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As It Passes Tax Bill, Senate Debates How Progressive is Progressive Enough

Paul Heintz May 2, 2013 9:42 AM

On the front lawn of the Statehouse Wednesday, hundreds of activists converged for a sun-soaked rally to demand a state budget that "puts people first."

But nary a May Day protester could be found within the Senate chamber that morning as legislators debated perhaps the most consequential bill this year concerning economic fairness.

There, by a vote of 24 to 5, the Senate approved $10 million in new taxes, the majority of which would be paid by wealthy Vermonters. 

The plan raises $7.4 million of that by capping the mortgage interest deduction at $12,000 and setting a minimum tax of three percent for those earning more than $125,000 a year. It raises much of the rest by taxing bottled water and satellite TV.

More important than what was in the Senate's version of the tax bill was what wasn't.

Despite Gov. Peter Shumlin's repeated calls to pay for new spending by slashing $17 million from the Earned Income Tax Credit, the Senate didn't touch the thing. It was so loathed by lawmakers as a regressive scheme to put low-income, working Vermonters on the hook that Shumlin's proposal was barely mentioned during hours of floor debate.

Instead, the Senate largely approved a far more progressive plan drafted by Senate Finance Committee chairman Tim Ashe (D/P-Chittenden). 

But neither Ashe's capital-P Progressive bona fides nor his efforts to spare the EITC shielded his plan from criticism from the left.