Statement on Legislators’ Proposal to Recoup Tax Cut Revenue

Vermont cannot continue to cut its way out of its budget problems. The Legislature needs to include new revenue as part of a balanced approach to balancing the budget. One obvious place to look is in the federal income tax savings Congress recently extended to the top 5 percent of Vermont taxpayers. They are saving $190 million this year through the extension of the Bush tax cuts, and they will have similar savings next year.  The proposal by Sen. Anthony Pollina and Rep. Chris Pearson would raise only $17 million to help address the $176 million projected fiscal 2012 budget gap, but it’s a start.

We also hope the Legislature will follow through on the recommendations of the Blue Ribbon Tax Structure Commission. The commission proposed some sensible changes to the income tax, which should make it easier to understand. However, the rates recommended by the commission need to be adjusted to make sure the income tax, which is our fairest tax, continues to generate at least as much money as it does now.

The Legislature also should fix the sales tax by eliminating the exemption for services. Without this necessary change, revenue from the sales tax won’t grow with the economy because in Vermont, as elsewhere, consumers spend more on services than they do on taxable goods.