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Affordability

Submitted by matt.stirnweis… on Fri, 11/04/2022 - 09:53
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One of Governor Scott’s top strategic priorities is to make Vermont more affordable for Vermonters and businesses. This is an essential strategy to making sure more young professionals, families and retirees can stay – and move to – Vermont, which is essential to addressing our workforce shortage, protecting the most vulnerable and ensuring a more prosperous future for Vermont families and communities.

 

Tax Relief

  • Elimination of the Tax on Social Security Benefits for Low- and Moderate-Income Vermonters - Proposed and passed the elimination of the income tax on Social Security benefits for low and middle-income retirees, benefitting approximately 35,000 Vermonters. (FY19). In the FY23 budget, Governor Scott proposed increasing this exemption from $45,000 to $75,000 for single filers, but the Legislature did not support or pass this expanded exemption.

 

  • Working Family Taxpayer Protection Act - Changes in federal tax laws at the end of 2017 impacted Vermont's tax system, so while many Vermonters were projected to see lower federal rates, these changes meant the State would have collected a net increase of $30 million in income tax, primarily from working families. To prevent this, the Governor proposed and passed a revenue-neutral plan to update our income tax laws. This legislation, coupled with the exemption of social security benefits, reduced income tax rates and prevented the collection of a net $30 million in higher taxes on Vermonters (FY19). Specifically, this legislation:
    • Lowered tax rates across the board by 0.2% for all filers;
    • Increased the Vermont Earned Income Tax Credit from 32% of the federal credit to 35% of the federal credit; 
    • Reintroduced personal exemptions at $4,000 each;
    • Created a Vermont-defined income deduction, equal to $6,000 for single filers, $12,000 for joint filers, and $9,000 for heads of household;
    • Introduced a 5% tax credit for charitable contributions (the as-passed bill includes a cap introduced by the Legislature); and
    • Moved to a system more closely tied to Adjusted Gross Income (AGI) to add resiliency and stability to the Vermont tax system.

 

  • Cutting the Land Gains Tax - Drawing on the Governor’s proposal, the FY20 revenue bill virtually eliminates the Land Gains Tax by substantially reducing the properties to which it applies.

 

  • Protecting Vulnerable Taxpayers - The FY20 revenue bill reinstates a deduction for medical expenses within Vermont’s personal income tax. This will allow taxpayers to deduct any medical expenses above Vermont’s standard deduction and personal exemptions.

 

  • Modernizing the Estate Tax - To make Vermont more competitive in retaining and attracting taxpayers, the FY20 budget adopted the Governor’s proposal to gradually increase the estate tax exemption from $2.75 million to $5 million to more closely align us with the exemption amount in surrounding states.

 

  • STILL NEED SUPPORT FROM THE LEGISLATURE: Throughout his tenure, Governor Scott has advocated for additional tax relief to make Vermont more affordable and to help target workers in high-need fields. The below proposals have not been supported or passed by the Legislature in full, but the Governor will continue to champion more relief:
    • Working to eliminate the tax on military retirement income For FIVE consecutive budgets, Governor Scott has proposed and funded an initiative to eliminate the tax on military retirement income. In FY23, he also proposed extending that exemption to family members as well. The Legislature has not supported or passed these proposals to-date.
    • Working to expand the exemption for social security benefits - In the FY23 budget, Governor Scott proposed increasing this exemption from $45,000 to $75,000 for single filers, but the Legislature did not support or pass this expanded exemption.
    • Working to increase the Earned Income Tax Credit The EITC is regarded as one of the best antipoverty measures, encouraging workforce participation and helping low-income working families keep more of what they earn. In FY23, Governor Scott proposed increasing Vermont’s EITC from 36% of the federal credit to 45%. The Legislature supported an increase of only 2% (to 38%).

 

Reducing Costs for Families & Businesses

  • Tax relief (See Tax Relief section above)

 

 

  • Making childcare more affordable
    • Increased investment in Childcare Financial Assistance Program - Governor Scott has secured $12 million in increased investments in the Child Care Financial Assistance Program (CCFAP) since his first term. While the Legislature has lowered each of Governor Scott’s proposed increases, as-passed budgets have increased investment in this program by more than 30% since the Governor came to office. This investment results in reducing the cost of childcare for low- and moderate-income families.
    • STILL NEED SUPPORT FROM THE LEGISLATURE – Governor Scott has repeatedly proposed permanent funding sources to make childcare more affordable, but the Legislature has not adopted these proposals. In 2019, Governor Scott proposed modernizing online sales tax and dedicating those revenues as a permanent funding source – which has grown annually – for the Child Care Financial Assistance Program (CCFAP). The Legislature passed the modernization initiatives but did not dedicate the funds exclusively to childcare. In 2020, the Governor proposed allowing for Keno sports betting and to dedicate those funds to CCFAP. The Legislature did not pursue this initiative.

 

  • Reducing Workers' Compensation insurance costs - Workers’ Compensation rates have decreased for six consecutive years under the Scott Administration, resulting in Vermont employers collectively paying an average of 41% less in premiums than they did in 2016. This is the result of a concerted effort by the Scott Administration, led by the Department of Financial Regulation, to design new programs and new constructs to lower rates while maintaining benefits, alongside employers’ success in keeping employees safe.

 

Holding the Line on New Taxes & Fees and Slowing State Budget Growth

  • Governor Scott has held the line on adding new, or increasing existing, taxes throughout his tenure.
  • The FY18 state budget did not raise or add taxes or fees and held statewide property tax rates level for residential and non-residential rate payers.
  • The FY19 state budget did not raise or add taxes or fees and held statewide property tax rates level for residential rate payers for a second consecutive year.
  • In 2018, the Governor worked to implement a new approach to managing the State’s Education Fund, which – with the support and hard work of school boards across the state – helped Vermonters avoid about $71 million in forecasted property tax rate increases. Of those total savings, $29 million were a direct result of the Governor’s budget vetoes.
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