in the State House of Representatives
on May 18, 2021, by a vote of
Purpose: To raise tax revenues and incentivize building housing in urban areas.
Analysis: S.101 would create an additional 0.5% property transfer tax on all real estate transactions exceeding $1 million. The first $1 million in the transaction is exempt from the additional tax. In addition, the bill would expand the downtown tax credit program by increasing new manufactured homes’ tax credits from $425,000 to $675,000 (credits last for 5 years).
Finally, S.101 authorizes the Department of Housing and Community Development to use the Municipal and Regional Planning Fund to give grants to municipalities for promoting “smart growth” (the tax increase doesn't finance the Fund). Smart growth emphasizes compact neighborhoods, walkability and “addressing lower and moderate-income housing needs.”
In F2020, the Joint Fiscal Office estimates that raising the property transfer tax by 0.5% would extract an additional $2.1 million in taxes from property transfers, while giving businesses $250,000 in tax credits for housing. Therefore, the General Fund is estimated to increase $1.85 million from these distribution schemes in F2020.
The tax credit program will be fully phased in F2026, making Vermonters pay an additional $1.9 million in transfer taxes. Businesses would receive $1.25 million in tax credits from Vermont, enriching the General Fund by $650,000 on net.
Those voting YES believe this will help revitalize town centers and encourage “smart growth” in urban areas.
Those voting NO question the need for an increase in the property tax, which would disproportionately impact small business such as farms, retail outlets, restaurants, manufacturing facilities, etc., at a time when businesses are just recovering from a recession. As such, this tax would be another disincentive for businesses to come to Vermont, and make it more difficult for existing businesses to act with flexibility as they try to recover from the Covid shutdown. All of the tax revenue raised would go to the General Fund rather than projects related to downtown revitalization.
As Recorded in the House Journal, Tuesday, May 18, 2021: “Shall the House propose to the Senate to further amend the bill as recommended by the Committee on Ways and Means? Yeas, 93. Nays, 56." (Read the Journal, p. 1222).
Watch the floor debate on YouTube.
How They Voted
(Click on your Rep’s name to send an email)
Sally Achey (R - Middletown Springs) – NO
William Lippert (D – Hinesburg) – YES
Curtis McCormack (D – Burlington) – YES
Kirk White (P/D - Bethel) – NO
Rebecca White (D – Hartford) – YES
Dane Whitman (D - Bennington) – YES
Terri Lynn Williams (R - Granby) – NO
Theresa Wood (D – Waterbury) – YES
David Yacovone (D – Morristown) – YES
Michael Yantachka (D – Charlotte) – YES