Vermont lawmakers weigh tax cut proposals
MONTPELIER, Vt. (WCAX) - Is a middle-income tax cut coming to Vermonters? State lawmakers are digging into a sweeping tax proposal from Governor Phil Scott which he says will help bolster the dwindling workforce and put more money in people’s pockets. A big component of the governor’s strategy is to reverse demographic trends by giving tax breaks to middle-income Vermonters and retirees, but those plans are still a long way from the finish line.
Governor Scott calls his proposal a progressive tax relief package. The Republican says it’s aimed at incentivizing more people to move to Vermont and stay here, starting with tax benefits for college graduates.
“It’s a simple proposal that just says all Vermonters can deduct all of their student loan interest,” said Vt. Tax Commissioner Craig Bolio.
There’s also an expansion of the earned income tax credit aimed at low to moderate-income earners. The same people would be eligible but Vermonters would get to keep more of their income. This would tie Vermont with California for the largest earned income tax credit in the country. “The earned income tax credit program is seen as one of the best anti-poverty programs that exists in the nation,” Bolio said.
The administration is also pushing an expansion of the child care and dependent tax credit and a $1,000 rebate for health care and child care workers, and a $45 million tax rebate for property owners from a surplus in the Education Fund.
The governor is also again seeking to exempt income taxes on military retirement pay, a skilled workforce that he says retires at a younger age. The House passed a measure last year that would exempt $10,000 in military pension from income taxes but that proposal is still in the works.
“Does this really address the demographic challenges as laid out by the governor? And it’s been unclear to us about what exactly the goal is in terms of this exemption,” said Rep. Janet Ancel, D-Calais.
Meanwhile, Vermont lawmakers are digging into their own version of tax cuts. President Biden’s Build Back Better bill included an extension of the $1,200 child tax credit for children six and under but its future in Washington is uncertain. “Vermont is trying to step up and say, okay, if the feds are falling short how can we use some of this money to fill the gap,” said Senate President Becca Balint, D-Windham County.
Legislative leaders are looking to create their own $58 million tax credit for working families with young kids. “Families with young children are often at the beginning of their earning power and so the stresses and struggles they have are greater,” Ancel said. The governor has not taken a position on the proposal.
Lawmakers say they still have a way to go before they arrive at a final number on their child tax credit, but they say if they are going to pass tax cuts as the governor wants, they need to be focused on those who need the money the most.
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