Tag Archives: payroll tax

The vicious circle of taxation rhetoric

Ah, spring. The buddling of the trees, the blossoming of the daffodils, the abrupt transition from shoveling snow to tending the yard.

And the annual flowering of complaints from conservatives, businesses, and Peter Shumlin about how Democrats want to tax everything. Look at all these tax proposals: sales tax on services, new limits on tax deductions, sugary beverage tax, candy, tobacco, payroll tax, development fees and farm-fertilizer taxes, plastic bag fee, fee hikes for various professions, tax on vending machines, and I’m sure I’m missing a few others.

Take them all together, and you have a picture of Montpelier liberals trying to squeeze the lifeblood out of our economy by taxing everything in sight.

There’s a problem with that. Nobody in Montpelier wants to “tax everything.” Not a single Democrat, not a single Progressive. Here’s the reality.

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.House Health Care gets the brown plate special

Recently, the House Health Care Committee passed a health care bill that raised $52 million in new revenue to pay for an array of reforms, including better Medicaid reimbursement for providers and more premium support for the working poor. It proposed raising the revenue through a payroll tax and a sugar-sweetened beverage tax.

Then it went to the Ways and Means Committee, which couldn’t agree on either tax. Technically they have yet to agree, but they did send guidance to the Health Care Committee that it should craft a plan requiring no more than $20 million a year. Ways and Means is reportedly moving toward a smaller version of the beverage tax to raise that money, although nothing is final.

Well, as one of my childhood heroes, Detroit Lions great Joe Schmidt, says, “Life is a shit sandwich, and every day you take another bite.” When the Health Care Committee reconvened this morning with that guidance in mind, they looked like they’d been served the Brown Plate Special. Glum faces all around. As committee chair BIll Lippert said, tongue slightly in cheek, “We can’t do all that we have to do.”

Committee members had no clear idea how to proceed. There were widely varying ideas. Anytime a specific cut of any size was suggested, sound and reasonable objections were voiced.

When they looked at the overall picture, some members wanted to make big cuts here and hold harmless there; but they all had different heres and theres.

At the end of a necessarily brief discussion (before the House convened for the day), Lippert thanked everyone for their input and said he would try to put together a proposal for futther discussion. And he noted that the committee would need to adopt some kind of bill by the end of the day tomorrow. He didn’t sound very happy.

Whatever Health Care comes up with, it’s likely to face the ax down the road. It’s still unclear whether Ways and Means can pass the reduced beverage tax, to say nothing of its fate in the full House and Senate. If I were a betting man, I’d say any new health care initiatives are going to be whittled down to nothing, or nearly so.

Our Leaders will plead fiscal responsibility in tough times, and perhaps start looking for a bone to throw to disaffected liberals.

House Ways and Means at impasse

This afternoon, the House Ways and Means Committee was scheduled to discuss the health care bill. You know, the one with the two-tax solution: the .3% payroll tax and the sugar-sweetened beverage tax.

Well, it didn’t happen.

The committee took testimony in the morning. But after lunch, members did not reassemble. At one point, committee chair Janet Ancel entered the Ways and Means room; I asked her what the plan was.

I don’t have her exact words, but here’s the gist. They’d heard from all the witnesses, but the committee had stalled out on the two tax provisions. Neither tax would get majority support in the committee, if she held votes today. So, no votes.

No witnesses left. (She jokingly asked me if I’d like to testify.) And apparently she feels that more discussion or debate wouldn’t change any minds.

Welp, without those two tax provisions, there’ll hardly be any money for closing the Medicaid gap or any of the other improvements adopted by the House Health Care Committee.

Ancel had no idea what would happen next, or when it might happen.

Of course, either tax (or both) could be added back at a later point. But if Ways and Means can’t agree on a funding mechanism, it’s  certainly a discouraging sign for those of us hoping to redeem a few scraps of the lost promise of single payer health care.

For health care expansion and SSBT, a long road ahead

Last week brought some relatively cheery news for fans of better access to health care and of the sugar-sweetened beverage tax. The House Health Care Committee passed a fairly wide-ranging bill that would help close the Medicaid gap, provide more assistance to working-class Vermonters seeking health insurance and encourage more primary care providers, among other things. To pay for all that, the Committee opted for a two-pronged approach: the revised 0.3% payroll tax proposed by Gov. Shumlin, plus the two-cents-per-ounce tax on sugar-sweetened beverages.

A good package, a nice bill. But is it a meaningful step, or simply a McGuffin? When you read between the lines of Committee chair Bill Lippert’s statement, and see the slightly shopworn look on his face, well, you start thinking the latter.

I have no illusions that what we propose will be a final product at the end of the session, but it was our responsibility… to identify and articulate priorities that could make a difference now and could be investments for the future, even in a time of tight budgetary constraints.

Glass half full, or glass half empty? I hear a guy resigning himself to the inevitable disembowelment of his bill.

Enough inference. The next stop is the Ways and Means Committee, where opinion is split on the SSBT and there’s widespread opposition to the payroll tax. After that, well, there’s a lot of room for pessimism.

There’s little appetite for raising taxes in Montpelier — or should I say “raising more taxes,” since tax increases will almost certainly be part of a budget-balancing deal. (Front runner: Ways and Means chair Janet Ancel’s plan to cap itemized deductions at 2.5 times the standard deduction.) There’s also the EPA-mandated Lake Champlain cleanup that needs funding. In this climate, it’ll be hard to justify funding the health care package as well.

Regarding the SSBT specifically, Governor Shumlin and House Speaker Shap Smith don’t like it. Really, there aren’t many real fans; some just see it as the least bad option. Most lawmakers seem allergic to the payroll tax, even in reduced form. But let’s say, just for the heck of it, that the Health Care Committee’s bill passes the House. What awaits in the Senate, that notorious den of centrism where liberal House bills go to die?

“I wouldn’t predict what a vote today would be,” says Senate Finance Committee chair Tim Ashe (more D and less P with each passing day). “I’d say they both start in difficult places in terms of a Senate vote. Individual committees may be more or less favorable, but in the whole Senate, both would struggle to pass at this time.”

Gulp. Well, I guess I shouldn’t be surprised. So I guess that leaves us with no money for enhancing our partially-fixed health care system?

“That’s an open question,” says Ashe. “There are the resources to pay for new initiatives or increased support for existing initiatives can come from existing sources or new revenues.”

Oh really? You’ve found a pot of money somewhere?

“I’ll mention just one resource. …This year, Vermonters without insurance are going to ship about six million bucks to the federal government in a penalty. Next year that money goes up to 12 to 14 because the penalty basically doubles.

“So 23,000 Vermonters will be shipping all that money to Washington, and they will get nothing for it. Question is, is there a way to help them NOT send the money to Washington and get nothing for it, but to keep the dollars here and give them something for it? I don’t know what the answer to that is, [but] it makes you scratch your head and say, ‘Well, jeez, wouldn’t it be easier if they just had insurance here?'”

Nice to see the Senator thinking outside the box, BUT… he himself admits he doesn’t know the answer to that. And even if we could somehow funnel the penalty money into health insurance, we’re talking “about six million bucks” this year and 12 mill the year after that. That’s a far cry from the Health Care Committee’s $70 million a year.

Six million, or even 12, isn’t going to buy you a whole lot of improvement. The Medicaid gap would remain painfully wide, and good-quality insurance would remain out of reach for many working Vermonters.

But that’s the kind of year we’ve got. Best to ratchet down expectations.

Of course, we’re now looking at budget gaps in the $50 million range for each of the following two years. Substantial health care reform keeps receding further over the horizon. And universal access? Rapidly approaching pipe dream territory.

The Good Ship Two-Tax leaves the harbor

“Yes.”

That’s the one-word answer I got from House Health Care Committee chair Bill Lippert (D-’Burbs). The question? Did he consult with Speaker Shap Smith and Governor Shumlin before proposing a two-tax approach to funding health care?

As you may have heard, Lippert’s committee yesterday passed a health care bill including a .3% payroll tax and a two-cents-per-ounce sugar-sweetened beverage tax. Thus confounding the predictions of low-budget Vermont Political Observers (ahem) who thought the introduction of the lower payroll tax might be the death knell for the beverage tax.

Asked to elaborate on his one-word revelation, Lippert unsurprisingly didn’t offer much:

“…there are different points of view on different parts of the bill. That’s all I can say, really. The Governor’s made clear that he’s a fan of the payroll tax and not a fan of the sugar sweetened beverage tax.”

Of course, in this budgetary environment, the governor’s going to wind up accepting some items he’s “not a fan of.”

On the other hand, the Health Care Committee is a relatively safe harbor for the beverage tax; it approved the tax last time around, only to see it run aground in Ways and Means. So, will it be smooth sailing for the committee’s bill this year?

Nah.

“Sail through? No, it will not sail through. There are waves and shoals and whatever metaphor you want to use. I’m looking forward to it not being a shipwreck.”

At that point, we abandoned the metaphor. Point being, Lippert has no illusions about the permanence of the vessel — oops — he’s built.

He makes a good case for it, from a liberal point of view. Since the Governor reduced his payroll tax plan, the combo tax was an alternative way to fund an array of health care reforms aimed at broadening access, reducing the uninsured, encouraging expansion of primary care offerings, and further bending the cost curve.

The bill would improve available subsidies in the health care exchange for those making between 133% and 300% of the federal poverty level. Even with current subsidies, many of the working poor can’t afford health insurance. Or their coverage has such high out-of-pocket costs that they can’t afford to use it. Kind of defeats the purpose of health insurance, no?

The sugar-sweetened beverage tax, Lippertays, makes sense as a funding source for health care because it “raises revenue, but is also a way to invest in longer-term behavioral changes and better health.”

Of course, he acknowledges diverse opinions about the beverage tax, even on his own committee, and expects more of the same going forward:

I have no illusions that what we propose will be a final product at the end of the session, but it was our responsibility, and I was given the direction, to work with the committee to identify and articulate priorities that could make a difference now and could be investments for the future, even in a time of tight budgetary constraints. We may have exceeded that, but we did our best.

A number of us came into this session saying, we’re not going to be able to move forward on the universal access through single payer, but there is still reason for us to move forward in a significant way in health care.

Moving forward “in a significant way” required more revenue than the Governor’s reduced payroll tax would provide. Problem is, there’s pretty broad disagreement on the relative merits of the payroll tax and the beverage tax — across party lines. At this point, there’s no consensus on how to pay for health care reforms, or how much to pay. The likeliest outcome: a lot of the reform provisions will wind up on the cutting-room floor as legislative compromises eat away at the Health Care Committee’s revenue proposals.

Beverage tax pipped at the post?

This should have been a good day for the sugar-sweetened beverage tax. State lawmakers were unconvinced by Governor Shumlin’s proposed payroll tax, and many had turned to the beverage tax as a way to help close the Medicaid cost gap. Today, the House Ways and Means Committee is considering the beverage tax, and advocates on both sides are pointing to this hearing as a key moment.

(Last year, the beverage tax passed the House Health Care Committee but died on a close vote in Ways and Means. Things were looking better for the tax this year.)

But wait, what’s this? Shumlin’s posse has come riding over the hill with a revised payroll tax plan that, according to VPR’s Peter Hirschfeld, “looks to have new life” in the Health Care Committee. Fortuitous timing, neh?

The new plan is friendlier to business, cutting the payroll tax rate in half and eliminating an employer assessment on businesses that don’t offer health insurance to their workers.

Chief of Health Care Reform Lawrence Miller says the smaller tax would generate enough money to pay for Shumlin’s plan to close the Medicaid gap. Which makes me wonder how he can now accomplish this with less than half the revenue of his original plan. What got cut?

We’ll find out soon enough, as the Governor’s new plan gets an airing in legislative committees. But its very introduction may well be enough to throw the beverage tax, once again, into the dumpster.

Not all businesses think alike. Or, Mr. Barlow, your table is ready.

We have a winner in theVPO’s first-ever giveaway.

In some secluded rendezvous…

In some secluded rendezvous…

As you may recall, earlier this week the Lake Champlain Regional Chamber of Commerce made an ass of itself: one day, its president issued a clarion call for action on Lake Champlain, and the next, its lobbyist strenuously insisted that the LCRCC would fight tax increases to fund cleanup efforts.

Hypocrisy, thine initials are LCRCC. Anyway, in light of that, I offered a free dinner to the first lobbyist who accepted a measure of financial responsibility for his/her group, industry, or membership.

Well, we have a winner, and it’s just who you might expect: Dan Barlow of Vermont Businesses for Social Responsibility.

Dan didn’t nominate himself; a friend in the media, who’d just love to see me spend my money, pointed out to me that at a Statehouse press conference yesterday, Barlow (speaking for VBSR) endorsed Gov. Shumlin’s proposal to close the Medicaid cost gap through a payroll tax. I wasn’t at the presser, but Barlow’s statement has been reported by VTDigger, which is good enough for me.

So Dan, if you want to strap on the ol’ feed bag, let me know.

This brings to mind something that’s been bugging me for a few days. On Monday, the usually impeccable Anne Galloway of VTDigger posted a story entitled “LEGISLATIVE MANDATES HAMPERING RECOVERY, BUSINESS GROUPS SAY.” The story recapped the usual litany of complaints about taxes and costs and regulations — and that hoary old chestnut, “uncertainty.”

Which is just bullshit. Life, by its very nature, is uncertain. Potential legislative changes are one of the smaller aspects of it. To cite just one obvious example: the price of oil. Who predicted its nearly 50% drop in recent months? That alone plunged a fatal dagger into Vermont Gas’ pipeline to Ticonderoga. Fuel costs are a much bigger factor in running a business than anything the legislature might reasonably do.

Galloway’s piece could have been written by a functionary in Jim Harrison’s back office, so one-sided was it. The only note of dissent was a brief comment by House Speaker Shap Smith in the very last paragraph.

Now, you could make an argument for this article as part of VTDigger’s ongoing coverage of the legislature: let’s take a look at how business groups are feeling about the course of the session. Other views will get a hearing elsewhere.

But even on that narrow pretext, the article falls short. By focusing on The Usual Suspects, it fails to reflect the range of views within the unmonolithic “business community.”

It doesn’t, for example, quote VBSR. Not even a little bit. It doesn’t quote business types like Small Dog’s Don Mayer or Fresh Tracks Capital’s Cairn Cross, who have much more nuanced views of the potentially positive role of government in economic development. It doesn’t mention former State Rep. Paul Ralston of Vermont Coffee Company, who’s chairing Shap Smith’s working group on improving the economy. It sure as hell doesn’t quote Ben Cohen or Jerry Greenfield.

EVen if you accept the premise that an overview of the business community is a worthwhile use of VTDigger’s media platform, this article was woefully incomplete. A rare FAIL for a diligent and trustworthy news source.