Rep. Paul Poirier, I-Barre, proposed raising taxes for people in the state's two highest income brackets to collect an additional $10 million to fund the 3SquaresVT nutrition assistance program. His effort was defeated on a roll-call vote of 115-28.
During the debate, Poirier implored his colleagues to restore the food stamp benefits cut by Congress.
"One out of every six Vermonters is dependent on some kind of financial help to put food on the table," Poirier said.
His figures were based on a one-month snapshot of 3SquaresVT, the state's Supplemental Nutritional Assistance Program. Thirty-four percent of all food assistance recipients are under 18 years old. The average monthly household benefit was $243 before the program was cut last year.
"I would ask anybody in this chamber, if you could feed your whole family for $243," Poirier said.
Joined by Rep. Chris Pearson, P-Burlington, he pleaded with lawmakers to buck leadership and support his amendment to temporarily raise taxes on the two highest income brackets.
The increase would have applied to tax years 2014 and 2015 and then revert to 2013 levels. Poirier wanted to raise the top two tiers from 8.80 percent and 8.95 percent, respectively, to 9.5 percent and 9.95 percent.
Rep. Anne Donahue, R-Northfield, said the highest earners already pay their fair share in relation to low-wage earners. The top 3 percent of tax filers contribute more than 40 percent of the state's personal income taxes, she said. The top-heavy nature of those payments indicates Vermont's income taxes already are progressive, she said.
Citing the same numbers, Pearson challenged her conclusion.
"You see why this body of Vermonters does not, in fact, pay an overwhelming amount of our income tax burden," Pearson said. "Because they don't earn an overwhelming amount of our income."
Rep. Mike Yantachka, D-Charlotte, said the broader problem is income tax avoidance. He and several others said they preferred a more permanent tax solution, namely shifting the tax base from taxable income to adjusted gross income.
Rep. Janet Ancel, D-Calais, chairs the House Committee on Ways and Means, which is responsible for generating tax recommendations and which worked closely with budget-writers in the Appropriations Committee. The two committees cut a projected $71 million shortfall in half with about $35 million in one-time funds and reduced the cost of some debt obligations. The tax revenue will fund a roughly 4 percent increase in the state budget.
They agreed to trim some programs, but cut none. E-cigarettes were added to a list of taxable tobacco products, but no other new taxes were levied with the passage Thursday of H.884.
business tax credits
Pearson later challenged the job creation impact of some corporate tax incentives provided by the Vermont Employment Growth Incentive (VEGI). The program's grants are awarded to businesses that say they could not create certain jobs without assistance from taxpayers.
Pearson said the publicly owned Keurig Green Mountain Inc. (formerly Green Mountain Coffee Roasters) and the entrepreneurial success story Dealer.com have received state assistance. His questions and comments implied the companies would have been quite capable of growing their work forces without public funding.
"To me, it's an easy either/or," Pearson said. "Provide more food for families, or give large companies tax breaks."
Building off that criticism, Rep. Adam Greshin, I-Warren, said he opposed the tax bill because it requires disclosure of the businesses that receive research and development tax incentives. The tax credit is not new, but the waiver of confidentiality is.
Ancel defended the waiver. She said that it's just a business' name that is disclosed, not the amount of the tax credit or the nature of the research. She said the disclosure is in the interest of transparency and accountability.
e-cigarettes and snuff
One of the few new sources of revenue in the tax bill is a levy on e-cigarettes. The product, previously unclassified, would be defined as "tobacco substitute" for tax purposes. Under the bill, all wholesale purchases would be taxed at 92 percent of its wholesale cost.
Donahue objected to that definition, saying it should be driven more by health policy than taxes.
"This is not something that should be subject to a brief discussion," Donahue said, noting growing concerns about major decisions being made based on their financial impact alone. "I'm disappointed we would address an issue like this in this way."
Limited objections to the e-cigarette tax were raised. Rep. Robert Helm, R/D-Fair Haven, said he's concerned about the impact of the tax on a business in his jurisdiction. It was suggested that consumers might move to online, out-of-state purchases.
Rep. William Canfield, R/D-Fair Haven, agreed.
"I can go down the road to the local head shop and buy a crack pipe, and pay 6 percent tax," Canfield said. To lay such a high tax on e-cigarettes, which he described as a product to help people quit smoking, is wrong.
Many lawmakers took issue with that characterization of e-cigarettes.
"They are a poison-delivery system," Yantachka said, further noting that flavors like bubble gum and chocolate suggest an intention of marketing to children.
No amendment to the e-cigarette provision was offered.