(Host) House Republican leaders are working on a new tax cut plan that would be financed by using future budget surpluses. Democrats say the proposal is a charade and they’ll strongly oppose it.
VPR’s Bob Kinzel reports.
(Kinzel) GOP leaders say they needed to develop a new strategy concerning income tax cuts because many members of their caucus oppose Governor Jim Douglas’s plan to eliminate the 40 percent exemption on capital gains.
Douglas wanted to use the $15 million raised from the elimination of the exemption to finance a personal income tax cut. House Republican leader Connie Houston says many GOP members feel the governor’s proposal is a mistake:
(Houston) “We feel capital gains is risk capital. What people do is they take a risk and they create more jobs and basically what it does, it employs more Vermonters.”
(Kinzel) House Ways and Means Chairman Dick Marron says his panel is now looking at a plan that would earmark any future budget surpluses directly to tax cuts. Marron notes that this procedure is currently used with the state’s education fund. When revenues exceed projections, the statewide property tax rate is automatically reduced:
(Marron) “If the economy picks up and we really start generating a lot of surplus revenues I think we could do something like we do with the Education Fund now. When the surpluses fill up and there’s too much money coming in and we’ve got enough for our normal spending, then we return that to the taxpayers. We could return that in the form of tax cuts just like we do with the Education tax.”
(Kinzel) House Democrats are backing a plan to create a municipal revenue sharing program that would be financed by eliminating the capital gains tax exemption. Democratic leader Gaye Symington says the Republican plan is irresponsible because it’s not sustainable:
(Symington) “I would like to call a charade a charade, that is to me would be an embarrassment to put into our language. What we’re facing as a state is serious deficits in our health care programs to protect our most vulnerable Vermonters. We’re looking at ’06 a deficit of $40 million. And to pretend that we can afford a tax cut is I think a disservice to Vermonters.”
(Kinzel) There may be an effort to attach the Republican tax plan to next year’s state budget when the spending plan comes to the House floor for debate at the end of the month.
For Vermont Public Radio, I’m Bob Kinzel in Montpelier.