Tax the rich: This is Vermont’s plan to raise taxes on its wealthiest residents

According to a 2022 Gallup poll, most voters support using the tax system to redistribute wealth to reduce inequality. Though the popular support is there, Congress has not moved on the issue. However, leaders in Vermont are taking a different approach by proposing a new tax system. The proposal, put forward by three organizations - the Vermont branch of the ACLU, Vermont National Education Association, and Vermont Natural Resources Council - would increase taxes for residents earning over half a million dollars per year or those with a net worth over a certain threshold. The coalition is organizing under the name Fair Share for Vermont and aims to raise awareness on how increasing taxes for wealthy residents and high earners could allow the state to fund social assistance programs more effectively to uplift low-income residents and decrease economic inequality.

Increasing taxes on high income earners

The fundamental component of the proposal is a three percent tax on all incomes over $500,000. The ACLU has been one of the most incredible supporters of the initiative and has argued that the new tax would allow the state to fund affordable housing projects, update and adapt the state’s infrastructure to new climate conditions, and increase access to healthcare. The bill H.828 was introduced in the Vermont legislature on 16 January and will not be debated by the state’s leaders.

Increasing capital gains tax

The second component of the proposal would increase capital gains tax for individuals with a net worth above $10 million. Retirees should not fret as their portfolios would be exempt from these additional taxes. Additionally, the state would allow residents to “exclude up to $1 million in specific assets [... including] personal and intellectual property, interests in business entities, real estate, and property held in trust.” The tax would be no greater than ten percent.

Governor Scott opposes the plan

While the proposal would only affect two percent of the state’s residents and is seen positively by the majority of voters, state leaders are already voicing their opposition before any votes can occur. The state’s governor, Phil Scott, a Republican, has said he will veto the legislation if it is too pass, noting that in his view, the tax code in Vermont is progressive enough. Yesterday, Gov. Scott made additional comments regarding the proposal.

“We have, to be honest, just pushing more and more money towards problems and needs hasn’t always led to progress,” argued the leader. The coalition has responded that while the current tax system has progressive elements, there are still regressive outcomes that should be corrected and that their proposal would achieve that goal.

Related stories

HEALTH

Why the FDA is recalling Robitussin cough syrup

EARTHQUAKE

A 4.2 magnitude earthquake rocks Southern California

The governor continued by urging the “middle majority” of the legislature to “do the hard policy work” to design programs that “invest in things that help people.” Advocates of the new proposal have addressed the criticisms by stating that the proposed taxes would give the government more resources to carry out its work.

Moreover, the redistributive measures would target the root cause of the inequalities affecting residents rather than implementing temporary solutions that leave people reliant on government aid.