Taxes

Taxes

Redux: Report calls for $1.6 billion in taxes, doesn’t include recommendation for financing single payer

January 29, 2013; Andrew Stein; VTDigger

The Shumlin administration’s much-anticipated financing plan for a single-payer health care system landed on the desks of Vermont legislators Thursday evening.

Drawing from 2011 numbers, the study projects Vermont would save an estimated 1.5 percent annually on a roughly $6 billion health care finance system.

Taxpayer dollars would fund an estimated $1.61 billion of the system — an estimate that relies heavily on the assumption that federal revenues would rise as a result of increased enrollment in Medicaid, which some skeptics question.

The study’s conclusion is undercut by a caveat that the estimates might turn out to be invalid due to outdated numbers and shifting details surrounding the structure, slated for implementation in 2017. The report does, however, provide a general financing structure for plugging in new numbers.

What surprised many legislators was that the so-called plan, which was mandated by Act 48 in 2011, lacked a specific vehicle for how the public would pay for such a system.

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Statehouse Sitdown: Tim Ashe

WCAX.COM Local Vermont News, Weather and Sports-

Shumlin’s New Tax on Low-Income Working Vermonters

Make no mistake: Governor Shumlin is proposing a broad-based tax increase on low-income working people.  Substantial cuts to the Earned Income Tax Credit are a tax increase by anyone’s measure. And a tax increase on the most vulnerable Vermonters, those who are working and raising children.

One example: A single mother of two small children who is self-employed and earns $27,000 a year.  She pays no income tax, but because she is self-employed, she pays $3,200 toward Social Security and Medicare (known as Self-Employment Tax on the Federal income tax return (1040), where it is collected from those who don't receive a W-2 from someone else).  Her Federal Earned Income Tax Credit is $3,200, which effectively pays that Self-Employment Tax.  Her Vermont Earned Income Tax credit is about $1,000.  That Vermont Earned Income Tax Credit effectively boosts her income for the year by $1,000 as an incentive because she is earning income and supporting her two children.

Obviously that $1000 makes a big difference in a household of 3 people, the difference between living on $27,000 or $28,000.  It is 3.5% of their income, so taking it away is essentially a 3.5% tax, which is really a 100% increase in their tax rate as the Vermont income tax rate on people of her filing status (head of household) making less than $46,000 is 3.5 percent.

Even Republican Lt. Governor Phil Scott said on the Mark Johnson show that he thought taking away people's Earned Income Credit was a bad idea because "this is money people use to buy groceries".

Governor Shumlin has said that he doesn’t want to raise taxes on the wealthy for fear they will leave the state.  I guess he figures low-income working Vermonters won’t leave, or does not care if they do.  Shumlin claims he is trying to incentivize people on welfare to get jobs, yet proposing now to penalize those who have jobs.  He claims he is trying to persuade young people to stay here and raise a family.  Someone should tell him that many young people are low-income earners when they first start a family.

This is the most regressive tax proposal to come out of any Governor’s office, Republican or Democrat, in recent memory.

Margolis: Governor hands lawmakers responsibility for tax increases

January 25, 2013; Jon Margolis; VTDigger

The innovation was the suggestion to levy a tax on “break-open tickets.” At least it was an innovation to the many listeners who had never before heard of a break-open ticket, a variation of a scratch-off lottery ticket, mostly sold in bars and social clubs. At least some of the profits go to charities or nonprofit institutions such as libraries. A 10 percent tax on the tickets, Shumlin said, could raise $17 million a year to help lower-income people “weatherize,” their homes, improving insulation so that they would burn less fuel.

The suggestion did not sit will with Sen. David Zuckerman, a Progressive from Hinesburg, who saw it as one of three proposed tax hikes or spending cuts that would cost low-income Vermonters some $40,000.

The other two, he said, were diverting $17 million from the state’s add-on to the federal Earned Income Tax Credit and saving $6 million by limiting Reach Up (welfare) recipients to leave three consecutive years and five aggregate years of benefits.

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Shumlin’s budget gets mixed reviews

January 25, 2013; Peter Hirschfeld; Times Argus

Rep. Chris Pearson, a Burlington Progressive and leader of his party’s House caucus, said he remains excited about Shumlin’s call for $17 million in new child care subsidies for low-income parents. He said he remains bewildered by Shumlin’s continued insistence on reducing the earned income tax credit — a program that benefits about 40,000 of the lowest-wage earners in Vermont — to fund it.

“We have a governor with Progressive priorities and Tea Party funding schemes,” Pearson said.

Pearson said he’s pleased to see the governor “at least acknowledge” the need for new revenue. In addition to raising millions by cutting tax exemptions for the poor, Shumlin’s budget included a proposed new tax on “tear-off” lotto tickets — a largely unregulated game of chance commonly found in private clubs and bars.

That money would be used to fund home-weatherization programs and renewable-energy subsidies. But Pearson said he’s discouraged that the governor has already dismissed out of hand a proposal to increase tax rates on filers in the top income bracket.

“I don’t understand his desire to go after a program that impacts 40,000 low-income Vermonters and to protect 4,000 of the wealthiest,” Pearson said.

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Gov. Shumlin wants to tax break-open tickets

January 25, 2013; Dave Gram; Brattleboro Reformer

The governor offered a strong defense of a plan he outlined in his second inaugural address earlier this month to trim a popular benefit for low-income working people -- the earned income tax credit. He wants to cut $17 million and use the money for expanded child care subsidies.

"We have concluded that the biggest barrier to work for many lower-income Vermonters is the cost of quality child care," the governor said. Low-income working Vermonters can take advantage of a range of state programs, making the earned income tax credit less crucial, he said.

And he offered another proposal that immediately drew the ire of advocates for low-income Vermonters. Shumlin said Vermont is the only state with no time limit for participants in its welfare-to-work program to complete the transition. He said he wants to set a time limit of three years, with two years of extensions possible.

Shumlin is widely regarded as a liberal Democrat, but his proposals came under immediate fire from the head of the left-leaning House Progressive caucus.

"The governor has progressive priorities and Tea Party funding schemes," said Rep. Chris Pearson of Burlington. He said slashing the earned income tax credit would hurt 40,000 Vermont families.

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