Tag Archives: sales tax

Phil Scott’s charity appears to be violating state tax law

Wheels for Warmth is a great thing. It turns an unutilized resource (winter tires sitting in garages) into money for emergency home heating assistance. It also gives many a Vermonter a chance to buy perfectly good snows on the cheap.

Win-win, and a testament to Phil Scott’s community-mindedness.

But when you run a charitable enterprise, no matter how noble, you have to play by the rules.

Charities that sell stuff to raise money are supposed to collect and pay sales tax. And as far as I can tell, Wheels for Warmth doesn’t do so.

An inquiry to the Tax Department produced the following information courtesy of Kirby Keeton, Tax Policy Analyst Interim General Counsel for the Department.

The state “cannot disclose tax information related to a specific taxpayer,” Keeton wrote. However, it can say whether an entity is registered to collect and pay sales tax.

Wheels for Warmth is not so registered.

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More tax-baiting from your VTGOP

Any day now, I expect Phil Scott to disavow the dishonest campaign tactics of his own Vermont Republican ParBWAHAHAHAHAHA Sorry, I thought I could get through that with a straight face.

At issue is VTGOP Executive Director Jeff Bartley’s continuing attacks on Sue Minter’s allegedly tax-happy ways. Problem: to make his case, he has to resort to fearmongering, gross exaggeration, and outright falsehood. So yeah, if Phil Scott were serious about negative campaigning, he’d clean up his own house first.

But I’m not holding my breah.

Bartley presents a two-fer in his latest press release, attacking Minter incorrectly for supporting a Vermont carbon tax (she doesn’t) and for pondering an expansion of the sales tax to include services (she’s considering it). The argument is taken further in this Tweet from @VTGOP.

Awww. Mean old lady wants to tax cute little boy’s haircut.

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Triangulatin’ Tim

Congratulations to Tim Ashe, chair of the Senate Finance Committee, for shepherding this year’s tax bill to the Senate floor. He managed to find some new money for the budget while keeping true to the intention he stated earlier this week:

“In terms of the major tax areas, my goal is not to have the Senate need to go to those sources,” Ashe said.

The final package emerging from Senate Finance and Appropriations:

The lion’s share of the Senate’s revenue package is generated by the miscellaneous fee bill. The Senate version removes an increase in the employer assessment for uninsured workers, as well as a hike in bank taxes.

The latter two were passed by the House.

My congratulations are tempered with confusion, however. Ashe’s goal would be sensible and reasonable if he were a centrist Democrat in the mold of John Campbell or Dick Mazza, not a Progressive who now lists himself as a D slash P.

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Our favorite Taxation Imp strikes again

As is customary on Thursdays, yesterday’s edition of the Burlington Free Press* once again was graced by the comedy stylings of Art Woolf, Vermont’s Loudest Economist. This time, Art was letting us know just how difficult it is to be rich.

*Newsstand price now a DOLLAR-FIFTY!!! for a few pages of wire copy and recycled USA TODAY “content.” I’d like to see Professor Woolf’s cost/benefit analysis of that little bargain.

No, seriously. The One Percent have it rough. Here’s how it starts.

Rich get richer, pay more taxes

In 2014, the state collected $650 million in income taxes from Vermonters. High income Vermonters continue to pay a very large share of that.

Well yeah, because they make most of the money.

He goes on to break down tax collections by income bracket in a way that emphasizes just how much we peasants are benefiting from the forced largesse of Our Betters. Which, if you consider state income tax in isolation, is true; the more money you make, the more taxes you pay.

But when you consider the entire burden of state and local taxes, you flip the script. Here’s a handy chart from the Institute on Taxation and Economic Policy (ITEP), showing Vermont’s total tax burden.

ITEP chart

That’s right. In Vermont, the rich get off easy and the middle class takes it in the shorts.

See, our income tax is reasonably progressive, but our other primary taxes are not. Sales taxes are strongly regressive, hitting the poorest people hardest. Property taxes slam the middle classes. Add ‘em all up, and that chart is what you get.

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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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Look out, here comes the Bee Pollen Brigade

Here’s the topline for today’s developments re: funding for improvements to Vermont’s health care system:

$20 million.

That’s the target figure for new revenue agreed upon by key House leaders. A big comedown from the House Health Care Committee’s $52 million, but enough to make some progress in closing the Medicaid gap*, enhancing access for the working poor, and trying to attract more primary care providers.

*The gap closure is likely to favor primary care doctors, since they’re the front line of health care and also the most financially precarious.

Exactly how the House will get to $20 million is unclear. House Ways and Means is aiming to pass a bill this week*, but it would then face an uncertain fate in the Appropriations Committee. And the House floor. And the Senate.

*Committee vote today postponed due to the absences of two Democratic members.

But $20 million seems etched in stone, at least in the House. So this morning, Ways and Means examined five different tax packages that would raise roughly $20 million per year. The options include: some sort of tax on sugar-sweetened AND diet beverages, removing the sales tax exemptions on candy, sweetened beverages, imposing the rooms and meals tax on vending machiens, increasing taxes on cigarettes and/or tobacco products, and my fave: imposing the sales tax on dietary supplements.

Gasp! Yes, lawmakers might force us to pay sales tax on cranberry extract pills, antioxidants, probiotics, pro-oxidants (is that a thing?), and all those other sundry preparations clogging the shelves of your local food co-op.

I am now counting down to the arrival of the Bee Pollen Brigade with cries of outrage. This could be the next mass invasion of the Statehouse.

But it’s among the least unpalatable options before Ways and Means. As of this writing, there’s no sense of a committee consensus or even a majority behind any of the five tax packages. (Conservative Democrat Jim Condon tried a Hail Mary pass this morning; he floated the idea of selling bonds to pay for some health care reforms. The idea was quickly shot down by the Treasurer’s office, which pointed out that it’s considered improvident to bond for short-term spending. Or, to put it in Treasurer’s terms, “You should make sure the useful life of the asset is at least as long as the life of the bond.”)

Ways and Means is working from five proposed tax packages; all five are outlined, with revenue estimates, on the committee’s website.

So, the details of the revenue package remain unclear, but the bottom line is not.

$20 million for health care.

The budget gap: an alternative story

A simple narrative has emerged to explain Vermont’s budget gap of roughly $113 million. Oddly, tragically, it’s pretty much the same narrative whether you’re Republican or Democrat.

The Republicans’ version goes like this: The Democrats are out of control! They’re taxing and spending like drunken sailors!

Some liberals raise a fundamental objection to this — but not Gov. Shumlin. Now, he couches it differently; his version is that Vermont’s economic growth has failed to meet expectations and that state spending has overreached. But his underlying assumption — the state has spent beyond its means — is very similar to the Republicans’.

Gee, no wonder he had trouble developing a clear narrative in the 2014 campaign.

It’s true that the economy has underperformed expectations — but that’s not a phenomenon unique to Vermont. Nor is it attributable to our alleged “tax, spend and regulate” ways. By many measures we’re doing better than our northeastern neighbors. And we’re doing a hell of a lot better than states with hard-core free-market governments like Wisconsin, Michigan and Kansas.

(The states where free-market ideology is credited for booming economies enjoy unrelated economic advantages: Texas and North Dakota’s fossil fuel wealth, Arizona and Florida’s retirement havens and influx of immigrants.)

(Yes, immigrants. Most of them are hardworking people who came here in search of a better life. They add energy and ambition as well as cultural spice to our melting pot. We could use more of them here in Vermont.)

There’s an alternate story to tell about how we got into this fix. Strangely enough, it actually shows the Shumlin administration in a positive light. If only the Governor was willing to tell it.

Part of our problem is the structure of our tax system, as previously discussed in this space. ur income tax system has an extremely narrow base because of how we calculate taxable income and allow itemized deductions.  We’re losing tens of millions in potential revenue because our sales tax system has more holes than Swiss cheese. (Sen. Tim Ashe, chair of the Senate Finance Committee, estimates that we’re losing $50 million a year because of Internet sales. That’s not new tax money; it’s money we used to collect and aren’t anymore.)

The rest of the problem is that the Democrats have been responsible stewards, even if it means short-term trouble. They’ve tried to manage state finances in difficult times while maintaining state programs that have a beneficial impact on our present and future well-being.

Programs like Reach Up and expanded health care access and substance abuse treatment aren’t giveaways; they’re aimed at giving Vermonters a way out of systemic poverty. There’s also an immediate benefit: money spent in programs like food stamps and LIHEAP and the Earned Income Tax Credit go directly back into the economy, creating much more positive impact than capital gains tax cuts or corporate tax breaks.

And here’s a great big item that, sadly, I didn’t even realize until Saturday when House Speaker Shap Smith addressed the State Democratic Committee. The Democrats have spent millions to restore full funding to public sector pension plans. Smith mentioned $60 million, and called it a significant reason for our budget troubles.

Which is true. But it’s also the responsible — nay, the legally required — thing to do. The pension gap was created through years of mismanagement under previous administrations. (You know, those administrations that featured budget hawk Tom Pelham in prominent roles.) They took the easy way out of budget predicaments: putting off the day or reckoning. As Smith said, “we’re making up for the sins of the past.”

Really, it’s the Republicans who are bad managers. They are so single-mindedly focused on cutting that they fail to develop any sort of vision for governing. And they undercut the good things that government can, and should, do.

Two more overdue investments. First, the current administration has instituted health care reforms that have produced some waste and a bug-riddled website, but have also cut our uninsured population to 3.7%, compared to a national average of 12%.

And second, it’s making a long-overdue attempt to clean up Lake Champlain. That’s another legacy of the short-sighted practices of past administrations: they ignored the problem and let it get worse. And more expensive to fix.

These are noteworthy accomplishments. They are the right things to do. They are not wild or radical or thoughtless. And they are big reasons why we’re in our current budgetary difficulties.

And that’s it. It’s not a narrative of spendthrift liberals bankrupting the state. It’s a narrative of careful investment in Vermont’s future weighed down by a legacy of bad management and an outdated, creaky tax system.

This is not to say that I agree with everything the Democrats do. They’ve been too careful for my taste. But they do have a compelling story to tell.

Too bad nobody’s telling it.