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Speaker decides against capital gains tax increase

first_imgSpeaker decides against capital gains tax increaseDemocratic House speaker Gaye Symington disapproved any steps towards changing the current exemption from taxation that Vermont allows on the first 40 percent of taxpayers capital gains. Symington explained her decision was due to the growing uncertainty in the financial world, and asked the House Ways and Means Committee to find an extra $3 million to $5 million in state revenues without enforcing a new tax fee.Symingtons decision ended the legislative session on three proposals for using the $21.4 million that was generated by eliminating the 40 percent exemption in new state revenues, which included her own initial plan. Her suggestion involved dividing the revenue three ways: $4.2 for targeted property tax relief, $8 million for the town highway and bridge program and $7 million to repay part of the $55 million owed by the state for school construction projects.The debate over the capital gains exemption started this past January when Governor Douglas suggested eliminating it and using the new revenue to offset reductions in income tax rates for middle and upper class residents. In a released statement the governor said, Vermont is one of only a few states where a working person making $50,000 a year pays nearly 50% more tax than someone who does not work and collects investment or trust fund capital gains income in the same amount. It is wrong for our tax system to have higher rates for working Vermonters.Douglas also explained that his commonsense reforms would permanently lower the income tax burden on more than 70,000 middle income taxpayers and save the average household up to $500 per year.”The governor’s capital gains proposal was purely a tax fairness proposal,” said Tax Commissioner Tom Pelham.The administration fully supported Symington’s decision to abandon her original plan to spend the money, even though it meant the governor’s plan died, too-a decision that would increase income taxes by more than $21 million.The controversy over the exemption wasnt solely based on how the money should be used. Lawmakers from both parties were anxious over the impact of eliminating the exemption.Rep. Rick Hube, Republica-South Londonderry explained that a small number of people pay a significant percentage of the income taxes the state collects. “The last thing we can do is jeopardize those individuals staying in Vermont.”Senator Hinda Miller, Democrat-Chittenden, explains that if the exemption is eliminated “it is going to cut down the equity capital coming into this state for entrepreneurial startups. These entrepreneurial startups are our hope for job creation.”Any House proposal eliminating the capital gains exemption faced a possible opposition in the Senate, despite the wish of the Senate Transportation Committee to use the money to address the shortfall for this years road and bridge budget. House Ways and Means Chairman Michael Obuchowski, Democrat-Rockingham, said it was important to maintain and save this potential revenue source in case of a deficit next year.”We’ve seen numbers for fiscal 2010 that project as high as an $80 million deficit,” Obuchowski said. Obuchowski said the committee would begin its search immediately for the extra revenues Symington requested.One source might be a change in a calculation of capital gains that allows some filers to show negative income. That change could generate $1.5 million to $1.9 million.House Republican leaders would prefer that the Legislature write a budget without finding extra revenue.last_img

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