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BILL AS INTRODUCED 2007-2008

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H.570

Introduced by Representatives Branagan of Georgia and Otterman of Topsham

Referred to Committee on

Date:

Subject:  Taxation; personal income tax; corporate income tax; repeal of exemptions and credits; reduction of rates; supermajority vote to increase rates

Statement of purpose:  This bill proposes to repeal the exemptions and credits in the personal and corporate income tax laws, reduce the rates, and require a supermajority vote to increase the rates.

AN ACT RELATING TO INCOME TAX EXEMPTIONS AND CREDITS, RATES, AND SUPERMAJORITY TO RAISE RATES

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  32 V.S.A. § 5811(21) is amended to read:

(21)  “Taxable income” means federal taxable income:

(A)  Increased by the following items of income (to the extent such income is excluded from federal adjusted gross income):

(i)  interest income from non-Vermont state and local obligations; and

(ii)  dividends or other distributions from any fund to the extent they are attributable to non-Vermont state or local obligations; and

(B)  Increased by the amount of state and local income taxes deducted from federal adjusted gross income for the taxable year, but only up to the amount which does not reduce total itemized deductions below the standard deduction allowable to the taxpayer; and

(C)  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 adjusted net capital gain income as defined in Section 1(h) of the Internal Revenue Code federal recapture of state and local income tax deductions.

Sec. 2.  32 V.S.A. § 5822(c) and (d) are amended to read:

(c)  The amount of tax determined under subsection (a) of this section shall be:

(1)  increased by 24 percent of the taxpayer’s federal tax liability for the taxable year for the following:

(A)  additional taxes on qualified retirement plans, including individual retirement accounts and medical savings accounts and other tax-favored accounts;

(B)  recapture of federal investment tax credit;

(C)  tax on qualified lump-sum distributions of pension income not included in federal taxable income; and

(2)  decreased by 24 percent of the reduction in the taxpayer’s federal tax liability due to farm income averaging.

(d)  A taxpayer shall be entitled to a credit against the tax imposed under this section of 24 percent of each of the credits allowed against the taxpayer’s federal income tax for the taxable year as follows:  elderly and permanently totally disabled credit, investment tax credit, and child care and dependent care credits.

Sec. 3.  REPEAL

The following sections of Title 32 are repealed, effective for taxable year 2009 and after:

(1)  § 5825a (Vermont higher education investment plan contributions credit);

(2)  § 5826 (income from commercial film production credit);

(3)  § 5828 (mobile home park sale; capital gain credit);

(4)  § 5828b (earned income tax credit);

(5)  § 5828c (low income child and dependent care credit);

(6)  § 5830b (Vermont seed capital fund credit);

(7)  § 5830c (nonprofit investment in housing credit);

(8)  § 5922 (financial services company credit);

(9)  § 5930b (Vermont employment growth incentive);

(10) §§ 5930c-k, 5930w, 5930-x (former VEPC credits);

(11)  § 5930u (affordable housing credit);

(12)  § 5930v (angel venture capital credit);

(13)  § 5930y (wood products manufacture tax credit);

(14) §§ 5930aa-5930ff (downtown and village center tax credit program for building improvements).

Sec. 4.  32 V.S.A. § 5822(a) is amended to read:

§ 5822.  TAX ON INCOME OF INDIVIDUALS, ESTATES, AND TRUSTS

(a)  A tax is imposed for each taxable year upon the taxable income earned or received in that year by every individual, estate, and trust, subject to income taxation under the laws of the United States, in an amount determined by the following tables, and adjusted as required under this section:

(1)  Married individuals filing joint returns and surviving spouses:

       If taxable income is:                                   The tax is:

       Not over $46,700.00 $53,150.00             3.6% 3.0% of taxable income

       Over $46,700.00 $53,150.00 but $1,681.00 $1,594.00 plus

       not over $112,850.00 128,500.00 7.2% 6.5% of the amount

                                                                        of taxable income over

            $46,700.00 $53,150.00

       Over $112,850.00 $128,500.00 but          $6,444.00 $6,491.00 plus 8.5%

       not over $171,950.00 $195,850.00           7.5% of the amount of taxable

                                                                        income over $112,850.00

                                                                        $128,500.00

       Over $171,950.00 $195,850.00 but          $11,468.00 $11,541.00 plus 9.0%

       not over $307,050.00 $349,700                8.5% of the amount of taxable

income over $171,950.00

$195,850.00

       Over $307,050.00 $349,700.00               $23,627.00 $24,617.00 plus 9.5%

                                                                        9.0% of the amount of taxable

income over $307,050.00 $349,700.00

(2)  Heads of households:

       If taxable income is:                                   The tax is:

       Not over $37,450.00 $42,650.00             3.6% 3.0% of taxable income

       Over $37,450.00 $42,650.00 but $1,348.00 $1,280.00 plus

       not over $96,700.00 $110,100.00 7.2% 6.5% of the amount                                                                                 of taxable income over                                                                              $37,450.00 $42,650.00

       Over $96,700.00 $110,100.00 but            $5,614.00 $5,664.00 plus 8.5%

       not over $156,600.00 $178,350.00           7.5% of the amount of taxable

                                                                        income over $96,700.00

                                                                        $110,100.00

       Over $156,600.00 $178,350.00 but          $10,706.00 $10,783.00 plus 9.0%

       not over $307,050.00 $349,700.00           8.5% of the amount of taxable

                                                                        income over $156,600.00

                                                                        $178,350.00

       Over $307,050.00 $349,700.00               $24.246.00 $25,348.00 plus 9.5%                                                                   9.0% of the amount of taxable

income over $307,050.00         $349,700.00

(3)  Unmarried individuals (other than surviving spouse or head of household):

       If taxable income is:                                   The tax is:

       Not over $27,950.00 $31,850.00             3.6% 3.0% of taxable income

       Over $27,950.00 $31,850.00 but $1,006.00 $956.00 plus 7.2%

       not over $67,700.00 $77,100.00               6.5% of the amount of taxable

                                                                        income over $27,950.00

$31,850.00

       Over $67,700.00 $77,100.00 but $3,868.00 $3,897.00 plus 8.5%  

       not over $141,250.00 $160,850.00           7.5% of the amount of taxable

income over $67,700.00 $77,100.00

       Over $141,250.00 $160,850.00 but          $10,120.00 $10,178.00 plus 9.0%

       not over $307,050.00 $349,700.00           8.5% of the amount of taxable

income over $141,250.00

                                                                        $160,850.00

       Over $307,050.00 $349,700.00               $25,042.00 $26,230.00 plus 9.5%

9.0% of the amount of taxable

income over $307,050.00

$349,700.00

(4)  Married individuals filing separate returns:

       If taxable income is:                                   The tax is:

       Not over $23,350.00 $26,575.00             3.6% 3.0% of taxable income

       Over $23,350.00 $26,575.00 but $841.00 $797.00 plus 7.2% 6.5%

       not over $56,425.00 $64,250.00               of the amount of taxable income

over $23,350.00 $26,575.00

       Over $56,425.00 $64,250.00 but $3,222.00 $3,246.00 plus 8.5%

       not over $85,975.00 $97,925.00               7.5% of the amount of taxable

income over $56,425.00

$64,250.00

       Over $85,975.00 $97,925.00 but $5,734.00 $5,772.00 plus 9.0%

       not over $153,525.00 $174,850.00           8.5% of the amount of taxable

income over $85,975.00 $97,925.00

        Over $153,525.00 $174,850.00              $11,813.00 $12,311.00 plus 9.5%

                                                                        9.0% of the amount of taxable

income over $153,525.00

$174,850.00

(5)  Estates and trusts:

       If taxable income is:                                   The tax is:

       $1,850.00 or less                                      3.6% of taxable income

       Over $1,850.00 but                                   $67.00 plus 7.2% of the

       not over $4,400.00                                    amount of taxable

income over $1,850.00

       Over $4,400.00 but                                   $250.00 plus 8.5% of the

       not over $6,750.00                                    amount of taxable

income over $4,400.00

       Over $6,750.00 but                                   $450.00 plus 9.0% of the

       not over $9,200.00                                    amount of taxable

income over $6,750.00

       Over $9,200.00                                        $670.00 plus 9.5% of the

amount of taxable

income over $9,200.00

Sec. 5.  32 V.S.A. § 5832(1) is amended to read:

(1)  an amount determined in accordance with the following schedule:

Vermont net income of the corporation

for the taxable year allocated or

apportioned to Vermont

under section 5833 of this title                                       Tax

       $   0-10,000.00                                         6.00% 5.5%

       10,001.00-25,000.00                                $600.00 $550.00 plus 7.0% 6.5%                                                                    of the excess

                                                                        over $10,000.00

       25,001.00 and over                                   $1,650.00 $1,525.00 plus 8.5%                                                                       8.0% of the excess

                                                                        over $25,000.00

or

Sec. 6.  32 V.S.A. § 5822a is added to read:

§ 5822a.  SUPERMAJORITY VOTE REQUIRED TO INCREASE INCOME

                 TAX RATES

     The personal and corporate income tax rates under sections 5822 and 5832 of this chapter shall not be increased except by action of at least two-thirds of the elected members of the house and at least two-thirds of the elected members of the senate.


Sec. 7.   EFFECTIVE DATE AND TRANSITION RULES

     This act shall take effect January 1, 2009, and shall apply to taxable years 2009 and after.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us