Capital gains taxes need more than a tweak

Posted by Jack Hoffman on April 25, 2019 at 5:16 pm | Comments (0)

The revenue bill passed by the Vermont House late last month will generate more money—about $5 million annually—by increasing the amount of investment income that is subject to the state’s capital gains tax. The additional revenue is welcome, and the change is a step in the right direction. But rather than simply tweaking the capital gains tax, the Legislature should be asking why it gives away $15 million every year by excluding certain investment income from taxes.

A January report by the Joint Fiscal Office and the Vermont Department of Taxes raises questions about the underlying justification for treating capital gains differently than the income earned by most working stiffs.

Invest in Vermont

Posted by Stephanie Yu on April 23, 2019 at 3:22 pm | * Comments (2)

Legislators in Montpelier are getting close to the end of the session, but they’re still in search of that elusive prey: revenue. According to legislative watchers, our elected officials are trying to find revenue sources for state investments that are widely acknowledged to be long overdue: clean water, child care, Reach Up, weatherization.

Here’s an idea: How about using some of the $350 million in federal tax breaks delivered to upper-income Vermonters in 2018?

Paid family and medical leave is a good deal for Vermonters

Posted by Stephanie Yu on April 4, 2019 at 11:09 am | Comments (0)

The basic idea is simple: A statewide insurance plan that provides paid family and medical leave to Vermont workers most of whom could not otherwise afford to take time from work to care for a new child, a sick family member, or the worker’s own health problem.

The six other states (and the District of Columbia) that currently offer paid leave plans provide a range of benefits. They all include protection for the employee’s own health condition. Most offer longer leave periods for medical conditions than for the birth of a child. They are funded through a mix of employer and employee contributions. Wage replacement ranges from 50 to 90 percent of the worker’s average weekly wage, depending on where they fall on the wage scale. Every state also caps the maximum benefit.

There’s a paid family and medical leave bill (H. 107) working its way through the Vermont House now and it’s likely to get to the governor’s desk. The governor vetoed the plan passed by the Legislature last year.

(un)Equal Pay Day

Posted by Sarah Lyons on April 2, 2019 at 1:16 pm | * Comments (2)

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Reach Up has fallen down

Posted by Julie Lowell on March 20, 2019 at 10:47 am | Comments Off on Reach Up has fallen down

Reach Up is failing to meet its own statutory goal “to improve the well-being of children by providing for their immediate basic needs, including food, housing, and clothing.” In a report issued last week, Public Assets found that Vermont is not coming close to meeting children’s basic needs.

Reach Up is the state’s primary cash assistance program and provides monthly grants to eligible families with children. A family of four with no other monthly income receives $726 in Reach Up benefits. This is the same amount a family of four received fifteen years ago—not the inflation-adjusted amount, but the exact same amount of money—while the cost of essentials has increased by 44 percent. It was not enough money in 2004 for a family to cover basic expenses, and it is certainly not enough in 2019. Fifteen years ago the benefit covered slightly less than half of a family’s estimated needs; today it covers 34 percent.

Fear of flight—tax flight

Posted by Stephanie Yu on March 6, 2019 at 2:30 pm | * Comments (2)

The fear that rich people will leave the state has been driving Vermont tax policy for years. The idea is that the state’s taxes should be competitive with other states’ so that taxpayers, especially those at the top, don’t leave. But this worry is unfounded, and the result is that low- and moderate-income Vermonters pay higher taxes than they should and the state’s revenues are inadequate to meet the state’s needs.

The latest proposal that relies on this fear involves Vermont’s estate tax. As part of his fiscal 2020 budget proposal, Governor Scott proposed raising the threshold for Vermont’s estate tax, a change that would cost Vermont as much as $10 million a year in state revenues.

As it stands now, the 16 percent tax kicks in for every dollar over $2.75 million in an estate—very few estates pay the tax (typically around 1 percent of estates per year). But Governor Scott would like the tax to apply to even fewer—only estates above $5.75 million.

Vermont’s latest health care bill

Posted by Jack Hoffman on February 26, 2019 at 3:41 pm | Comments Off on Vermont’s latest health care bill

When the Vermont Senate voted last week to increase the state’s minimum wage to $15 an hour by 2024, it was portrayed as an economic boon and a way to narrow the gap between low-income families and the well-to-do. What some senators may not have realized is that they also were passing a health care bill.

The New York Times Magazine ran a story last weekend about the various health benefits—both physical and mental—that come from raising the minimum wage. “Dollars on the Margins,” by Matthew Desmond, cites numerous studies that show people sleep better, eat healthier food, are less depressed, and smoke less when they get a raise and can make a decent wage.

“Studies have linked higher minimum wages to decreases in low birth-weight babies, lower rates of teen alcohol consumption and declines in teen births,” Desmond wrote. “A 2016 study published in the American Journal of Public Health found that between roughly 2,800 and 5,500 premature deaths that occurred in New York City from 2008 to 2012 could have been prevented if the city’s minimum wage had been $15 an hour during that time, instead of a little over $7 an hour.”

Child care déjà vu

Posted by Jack Hoffman on February 12, 2019 at 2:46 pm | * Comments (3)

Here we go again.

As his predecessor did six years ago, Gov. Phil Scott has proposed more money to help low-income families pay for high quality child care. It's a worthy investment, as it would have been in 2013. But repeating the mistake his predecessor made, Governor Scott wants to pay for his proposal by taking from Peter to pay Paul.

The governor's budget for fiscal 2020 calls for about $11–13 million in new taxes, including a $7 million increase Vermont could get by changing the way it taxes certain internet sales. But sales taxes, as a result of a major reshuffle the Legislature approved last year, are now dedicated exclusively to the Education Fund. So while raising the additional revenue makes sense, and would help to level the playing field for Vermont retailers, skimming money from the Education Fund shifts costs onto the property tax.

Larry Mandell remembered

Posted by Paul Cillo on February 1, 2019 at 2:17 pm | * Comments (2)

We were shocked and saddened to learn that Public Assets’ board chair, Larry Mandell, died on January 21.

It was shocking because he was active and by all appearances healthy. I had spoken with Larry a few days before he died and nothing about that conversation suggested that his symptoms would prove fatal. He was in the hospital for some tests. But it turns out that Larry had a rare and fast-acting disease called amyloidosis that caused his heart to stop suddenly.

We were saddened because Larry was a friend and a leader at Public Assets Institute. We miss him.

I had known Larry Mandell for decades, though just to say hello and exchange pleasantries. We had never had a conversation—until November 9, 2011.

Testimony to Senate Economic Development, Housing & General Affairs, January 24, 2019

Posted by Stephanie Yu on January 25, 2019 at 4:07 pm | Comments Off on Testimony to Senate Economic Development, Housing & General Affairs, January 24, 2019

Good morning, Mr. Chairman, members of the committee. Thank you for having me today.

My name is Stephanie Yu. I’m the deputy director of Public Assets Institute here in Montpelier. We’re a nonprofit, nonpartisan, public policy think tank that was established in 2003. 

For those of you who don’t know about Public Assets Institute, we analyze Vermont fiscal policy—tax, budget, and economic policy—with the typical Vermonter in mind. 

We publish an annual report at the end of December called the State of Working Vermont, which is our annual state of the state. Read more