The House Ways and Means Committee is poised to vote on a massive tax increase intended to pay for new spending on child care in S.56. The Ways and Means Committee could vote as soon as this Monday. The bill will go next to the Appropriations Committee and could be on the House Floor later this coming week.
We strongly encourage employers to contact members of the Ways and Means Committee, Appropriations Committee, as well as their own Representatives and urge them to vote NO on S.56.
Concerns with S.56
The new draft for S.56 includes significant increases in both personal income and corporate income tax rates, making Vermont one of the highest tax states in the country.
However, the child care policies included in the bill, primarily increasing pay for child care workers and lower income subsidies for parents, have not actually been demonstrated to likely lead to lower overall costs or wider availability and access to services in a meaningful way. As a result, they are not expected to have a meaningful impact on how child care costs and availability are keeping Vermonters out of the workforce.
While the sheer scale of the tax increases is enough to oppose this proposal, the lack of expected effectiveness in the policies the taxes are supposed to pay for only compounds concerns with the bill as whole. The bill increases the rates in each of the existing tax brackets in both corporate and personal income taxes, including an increase in the rate for taxable corporate income over $25,000 from 8.5% to 10%. In total, it increases corporate taxes by $19.9 million and personal taxes by $120.8 million, or a gross total of $140.7 million. This is partially offset overall by an increase in the Earned Income Tax Credit by $13.9 million. Also, the bill will likely include provisions to address the current State and Local Tax (SALT) Cap disadvantage for Vermont pass-through entities (PTEs), which could save some Vermont companies up to $20 million in federal taxes, but this positive proposal does not outweigh the overwhelmingly negative aspects of the bill.
For a Committee overview of the tax changes, click here.
Contacting Your Senators and Representatives
You can find your Representatives by clicking here. You can also find the members of the Ways and Means Committee clicking here and the Appropriations Committee clicking here. Click on their name links for contact information.
You can also leave messages in the State House by calling 802.828.2228.
Given the timing of Committee and Floor votes next week, we would recommend both emailing and leaving phone messages urging a NO vote on S.56.
If you have any questions about S.56 or reaching out to your legislators, please don’t hesitate to contact us at email@example.com.