Potential tax increases coming after the election
Before Peter Shumlin became governor, he famously said that there was no more tax capacity left in Vermont. We were 'tapped out." Since then, Shumlin and majorities in the legislature have passed hundreds of millions of dollars worth of new taxes and fees. Despite this, the state still deals with a consistent structural budget deficit and revenue shortfalls.
Many of our politicians, like Shumlin, pay lip service to hearing Vermonter's pain when it comes to our tax burdens and overspending by the state, but their records tell a different story. And, these particular zebras aren't going to change their stripes. Just look at the tax and spending proposals that are on the table for tapped out Vermonters to contemplate for 2017.
The Carbon Tax. This is ultimately a $500 million dollar per year excise tax on fossil fuels. This translates into adding 88¢ to each gallon of gasoline, $1.02 per gallon of diesel and home heating oil, and similar increases for propane, natural gas, kerosene, butane and aviation fuel. Proponents say that 90 percent of the revenue collected would be returned via a variety redistribution schemes (keep in mind that households making over 200 percent of poverty level, or about $25,000, will not qualify for rebates and will get stuck with the bill), but hedge that promise by admitting the state is always free to find other uses for the money.
In 2014, Rep. Tony Klein (D-East Montpelier), chair of the House Energy & Natural Resources gave an interview stating about the Carbon Tax that "it's at least a three-year process," and that "you don't [pass a massive tax increase] in an election year." This means 2017 – after this November's election – is the target for passage.
The primary Carbon Tax bill presented in the 2015-16 biennium has 28 sponsors, all Democrats and Progressives, including Democratic Lt. Gubernatorial candidate Kesha Ram. All three Democratic candidates for governor, Matt Dunne, Peter Galbraith, and Sue Minter, support some version of a Carbon Tax.
Dr. Dynasaur 2.0. This program would essentially expand children's Medicaid benefits to adults 18-26 years old. It has a total price tag of $400 million, and ignores the fact that Medicaid is already the primary reason for the state's structural budget deficit. Additionally, removing these young, healthy Vermonters from the private insurance market would cause private insurance rates to skyrocket. Despite all this, a majority in the legislature voted last year to spend $100,000 to study Dr. Dynasaur 2.0 in preparation for the 2017 legislative session.
Two percent Payroll Tax. This is a proposed $240 million tax increase by Peter Galbraith that would be used to pay for "Universal Primary Care." In a nutshell, the state would pay doctors a set rate per patient for full access to primary care services. Patients would still need insurance for non-basic or catastrophic health events, which account for 95 percent of healthcare spending.
All three Democratic gubernatorial candidates support moving forward with some version of Dr. Dynasaur 2.0, Universal Primary Care, or both, as a step toward a comprehensive single payer healthcare system – doubling down on Peter Shumlin's greatest financial and political disaster.
"Free" College. All three Democrats running for governor have plans to subsidize college tuition that would cost taxpayers between $45 million and $12 million, depending upon the plan. Matt Dunne's plan would rely on an increase in the capital gains tax, Sue Minter would increase the bank franchising fee and create new corporate taxes targeting banks, and Galbraith's plan would rely on a number of tax increases, including a tax on cloud computing services and closing income tax loopholes. Pick your poison.
Public Pre-K. Since the mid-2000s, the legislature has been steadily increasing government's (and property taxpayers') role in daycare for three and four year olds. The goal is full day, publicly funded pre-k programs administered by the public school system, essentially adding two years to the K-12 system. This year, a major push is underway to expand the current programs and expand the scope of interest from three and four year olds to "birth to five."
A coalition of special interest groups, Let's Grow Kids, Vermont Birth to Five, Building Bright Futures, are working with the Vermont Department of Children and Families on a statewide propaganda campaign to fund this expansion. "Ultimately, this will require increased investment in Vermont's early childhood system," writes advocate Robyn Freedner-Maguire in the group's latest Op-Ed. Though they don't specify the amounts they will ultimately be asking for, and the Joint Fiscal Office has yet to make an official estimate the cost, a rough estimate is between a $50 million and $100 million increase to the property tax burden.
These are just the big plans. None of this accounts for the existing revenue gap we'll need to close to continue paying for the government in place as it is. So, as the primary elections come to a close on August 9 and we know who our official candidates for state office will be, make a point of asking them about these issues. If they really care about lowering your tax burden, they won't support any of them.
Rob Roper is president of the Ethan Allen Institute. He lives in Stowe.
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