By Peter Hirschfeld, May 1, 2026
Legislation that would raise taxes on the top 1% of income earners in Vermont has no chance of becoming law this year, but some Democrats say they hope the proposal sharpens the contrast between them and Republican Gov. Phil Scott heading into this year’s midterms.
The House Committee on Ways and Means has spent the last three weeks crafting proposals that would raise income taxes on households that earn more than $586,000 a year. The plans, which would bring in anywhere between $62 million and $110 million annually in new revenue, also include a new tax on “unearned” investment income, such as capital gains from stocks.
Democrats want to use the money either to backfill federal health insurance subsidies that expired last year, or to lower income taxes for anyone making less than roughly $500,000 a year.
MassBudget Reference:
Officials from some of the eight states that have passed so-called “millionaire taxes” over the past 20 years have tried to alleviate concerns over tax flight. When Massachusetts voters approved a 4% surtax on all income over $1 million in 2022, critics warned “the sky was going to fall on our heads if we did this,” according to Phineas Baxandall, with Massachusetts Budget and Policy Center.
In fact, he said, revenues have wildly exceeded expectations. Massachusetts took in more than $3 billion from its millionaire tax in fiscal year 2026, money the state has used to fix roads and bridges, improve schools and lower child care costs.
“The actual revenue is in some ways the greatest proof in the pudding for the success of this … and not falling into the pitfalls of tax flight,” Baxandall said.
