MONTPELIER — Democratic gubernatorial nominee Sue Minter says she will seek tax fairness as governor and look to lower the burden on low- and middle-income Vermonters by closing loopholes enjoyed by the wealthy and corporations.
According to Minter, the tax policies she will propose as governor may incorporate some elements of the Blue Ribbon Tax Structure Commission report released in 2011. The report, which was shelved by policymakers in Montpelier, recommended expanding the sales tax to “all consumer-purchased services with limited exceptions for certain health and education services and business to business service transactions.”
Minter expressed an interest in dusting off the commission’s report during a WDEV radio debate on Sept. 14, saying she would look at expanding the base of the sales tax to include services. Her Republican opponent, Lt. Gov. Phil Scott and the Vermont Republican Party pounced, announcing to Vermonters in a coordinated effort that Minter wants to tax hair cuts, among other services that Vermonters pay for.
“At this point, it’s unclear if there’s anything she won’t tax. Moreover, she deceptively argues that increasing the cost of services on families and businesses will actually lower your taxes and costs of living,” Vermont GOP Executive Director Jeffrey Bartley said in a statement.
Scott, meanwhile, issued his own release decrying “a new state sales tax on over 160 services” and pledged to veto any sales tax expansion.
Minter said the opposition’s reaction is misleading and wrong.
“I will not tax my hair cut or yours. That is, frankly, not the goal, and that is typical Republican scare tactics from the Republican national playbook,” Minter told the Vermont Press Bureau.
Rather, Minter said she wants to create more tax fairness that eases the burden on low- and middle-income Vermonters. Her administration might look to expand the sales tax to some services, she said, but the focus of her tax policy will be on removing exemptions and loopholes that are used by wealthy residents and businesses.
“I think the real point is that I don’t endorse every single suggestion in the report,” Minter said. “I know that too many middle-income Vermonters are struggling. I want to shift the focus away from expanding the sales tax to really looking toward exemptions that might benefit the wealthy or corporations.”
Minter said some services — limousines rides, private jets and lobbying — could be considered under a Minter administration. But services that Vermonters use on a regular basis would not be considered.
“This is not really looking at specific numbers of new taxes. It’s really looking at an orientation that evaluates the impact on middle-class Vermonters. Let me be very clear — I’m going to oppose taxing services that would hurt middle-income Vermonters and families.”
The state’s sales tax “is one of the most regressive taxes” that Vermonters pay, Minter said, because it impacts those who earn the least the hardest. It also hinders Vermont businesses that must compete with businesses to the east in New Hampshire where there is no sales tax.
Minter said Scott, himself, helped increases taxes on Vermonters by $680 million since 2003 when he voted in favor of hiking the sales tax as a state senator from Washington County.
“My opponent Phil Scott, who talks a lot about affordability, has in fact voted to raise the sales tax from 5 percent to 6 percent. I’m going to hold the line on the sales tax because we know it’s a regressive tax,” she said.
Britney Wilson, Scott’s campaign coordinator, said he voted to raise the sales tax by a penny as part of the effort to pass Act 68, which sought to further amend the state’s education financing system. The legislation “was sold to the Republican-controlled Legislature” as a plan to reduce property taxes, she said.
“It was also part of a larger discussion to put long-term cost containment caps on property taxes. So the pitch to increase the sales tax by a penny on the dollar in exchange for long-term property tax relief and a cap, seemed like a good negotiation,” Wilson said. “But the Democrats gained control of the House and that compromise was never fulfilled. Let this be a cautionary tale for Sue’s proposal to expand the sales tax to services, because without clear budget parameters a new tax will only support unsustainable spending. So having said all of this, if Phil was faced with the same vote today, he would vote no.”
Minter said she also wants to make the state’s income tax more fair for Vermont families. It has proven to be an inconsistent source of revenue for the state in recent years, and revenue projects indicate that it will continue to be unstable. Minter said she will look at ways to close loopholes like the mortgage interest deduction available for vacation homes. The potential savings, which Minter said are unknown at this point, would be used to support rate reductions for lower earning families.
“If we actually look at exemptions and how we’re taxing, we can actually lower rates. I’m not proposing specifics right now but a way to look at more tax fairness,” she said. “We need to be thinking about these taxes and who they effect.”
Minter said she opposes the tax credits and cuts that Scott proposed in his own economic plan. She characterized his proposals as “tax giveaways to investors and corporations.”
“I think it’s an approach that I have seen that is not looking to help middle-class Vermonters,” she said. “I am looking to raise the minimum wage and expand paid family leave, both of these are proposals that Phil opposes. I am not looking to have greater loopholes for corporations.”
Wilson said Scott’s plan will help stimulate the state’s economy resulting in more economic prosperity across the board.
“Phil Scott’s economic development plan benefits all Vermonters, particularly low- and middle-income Vermonters because it focuses on keeping and creating jobs and growing economic opportunities,” she said.
Wilson said Minter’s proposals will add to the burden on low- and middle-income Vermonters.
“Let’s be honest, Sue Minter’s proposal to expand the sales tax on over 160 services will further burden Vermonters, especially communities on the borders and add to the crisis of affordability. Her plans call for raising taxes on struggling Vermonters, meaning less money in their pockets,” Wilson said.
Minter said her plan may result in higher taxes on wealthier Vermonters but will reduce the burden on those who are struggling.
“We’re going to be looking at every possible opportunity for how we manage our budgets going forward, how we grow the economy. There are many different revenue sources,” she said. “We’re looking more to closing loopholes that benefit the wealthy and outside corporations.”