Democrats are drafting legislation to raise taxes on Vermont’s most well-to-do, arguing that the 1 percent can afford to pay a little more after benefiting from the recent extension of federal income tax cuts.
Republican Gov. Phil Scott and his legislative allies say that’s a horrible idea and risks deepening Vermont’s financial troubles by driving wealthy residents from the state. Since Democrats no longer enjoy a supermajority in the legislature, Scott’s veto threat could have effectively ended the debate, at least for this year. But it hasn’t.
The House Ways and Means Committee is hammering out a bill that would raise income tax rates for the top 1 percent of taxpayers. Democratic supporters believe it will win them political points even if the effort is killed by Scott’s veto pen.
MassBudget Reference:
That hasn’t been the experience in Massachusetts, which passed a 4 percent income tax surcharge in 2024 and has received higher-than-expected revenue every year since. “We definitely heard that the sky was gonna fall on our heads if we did this,” said Phineas Baxandall, policy director at the Massachusetts Budget & Policy Center, which advocates for progressive causes.
The policy instead has been an “unmitigated success” that pumps more than $3 billion per year into education and transportation initiatives. The warnings of tax flight proved to be overblown, he said.
