In his State of the State speech, Gov. James Douglas announced two ways to generate additional revenue. The first was to lease the state’s lottery for a one-time gain of $380 million. The second was to eliminate a loophole in the state’s tax laws that benefited Vermonters with unearned income and capital gains. Closing the loophole would generate approximately $21.4 million annually.
As Rep. David Sharpe, D-Bristol, notes in his legislative column on Page 5, the Legislature has so far been opposed to leasing the lottery for fiscal and values-related reasons. We wholeheartedly agree. The one-time benefit means little in the long-term scheme of things, and the trade-off would turn the lottery into an enterprise that preys on Vermonters who don’t have the money to lose. It’s an unseemly proposition.
Both sides of the legislative aisle agree that closing the capital gains loophole is a good idea, and that’s to the governor’s credit. It’s not only a substantial amount of money into the state’s coffers each year, but it is an effective tax increase on the state’s wealthiest residents. Kudos, then, to the governor for going against his pledge not to increase taxes and taking action on this oversight that needed correcting.
And contrary to the Democrats’ suggestion to use that money for expenditures they suggest would lower property taxes, the governor’s plan to use the $21.4 million to lower income taxes for Vermonters has considerable merit.
Here’s why: