House passes income tax reduction plan
The House has passed a bill that could lead to reductions in state income taxes.
But there are a number of bridges to cross before that happens.
One – the state’s Budget Stabilization Fund would have to reach its limit, which is an amount equal to about 15 percent of the state’s general fund budget. Two, the carry-over, or ending fund balance, would have to be at least $65 million. Then the income tax would be reduced, by up to $150 million.
"It does sound like it's a convoluted process," said Rep, Craig Headland (R-Montpelier), chairman of the House Finance and Taxation Committee. "But I want to assure you, it's an easy calculation for the Tax Department to determine."
Headland said previous attempts to pass an income tax reduction have stalled because of opposition in the Senate. He said this bill is designed to have something in law that would allow future income tax reductions if there are future budget surpluses.
"If that occurs, that tells you our economy is growing, and growing at a rate fast enough to allow for reductions in the marginal rates," Headland said. "That's a good thing."
Headland said the way the amendment was drafted is being interpreted as a “one time” tax reduction. He said that can be corrected in conference committee.
The bill is SB 2139. It passed the House 80 to 12.