Shumlin outlines revenue package to close capital gains loophole and lower income taxes

Senate President Peter Shumlin has outlined a revenue package to the Senate Finance Committee that will close the Capital Gains loophole and lower Vermonters' income taxes. The package includes many of the House's revenue provisions, increases cigarette, liquor and satellite taxes and closes the capital gains loophole to lower the marginal rates on all types of income for all taxpayers. Projected revenues from the package are roughly $25 million. Vermont is only one of nine states that has the capital gains loophole in place.
Shumlin's proposal aims to prevent additional layoffs of over three hundred state workers, which could devastate essential state services. Since January 2008, the state has cut $70 million from the state budget and the current FY10 budget contains $28 million in additional cuts.
"With the capital gains loophole, Vermont is taxing hard working people more than those who live off their investments or trust funds," said Senator Shumlin. "This is an unfair tax policy and I am pleased to have proposed its elimination today.
The proposal would drop Vermont's top marginal rate from 1st to 5th nationally. Under this proposal, all taxpayers without capital gains (84% of Vermonters) will have lower taxes. "Vermonters are struggling in these tough economic times to put food on the table, send their kids to college, and keep up with their bills," said Senator Shumlin "Reducing income taxes for all Vermonters will help them through these tough times."
The proposal is detailed below.
$ 8.4 million H.442 Misc. Tax Bill - Accept Revenue Provisions
$ 4.2 million Satellite Gross Receipts Tax @ 5%
$ 2.0 million Increase the Other Tobacco Products Tax from 41% to 92%
$ 4.5 million Increase the Cigarette Tax by 25 cents from $1.99 to $2.24 per pack
$ 6.0 million Increase the Liquor Tax from 25% to 35% of gross receipts
$25.1 million TOTAL
Personal Income Tax Proposal
Lowers marginal tax rates on all types of income for all taxpayers.
Current Law Proposed
Marginal Rates Rate Change Percent Change
3.6% 3.50% -0.10 -2.8%
7.2% 7.10% -0.10 -1.4%
8.5% 8.25% -0.25 -2.9%
9.0% 8.50% -0.50 -5.6%
9.5% 8.95% -0.55 -5.8%
Source: Senator Shumlin's Office