getting. It’s convenient when he doesn’t release the tax plan until AFTER he’s elected. Of course, the legislature could do the right thing and that’s vote according to how their districts voted. Burlington shouldn’t hold the rest of the state hostage every election.
But, I have little doubt that party politics will rule and the super majority will re-elect their boy, Shumlin.


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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.

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