Vermont Governor Jim Douglas is asking all Vermonters to make sacrifices during these difficult times. State services are being cut to the bone, state fees are being increased and there is talk of cutting unemployment benefits.
However minus any hint of shared sacrifice Douglas has proposed replacing a 40% capital gains tax exemption removed last year that favors those in upper income brackets. This move and other changes he proposes would, according to the Times Argus, result in $9.9 million loss of state revenue.
He attempts to justify this by rising the fear that Vermont’s rich will have no incentive to stay unless their taxes are lowered.
Douglas would revoke the first of those changes, restoring the old capital gains exemption, but not the second, leaving the reductions in the top income tax brackets in place.
Douglas acknowledged last week that if his proposal were enacted it would effectively be a tax reduction for top earners. Vermont's having among the highest top margin rates risks driving wealthier Vermonters out of the state, Douglas said.
"We have to make sure there are people in those brackets in the years to come," he said. "I think we are going to see fewer of them."
In addition, Douglas would roll back changes made last year that reduced how much money could be excluded from Vermont's estate taxes.
How deeply Governor Douglas’ fear will touch those experiencing Catamount health cost increases, cuts in human services, housing support service cuts and limited state Medicaid programs remains to be seen.
No explanation was offered why an exodus of upper bracket Vermonters didn’t leave the state in droves over the past year. Perhaps some sympathy could be had if he were to document the coming exodus, show the empty mansions, the derelict condos, the luxury cars packed high with goods abandoned along the highway in hurried flight from the tyranny of a closed capital gains tax loophole.
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