|BILL AS INTRODUCED||2007-2008|
Introduced by Representatives Milkey of Brattleboro, Davis of Washington, Deen of Westminster, Edwards of Brattleboro, French of Randolph, Johnson of South Hero, Lorber of Burlington, Marek of Newfane, Mrowicki of Putney, Pearson of Burlington, Pillsbury of Brattleboro, Shand of Weathersfield, Sharpe of Bristol, Sweaney of Windsor and Zuckerman of Burlington
Subject: Taxation; income tax; surcharge rates; repeal of capital gains exclusion except for first $2,500.00; property tax; reduction of education property tax through creation of a $50,000.00 homestead exemption
Statement of purpose: This bill proposes to impose a surtax on the top income tax bracket, to repeal the capital gain exclusion on all but the first $2,500.00 of capital gain annually; and to use the new revenue to reduce education property taxes by creating a homestead exemption for the first $50,000.00 of homestead value.
AN ACT RELATING TO INCOME TAX SURTAX, REDUCTION OF CAPITAL GAIN EXCLUSION, AND REDUCTION OF EDUCATION PROPERTY TAX
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 32 V.S.A. § 5811(21)(B) is amended to read:
(21) “Taxable income” means federal taxable income:
(B) Decreased by the following items of income (to the extent such income is included in federal adjusted gross income):
(i) income from United States government obligations; and
(ii) 40 percent of the first $2,500.00 capital gains and 40 percent of all capital gain from the sale of a farm business by a farmer or the estate of a farmer. In this subsection, “capital gain” means adjusted net capital gain income as defined in Section 1(h) of the Internal Revenue Code, and “farmer” shall have the same meaning as in chapter 127 of this title.
Sec. 2. 32 V.S.A. § 5822a is added to read:
§ 5822a. Income Surtax
(a) The tax liability determined under sections 5822 and 5825 of this title shall be increased by a surtax as follows:
If taxable income is: The surtax shall be this percent of the tax liability under sections 5822 and 5825:
$349,700.00 -$499,000.00 2%
$500,000.00 - $999,999.00 5%
In excess of $999,999.00 10%
(b) The surtax under this section shall be collected, administered, and enforced in the same manner as the income tax under section 5822 of this title.
(c) The taxable income amounts in the table in subsection (a) of this section shall be adjusted annually for inflation as described in subdivision 5822(b)(2) of this title.
Sec. 3. 32 V.S.A. § 5402(b)(1) is amended to read:
(b) Calculation of education tax.
(1)(A) The commissioner of taxes shall determine for each municipality the education tax rates under subsection (a) of this section, divided by the municipality's most recent common level of appraisal.
legislative body in each municipality shall then bill each property taxpayer
in an amount equal to the homestead or nonresidential rate determined by
the commissioner under this subdivision, multiplied by the education property
tax grand list value of the nonresidential property or value of the
homestead property minus $50,000.00, properly classified as homestead or
nonresidential property and without regard to any other tax classification of
(C) Each homestead property tax bill shall include notice of the education spending per equalized pupil in the taxpayer's district and its relation to the base education payment; and the effect of the education spending in the district upon the homestead tax rate and the applicable percentage for income sensitivity; and shall also include an insert supplied by the commissioner of taxes which explains the relationship of district education spending and the common level of appraisal to property tax rates. Tax bills shall show the tax due and the calculation of the rate determined under subsection (a) of this section, divided by the municipality's most recent common level of appraisal, multiplied by the current grand list value of the property minus any homestead exemption amount to be taxed.
Sec. 4. EFFECTIVE DATE
This act shall apply to taxable years 2007 and after.
The Vermont General Assembly
115 State Street