Vermont Has Options to Raise Revenue for Smart Investments

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Gov. Peter Shumlin has the right idea when he says we should invest in expanding the availability of child care for working Vermonters. However, it just doesn’t make sense to take money from low-wage working families to pay for this initiative. Other changes to Vermont’s income tax code could produce about as much revenue as the governor is seeking—or more—and make the state’s tax system more equitable.

Currently, Vermont allows taxpayers two options for subtracting certain kinds of expenses from their income. They can take a standard, lump-sum deduction that covers things like health care, state and local taxes, and mortgage interest. Or they can list each of these expenses and take a larger deduction if the itemized expenses are greater than the standard deduction. Vermont could change the way it treats itemized deductions or it could modify or eliminate certain deductions.

The Institute on Taxation and Economic Policy (http://www.itepnet.org/) in Washington, D.C., analyzed several options for Public Assets Institute and estimated how each would affect Vermonters in various income categories in 2013. Revenue estimates are calculated for each option separately and should not be added together.