It is not often I have the need to write a letter to the Editor, but in this case I feel it is important your readers have all of the information concerning Vermont tax policy. Your publication recently printed a letter from representative David Sharpe concerning gubernatorial candidate Minter’s proposal to address the high cost of post secondary education in Vermont. As a father of four, I am quite familiar with the issue. To be clear, my comments are not directed at representative Sharpe who has done an excellent job as chair of the House Education Committee, nor am I debating the merits of the Minter plan. Rather I believe it is important for the public to understand how the banks in Vermont are taxed and the total revenue generated.
Currently we have 21 banks, large and small, doing business in the state of Vermont. These are banks that have physical branches where people can go and deposit their money. That is an important factor because banks pay a tax to the state based on the deposits they are holding; it is called a franchise tax. The reason they pay a franchise tax is because many years ago the Legislature decided it was a much more stable tax as compared to an income tax, which can go up and down depending upon the success of an institution in a given year.
Let me share some numbers with you. In fiscal year 2005, the total gross tax liability of the industry to the state was $11,221,482. In fiscal year 2017, the estimated gross liability is $14,426,446. The liability has increased over the years because deposits have grown even though the tax rate has stayed the same and banking today looks very different than it did a decade ago.
The only offset to the tax is the ability of a bank to purchase affordable housing and downtown tax credits; a public policy initiative created by the Legislature. Those are funds paid to local housing initiatives in order for those projects to move forward. For example last fiscal year the state collected $10,811,237 in franchise tax revenue. The banks also paid $3,315,672 to support housing projects. Total money paid out by the banks $14,126,909.
I make these statements not so your readers feel bad for the industry, but rather to illustrate the 21 banks in the state of Vermont are paying their fair share. There is no free ride for the industry, which strongly supports the citizens of the state and the communities they live in not only through taxes, but well over a million dollars of charitable giving each year.
Christopher D’Elia
President,
Vermont Bankers Association
Montpelier