A major study of Vermont’s entire tax system, two years in the making, had its debut Friday morning before the House Ways & Means Committee. The panel recommended wide-ranging reforms, each of which would be a very heavy political lift. These include shifting education funding from property tax to income tax, eliminating virtually all exclusions from the state sales tax (which would mean a lowering of the tax rate), imposing an annual registration fee on electric vehicles to replace lost gas-tax revenue in the coming transition to electric transportation, and replacement of the Telephone Personal Property Tax with a comprehensive levy on all telecommunications.
The Tax Structure Commission’s report was labeled a “draft.” It wasn’t made clear how much work remains, and how many changes might be made, before a “final” report is released. (The report can be accessed through the Ways & Means website.)
Commission member Deb Brighton began with a cheery reminder of the typical fate of tax-reform panels. “Every five years or so, the Legislature decides it wants a fresh, hard look at taxation,” she noted. Left unsaid was the fact that these reports are usually consigned to a dusty shelf, because real tax reform means a whole lot of sacred cows get whacked. In light of this SIsyphean history, one can easily conclude that this report is also destined for the dustbin of history.
The most recent tax panel, the Blue Ribbon Tax Structure Commission, delivered its report in 2011. Many of the TSc’s bullet points are strikingly similar to the BRTSC’s. The earlier panel’s fate was partly a matter of realpolitik, but each commission, coincidentally, faces competition from a natural disaster. The Blue Ribbon report was issued less than eight months before Tropical Storm Irene devastated Vermont. The new report, need I say, comes in the middle of a pandemic and resultant economic devastation.
Any tax reform is a complicated, time-consuming process. When it has to compete with a natural disaster, it has almost no chance of getting through. Not that this report is doomed. Just that I’m not sanguine about its chances, even though reform is badly needed.Continue reading