Vermont Legislature SmartTranscripts:

[Emilie Kornheiser (Chair)]: Good morning. It is January, a little bit after nine This morning, we're gonna hear two bills from our colleagues. And then at 11:00 then we have the floor. And then at 11:00, we're back here for some testimony from tax about compliance. Some of what we talked about yesterday, state tax will come up. I think at some point, we had a conversation about sort of nexus of where someone lives and where someone works and how income taxes fit into that. So they're gonna sort of touch on all of those things. And then after lunch is an opportunity for folks to catch up both on all the reports. And last when we heard testimony about the regional assessment districts and testimony about the new homestead, non homestead tax classifications, we walked through both of language for both of those. And next week, we're gonna start diving back into them. So if people could really take time this afternoon and make notes about what you think the answer might be for the questions that were highlighted by Kirby. Kirby? Yes. Does that feel like that sentence was very circular. I'm sorry. I haven't quite finished the beat. Okay. So that would be, like, really helpful activities. You don't need to have language drafted unless you want to, but, like, really come prepared for us to start problem solving next week. And feel free to email talk over the weekends about it, or this afternoon with me. Okay. I'm gonna stop talking now, and invite representative Bert up. Morning. Morning. Morning.

[Rep. Craig Burk]: Thanks for taking time for me this morning.

[Emilie Kornheiser (Chair)]: It is our pleasure. Thanks for coming.

[Rep. Craig Burk]: For the record, Craig Burk, representative from Cabot, Danden and Peacham. Here to introduce h seven eleven. So, yeah, this bill is about removing the sales tax from precious metals bullion or exempting them from the sales tax, if wanna look at that way. It looks like there was a bill at 2023 similar to this. I I haven't seen that one. I just saw that that that they were related, but And you probably have gotten emails from What's the name of the got an email.

[Emilie Kornheiser (Chair)]: Postcards, strange.

[Rep. Craig Burk]: Postcards, yeah, and mail in our mailbox about this. I don't know, it intrigued me. I have just a very small amount invested in silver bullion that's in my safe, and so I took a look at it, I was surprised that we do. We're one of only five states that have a sales tax on gold and silver, and so basically I just for me, I think it's maybe a small win to head what in what I think is a good direction for our state to head in terms of, you know, our economic policy and just lining up with what other what other states are doing. So being one of five that tax gold and silver bullion still, I'd rather see us heading in the ops in the other direction, I guess, on that. You can I don't know if there's a minimum quantity of silver that you have? I I would assume you can buy as much or little as you bought in gold. So it's really an investment that anyone can make in theory that appreciates in value over time. So I don't think this bill is really geared toward some, you know, level of economic status. I'm certainly not you know, especially when I invested in silver, would not put myself in a high wealth category. But I I think it's a good investment for my family. And yeah. And I think it should just be taxed on capital gains like every other investment is instead of being taxed at 6% from sales. And and there are loopholes that, you know, people can technically go through by going to New Hampshire to buy it or buy it on the Internet. So we're we're losing out on potential businesses in our state that could, you know, have this be part of their their business for selling precious metals. Given that there's a sales tax on here. I imagine we don't I don't know how many businesses in our state. I mean, there's certainly pawn shops. This this bill does not address anything with jewelry or anything like that, so there would still be sales tax on jewelry. So just be bullion, it outlines what that would be. It's something that really has no aesthetic value or any value outside of being a precious metal. So, yeah, I mean, in a nutshell, that's all I'm looking for. I mean, I I I know when you look at I was trying to see if if this would apply to, you know, metrics for our economy as a whole in the state, you know, how we're we're ranking in the, you know, thirty fifth or lower on a would lot of this boost our, you know, our rating? I guess it's not a very it's not a large enough, you know, factor for most economic ratings to really put that into it. And in terms of trying to see how much it would affect the amount of taxes coming into the state, it looks fairly de minimis, although you can't, unless I would have JFL obviously come in to talk about that, but I don't from what I can tell, it it has a pretty would have a pretty de minimis effect on our taxes. So generally speaking, I think it's I I'm a big proponent of investing in things that appreciate, which is, I guess, the definition of investing in LA, but

[Emilie Kornheiser (Chair)]: Not always.

[Rep. Craig Burk]: Not always, I guess, yeah. Sound investment, I guess. And the fact that it doesn't affect It's not Bullying can be bought and sold in any quantity, so in theory, would be for any tax bracket. I think it's a better way for our economy to have as a whole, to have our citizens investing and things like that, and not being penalized for doing so.

[Emilie Kornheiser (Chair)]: Thanks. This version of the bill is actually significantly stronger than the one we looked at last biennium, That think it one only had an exemption if you spent more than $100 which struck me as, I think, was trying to get at the jewelry question, but I think it sounds kind of awkward.

[Rep. Craig Burk]: Yeah. Yeah.

[Emilie Kornheiser (Chair)]: I appreciate that you've sort of defined bullion and coins and really separated out sort of the investment question from the jewelry question.

[Rep. Craig Burk]: Kirby Keaton did most of the work on it, I took his wisdom.

[Unidentified committee member]: Any questions?

[Rep. Craig Burk]: I'm just a little curious for gold bullion. How do you receive it? Do you receive it in the mail? Mean, don't imagine it brings cups to your home or anything like that. I mean You buy, is it like four knots with the gold full in the sea? Right. So, I mean, my limited experience with it is, you know, we bought Internet based company and, you know, got a little package with a little silver block in it that we have kept in our safe. Actually, my wife probably knows more about the ins and outs of it because she's the one who did it. And so you can, you know, keep the physical boolean, you know, in your home if you wanted to. But I believe there there are ways to purchase it where it's and I remember talking about this with my wife as to what we should do, but there are companies that will just keep the bullion at their location, but you own it. So but it's you're still owning a physical it's like it's like a bank, right? I mean, it's keeping your finances, audit accounts. Different system, so I would probably try to look for testimony, if you want to take this up, or someone has more expertise on that than I do, but and I could look to help with that if you wanted. But yeah.

[Emilie Kornheiser (Chair)]: Yes. I am. Just for the record, if someone buys gold in New Hampshire or silver in New Hampshire, they are still responsible for sales tax in Vermont. Yes. I know no one does it, but I mean, frankly, I don't. But not that I buy gold, but I bought toilet paper or something. Apparel. Yeah, was gonna say, there is some

[Unidentified committee member]: black paint use that. Yes. But I was thinking about what happens when you sell the gold or silver, and I was thinking about how the cost basis would be known and you mentioned capital gains treatment and I don't know how that, did you look into that?

[Rep. Craig Burk]: I haven't done a lot of research on it. I would assume that the companies that hold the Boolean for you would be required obviously to report all the information regarding transactions. Would be easy to take, know what capital gains occurred with that. There again, we should bring in an expert, but how gold is being just transferred between two individuals, or is it held by a company? I would have to have an expert comment on.

[Emilie Kornheiser (Chair)]: Thank you. I was talking to a quite wealthy Vermonter who has a lot has purchased a lot of gold, and it's stored in a underground bunker in Texas. Actually, drove there so that he could see the gold, but they were only willing to bring one bar up above ground for him. It was a very fascinating story that had stuck with me.

[Rep. Craig Burk]: And you're sure that's mine?

[Emilie Kornheiser (Chair)]: That was sort of my question, but he seemed to feel confident about the whole thing. Yes. Yeah, that was definitely what I was thinking, but he seemed confident. You talked about, like, the economy moving you wanting Vermont's economy to move in this direction. Can you tell me more about what you mean by that?

[Rep. Craig Burk]: Yeah. I mean, well, like, I, you know, I I was I have a bill in about subscriptions with it's in commerce, and the bill is about making it just as easy to get out of a subscription as it is to get into a subscription, which on Amazon, it's just like one click and you're getting deodorant every week, you were just getting one bar, right? And it's like, well, how do I get out of that? And that should be simple, I think, because of the nature of how we buy things now. They were pretty excited about that bill, because I feel like it's a small win for the people of our state. This is to me, another example of that. To me, I think this can be a small win. If it's a de minimis amount of income to the state, then I personally don't see, you know, 45 other states think it's perfectly fine not to put a sales tax on this. I feel like not only is it just heading it in the right direction, but it's an easy talking point for all of us to be like, these are some changes that we made to head things in the right direction. I don't think when when you when you talk about, you know, trying to reduce taxes, well, it's like, here's an example. We reduced taxes on this. We actually got rid of the tax, and we're we're we're encouraging people to invest instead of do whatever else with their money, you know, instead of buying buying another Pepsi or another subscription.

[Emilie Kornheiser (Chair)]: Representative Kimbell and I worked on a subscription service bill eight years ago.

[Rep. Charles Kimbell (Ranking Member)]: It's a while

[Rep. Joshua Dobrevich]: ago, yeah.

[Emilie Kornheiser (Chair)]: And love it. It was very exciting. Don't recognize. Anyway, so thanks sponsoring.

[Rep. Craig Burk]: I think Mark Ode said that he'd done the one that was there before. It was based on his personal experiences, but it was yearly contracts rather than Now they're talking about just getting rid of the whole timeframe part because they're so narrow now.

[Emilie Kornheiser (Chair)]: Any other questions? Thank you so much.

[Rep. Craig Burk]: Really appreciate you.

[Emilie Kornheiser (Chair)]: Representative Dobreich, do you want to join us? Good

[Unidentified committee member]: morning. Good morning.

[Rep. Joshua Dobrevich]: Forgive me. It's my second presentation ever. I'm a little, nervous.

[Emilie Kornheiser (Chair)]: We're gentle on Friday morning.

[Rep. Joshua Dobrevich]: It's not what I hear. It's totally kidding. So I have a humor too, and it comes out unexpectedly. I mean, it's a lighting committee. There has to be some toughness that happens. Wants everything from you.

[Rep. Craig Burk]: Every day.

[Rep. Joshua Dobrevich]: Every day.

[Emilie Kornheiser (Chair)]: The floor is yours.

[Rep. Joshua Dobrevich]: Thank you. My name is representative Joshua Dobrevich from Williamstown Chelsea. Thank you all for allowing me to present this to you today. My read from the script keeps me on topic and not rambling. Vermont's current tax system with multiple income brackets, sales tax, property taxes, estate's taxes, and others is complex and can feel burdensome to many families, businesses, and even estates and trusts. This book proposes a major simplification, repealing several existing taxes, including the sales and use tax, education property tax, education property tax, estate and gift taxes, property tax transfer, land gains and others, and shifting the primary revenue source towards personal income tax. The bill applies this unified income tax structure to individuals, estates, and trusts while maintaining key exemptions and deductions and a new targeted low income relief credit to protect lower income households. It also built safeguards requiring detailed reports from the commissioner of taxes on revenue and implementation and mandating a two thirds legislative vote or in some cases, a voter approval for future rate changes. This promotes transparency, predictability, accountability while aiming to fund essential services like education and health care. The is a more straightforward, tax structure structure that supports our communities, encouraging people and businesses to stay or move to Vermont and reduces overall administrative burdens. You move forward, I want to emphasize the importance of preserving existing tax reliefs established in prior sessions for our veterans, such as the Vermont Veterans tax credit and the partial exemption for military requirement retirement pay, and also for Social Security beneficiaries, including the exemption, preferably taxable Social Security benefits under 32 VSA subsection five fifty eight thirty e. These protections should be incorporated to ensure continued support for those who have served our country and those relying on fixed incomes. Do also wanna say that with that, after the fact, the more I think about this, because I've been trying to, like, process like, it started with an idea that many humans besides myself have had over 50 moons. But I I I I've presented too many bills this year, so I have to think through them all. And as I sit and think about this, there's one contemplation they didn't make, and that is, you know, the people who own property who don't live here, right? That, to me, that's an ongoing question that we all have on either side of the political divide. So that's the kind question that's not in here is how do you and how do you still, if you remove the education property tax for all Vermonters and businesses, it's all going here, I still think those out of staters who don't live here, who don't want anything to do with here except own our property and make money here, there's got to be a way to address that through a tax that stays there. I'm not sure how that works well out of my. Breath of knowledge.

[Unidentified committee member]: What about the municipal tax?

[Rep. Joshua Dobrevich]: That's why I said in there, I said the education property tax. I mean, they can't operate for them to try and figure out how they ask the state government for their money. I mean, they were back to the education conundrum that we're currently in. So I think that that has to stay there is that municipal property tax exists for those municipalities.

[Emilie Kornheiser (Chair)]: And how much do you think the flat tax rate would have to be to cover all those other tax rates? Okay. So Josh Math, let's be clear. Math is interesting.

[Rep. Joshua Dobrevich]: When I tried to do the calculations using stuff I read, types of I did use AI to help me take the data that I didn't understand and help me understand it. Based on last year's budget, if we removed all of those, all the taxes, kept tobacco, alcohol, cannabis, left all fees in play. 13% should give us a couple million over what our budget was last year. So 13% is where I came to for that reason. That's, I would love to see 10%, but I am not stupid. And I know that there's no way we're going to claw back that much spending. So to keep things kind of level set, and to keep where they are a little bit of extra, tiny bit of extra, you're looking at 13%. And then should we be at a budget shortfall and I have in there that it would have to be, you can only do for two consecutive years, and it would have to be a shortfall that is addressed during the BAA, is that the governor can propose a temporary increase, legislature by a two thirds vote would have to approve that and that could go into effect for twelve months. You could do that for two consecutive years. If you decided you want to increase that 13% to 15%, it have to be approved by two thirds in both chambers, the governor, and then go to a constituent vote, a voter vote on a ballot. So it would

[Emilie Kornheiser (Chair)]: take like a few years?

[Rep. Joshua Dobrevich]: It's not a constitutional but you can make that proposal and it can go on the next election cycle. So you would have to prepare it to go into an election cycle and be on a ballot. And, yeah, it should be hard. Like, I I think it should be hard for us as legislate legislators to ask our constituents for more money when we ask for a grip of money from them currently. So it gives them some control back of how we're spending their money. It's not our money, it's theirs. So how do we say, hey, we want you to be part of this process. That just means we have to be more transparent and say, hey, this is why we need more money. These are the programs that can really get out there and become part of our communities. I want to say we try in some areas to do well there, in some areas we maybe not so much.

[Emilie Kornheiser (Chair)]: I wasn't I was more just reflecting on how there's a sort of a lag between when we change tax law and when the revenues actually come in because we like to surprise people mid year with a new tax.

[Rep. Joshua Dobrevich]: That for me is where my breadth of knowledge has ended long before we get to that conversation. Because I mean, I'm not a I have my thoughts. I can look at it and understand it. But I don't know the ins and outs of the tax. Caribbean had really had to hold my hand during all of this. Pretty good. I am aware of other states trying to do this, but I don't know

[Emilie Kornheiser (Chair)]: of any other state that has done this. Are you? Okay.

[Rep. Joshua Dobrevich]: So it has been tried. My understanding, it's been on the wall in this committee at times over the last however many decades. I'm really bringing it because we are at a time where everybody's feeling the pinch. Population's aging and our working population is aging out. We're taking in less money. I'm trying to put forth another conversation, right? Even if it doesn't happen, just every bill that I've introduced this year, it's about a conversation. Like, I'd love for you to take it off the wall. If no other reason to just like, does it make sense? Is there something that comes with it that can make better sense? How do we really explore the uncomfortable or the unknown to see how we can help our constituents save money, not feel so burdened?

[Emilie Kornheiser (Chair)]: I can keep on going, but if anyone has any other questions.

[Rep. Charles Kimbell (Ranking Member)]: I appreciate the fact that it's bold thinking out of the box and just trying to figure out how do you and I think that's part of your point, is that how do we approach raising revenues for government in a simpler way for people to understand? I think that's what you're driving at.

[Rep. Joshua Dobrevich]: Yeah. And I mean, so let's just think of lower income. I got flack when I put when I started talking about it before I got into nitty gritty. Well, you're trying to make it more expensive for lower income. Well, no, I have provisions in there, but also they're going to pay less sales. They're going to pay no sales tax. They're going to pay no fuel tax. Theoretically is the best way I could say is they likely will actually have less expense out of their pockets in the long run because they're I contemplate for lower income and then they're not paying taxes. Then people who aren't don't own properties, they're not paying sales and use tax, they're not paying fuel tax, all these other things. So they are saving money there on top of the deductions that they're getting. So they actually could come out more ahead. And I'm trying, you know, by contemplating trust in The States, I'm trying to go for those who are trying to shovel their money in ways so they don't have to pay anything. So it's trying to contemplate, yes, that idea, but there's a lot of thought into how this actually could work. It's just there's a lot of it that's out of my world.

[Emilie Kornheiser (Chair)]: If Representative Branagan could hold her ears for a moment, I'm curious why you would keep fees, because I personally, I feel like fees is one of the first things I would remove.

[Rep. Joshua Dobrevich]: That was, to be honest, it was a very hard decision for me. My past life in many different ways had to do with service. Even some of my current work has to do with fee for service. I do think there is a benefit by still participating in certain things. Like there's a service you're doing, there should be a fee to it. By DMV fees, that's going to pay for those people who are working in the DMV doing those things, buying the license plates, having the license plates meet, I should say, things like that. So I think there is a benefit for keeping the fees. I did contemplate taking them out. If I take out the fees and the three syntaxes, you got to increase the flat fee to 14%. My head is, you know, now 14% is almost double what our highest tax rate currently, personal tax rate currently is. How do you get people to understand, like even this bill, how do you get the population to understand what we're doing? Like my income tax is going up, oh my god, it's gonna hurt on my paycheck. But you're not gonna be paying, you're not gonna have that crazy education property tax pop up every year that you're uncertain about. You just know what you paid and that's all the money spent. So fees, it's a hard one for me to contemplate. I do believe in fee for service. I think it makes sense. I think it helps, you know, adjust what it costs tax wise. Fees can undulate a little bit as DMV or zoning needs more for whatever. That can move a little bit more. So that's kind of why I left them in there.

[Emilie Kornheiser (Chair)]: And I agree, the education property tax needs to be stable year over year. Right. It's very hard to

[Rep. Joshua Dobrevich]: I mean, there's a conversation about pulling the education property tax out and putting that into income tax. I mean, I heard it and I'm like, hey, I want to hear more. Mean, I'm going meet with the people who are talking about that because it's not the same. And the devil's in the details.

[Emilie Kornheiser (Chair)]: There's a really good topic support about it. I'm happy to

[Rep. Craig Burk]: say that.

[Rep. Joshua Dobrevich]: Yeah, please. I mean, so I'm a landlord too, right? And I try and provide affordable housing when my property taxes go up. In five years, I've not increased my rents because of any of the costs that have been extra to me. At some point, I might not be able to do that. So when I hear about that, and they're like, Oh, but we'll keep it on landlords and other property owners. Yes, but please be careful because if it goes up for me, then my cost of providing as good of housing as I can, as an affordable price as I can, changes. So I like the idea of removing bad education property tax, but I want to be careful. So that's where this kind of takes away even that. If you did something like this with that, it makes sense to me.

[Emilie Kornheiser (Chair)]: Did you consider adding some new SINs to tax?

[Rep. Joshua Dobrevich]: I know I used that word. I would need to know what they are. To be honest, cannabis didn't even cross my radar till I was reading all the taxes. Was like, Oh, that one. They're not for real, bro.

[Emilie Kornheiser (Chair)]: Sorry. Was that? They're not in Brattleboro? I was saying, You're not from Brattleboro. No. Yeah, I know.

[Rep. Joshua Dobrevich]: I'm from Barrie and they're seven. But again, whatever your thoughts are on that subject, it's a thing that I think just like tobacco, it's the same as tobacco, it's the same as alcohol to me. That's why alcohol is part of the food It's part of the food and beverage. So I have them pull that out to make it its own because I think it's all the same. I mean, we shouldn't be I think we should be trying to teach people to moderation.

[Emilie Kornheiser (Chair)]: And there's conversations about taxing sugar as a sin or legalizing sex work and taxing I

[Rep. Joshua Dobrevich]: don't know that. That's a whole nother philosophical conversation about that. I don't know. I want to get into there. Sugar, I mean, I'll speak from personal experience. When I get into the holidays, I can act. So my snoring, my sleeping, some other things get changed by the amount of sugar I intake. When I scroll it back, I can feel my health change. I don't snore. All these things happen. So would I be opposed to it? I would be opposed to it because, again, it's personal choice. And those things, to me, it's just as addictive as alcohol, but it's a whole another philosophical conversation.

[Emilie Kornheiser (Chair)]: President Mesland, you get the last question. We're going to the floor.

[Rep. James Masland (Member)]: Very helpful. Also, you have a lot of ideas. I do. Do you have any one pagers on

[Rep. Joshua Dobrevich]: I do.

[Rep. James Masland (Member)]: Of your presentation?

[Rep. Joshua Dobrevich]: Of this?

[Rep. James Masland (Member)]: Or many of it. I tend to look at things in chunks and sort of figure that one out and then go on to the next. So if you have any one pagers, even if they bleed one to the next, it would be helpful to see them and read them.

[Rep. Joshua Dobrevich]: Okay. Yeah, I hate all of my builds except for one because I believe every build should be one page and be able to be read about while walking, just like Benjamin Franklin. But unfortunately, that doesn't happen anymore. Yes, ideas are good luck. You ready? Holy moss, baby. Thank you very much. And you guys are awesome. Like, I felt very comfortable. We can go outside. Even slightly nervous.

[Rep. Craig Burk]: Yeah, show you if you

[Emilie Kornheiser (Chair)]: did