Vermont H 794: An act relating to increasing taxes on higher income earners and creating the School Construction Aid Special Fund

Bill Text

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H.794 1
Introduced by Representatives Logan of Burlington, Cina of Burlington, and 2
Tomlinson of Winooski 3
Referred to Committee on 4
Date: 5
Subject: Taxation; income tax; income tax surcharge; wealth proceeds tax; net 6
investment tax; education property tax; property valuation; tax 7
classifications; School Construction Aid Special Fund 8
Statement of purpose of bill as introduced: This bill proposes to create a 9
personal income tax surcharge imposed on taxpayers with more than 10
$250,000.00 of AGI; create a wealth proceeds tax imposed on individuals, 11
estates, and trusts with taxable income over certain thresholds; and create a 12
property tax classification for nonhomestead residential properties with a tax 13
rate that is double the rate paid by homestead taxpayers. It further creates the 14
School Construction Aid Special Fund. 15
An act relating to increasing taxes on higher income earners and creating 16
the School Construction Aid Special Fund 17
It is hereby enacted by the General Assembly of the State of Vermont: 18
Sec. 1. SHORT TITLE 19

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This act shall be known and may be cited as the “Preserving Revenue for 1
State Programs and Economic Resiliency Act.” 2
Sec. 2. 32 V.S.A. § 5822a is added to read: 3
§ 5822a. PERSONAL INCOME TAX SURCHARGE 4
(a) There shall be a surcharge applied to the federal adjusted gross income 5
of individuals with federal adjusted gross income equal to or greater than 6
$250,000.00. The surcharge shall be at a rate of two percent of the adjusted 7
gross income exceeding $250,000.00. The surcharge shall be in addition to 8
any tax assessed under this chapter and shall be paid, collected, and enforced in 9
the same manner as the tax assessed under section 5822 of this title. 10
(b) There shall be an additional surcharge applied to the federal adjusted 11
gross income of individuals with federal adjusted gross income equal to or 12
greater than $500,000.00. The surcharge shall be at a rate of six percent of the 13
adjusted gross income exceeding $500,000.00. The surcharge shall be in 14
addition to any tax assessed under this chapter and shall be paid, collected, and 15
enforced in the same manner as the tax assessed under section 5822 of this 16
title. 17
(c) The surcharges imposed under this section shall be applied to 18
individuals without regard for filing status. 19
(d) Annually, the Commissioner of Taxes shall use the process required 20
under subdivision 5822(b)(2) of this title to adjust for inflation the minimum 21

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amount of federal adjusted gross income necessary for an individual to incur a 1
surcharge under this section. 2
Sec. 3. 32 V.S.A. chapter 149 is added to read: 3
CHAPTER 149. WEALTH PROCEEDS TAX 4
§ 5701. DEFINITIONS 5
As used in this chapter: 6
(1) “Federal modified adjusted gross income” means modified adjusted 7
gross income as defined in 26 U.S.C. § 1411(d). 8
(2) “Incomplete gift nongrantor trust” means a resident trust that meets 9
the following conditions: 10
(A) the trust does not qualify as a grantor trust under 26 U.S.C. 11
§§ 671–679; and 12
(B) the grantor’s transfer of assets to the trust is treated as an 13
incomplete gift under 26 U.S.C. § 2511. 14
(3) “Taxable income” has the same meaning as in subdivision 5811(21) 15
of this title. 16
(4) “Taxable year” has the same meaning as in subdivision 5811(16) of 17
this title. 18
(5) “Threshold amount” has the same meaning as in 26 U.S.C. 19
§ 1411(b). 20

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(6) “Wealth proceeds” has the same meaning as net investment income 1
in 26 U.S.C. § 1411(c) as adjusted by section 5702 of this chapter. 2
§ 5702. DETERMINATION OF WEALTH PROCEEDS 3
The wealth proceeds of an individual, estate, or trust means net investment 4
income, as defined in 26 U.S.C. § 1411(c), and: 5
(1) increased by the following to the extent they are excluded from net 6
investment income: 7
(A) income from state and local obligations outside Vermont; 8
(B) net gain excluded under 26 U.S.C. § 1202; 9
(C) net gain excluded under 26 U.S.C. § 1400Z-2; 10
(D) net gain attributable to disposition of property held in trade or 11
business not described under 26 U.S.C. § 1411(c)(2); 12
(E) net gain described under the exception in 26 U.S.C. § 1411(c)(4); 13
(F) net gain excluded under 26 U.S.C. § 1411(c)(5), provided it is 14
attributable to net unrealized appreciation within the meaning of 26 U.S.C. 15
§ 402(e)(4); and 16
(G) for a taxpayer who transferred property to an incomplete gift 17
nongrantor trust, any amounts recognized as wealth proceeds under this section 18
held by the trust, but reduced by any deductions of the trust, to the extent the 19
wealth proceeds and deductions of the trust would be taken into account in 20

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VT LEG #38