An act relating to increasing taxes on higher income earners and creating the School Construction Aid Special Fund
S.282 would significantly increase taxes on higher-income individuals and certain investment income, while also restructuring parts of Vermont’s education property tax system. It creates a new personal income tax surcharge for individuals with federal adjusted gross income above $250,000, with a higher surcharge for income above $500,000, and it indexes the thresholds for inflation. The bill also adds a new “wealth proceeds tax” on individuals, estates, and trusts with income above specified thresholds, generally taxing net investment income and certain gains that are otherwise excluded from federal net investment income calculations.
In addition to the income-tax changes, the bill creates new property tax classifications for homestead, nonhomestead residential, nonhomestead nonresidential, and nonhomestead seasonal property. Nonhomestead residential property would be taxed at a higher education property tax rate than homestead property, while nonhomestead nonresidential and seasonal property would continue under a separate statewide rate. The bill also creates the School Construction Aid Special Fund and directs half of the education property tax revenue from nonhomestead residential properties into that fund for school construction aid, facilities planning grants, and related administrative and emergency costs.
The bill would amend multiple titles of Vermont law, including the income tax code, property tax classification provisions, education property tax rates, and school construction funding statutes. It would add a new surcharge provision to the personal income tax, create a new chapter imposing a wealth proceeds tax, and require the Department of Taxes to develop new forms, guidance, and classification procedures for property tax administration. It would also change how the statewide education tax is calculated for different property classes and redirect a portion of education tax revenue into a newly created special fund.
Based on the bill text and the absence of committee transcripts or recorded votes, the available context suggests the bill is framed as a revenue-raising measure aimed at higher-income taxpayers and property owners with nonhomestead residential property. The title and structure indicate a policy goal of preserving state revenue and supporting school construction funding. Because there are no transcripts or vote records provided, there is no documented committee or floor sentiment to characterize beyond the bill’s apparent intent and fiscal emphasis.
The most likely points of contention are the higher tax burden on upper-income earners, the new tax on investment-related income, and the creation of a higher education property tax rate for nonhomestead residential property. Taxpayers affected by the surcharge and wealth proceeds tax, as well as owners of second homes or other nonhomestead residential properties, would likely be the primary groups opposed. Supporters would likely emphasize progressive taxation, increased state revenue, and dedicated funding for school construction and facilities, while opponents may focus on tax competitiveness, complexity, and the impact on property owners and investment income.