Vermont Business Magazine Taxpayers, wary of possible capital gains changes, cashed out in 2012, which has shorted Vermont tax returns for 2013, despite the fact that the tax changes never occurred. Secretary of Administration Jeb Spaulding released the April 2014 General Fund (GF) revenue results Tuesday. General Fund revenues totaled $206.35 million for April 2014, down $4.86 million (2.30 percent) from the monthly target. Year to date, General Fund receipts are now $1,132.55 million, $.10 million or 0.01% ahead of the cumulative target. Year to date revenue is $28.80 million (2.61 percent) ahead of the same period for the prior fiscal year (FY 2013). April returns were helped by a windfall of estate tax receipts, which helped offset the disappointing personal income tax numbers. April is the tenth month of fiscal year (FY) 2014.
Secretary Spaulding stated, “As was the case with numerous states, receipts from income tax returns and extensions came in significantly below projection (-$19M) for April. The thinking around the country is that this happened because sophisticated taxpayers accelerated capital gains more than expected in anticipation of federal tax changes that were effective in 2013. This is consistent with what we said last April, when we experienced the largest single month of income tax receipts ever, and stated in our monthly revenue release, ‘it appears that individual and business taxpayers chose to recognize gains and pay taxes in tax year 2012 (April 2013) at known rates, rather than risk paying at increased future rates.’ It appears now that economists underestimated what the effect would be on this year’s receipts.
April General Fund receipts were also heavily impacted by an unprecedented level of collections in the Estate Tax component – just under $19 million, exceeding the next closest month back in 2006 by almost $3.3 million. This will help offset the under-performance in April income tax receipts.
We do not believe April’s income tax results indicate a change in our steady positive economic trajectory, as indicated by the most recent employment reports, permit applications and April tax receipts in other important categories such as Sales and Rooms & Meals, which were up 5% and 8% respectively over last year.
The Transportation Fund had a good month, coming in $1.2 million ahead of target. If this level or performance continues, the T Fund should finish the year in good shape.”