Vermont Legislature SmartTranscripts:

[Sen. Ann Cummings (Chair)]: We are live. This is Senate Finance on February 5, and today we're going to walk through S-two 82, and that's related to increasing taxes on higher income earners and creating the school construction aid special fund. This was the one where things that are taxed except federally would be added back in, be taxed here, mostly having to do with investment income as much as I could understand it. And so this is going to be 101 to help us figure out what we're being asked to tax, what it would look like, and how much money we might make at it too. So, Kirby, I've got you first if that's

[Kirby King (Legislative Counsel)]: Yeah. I think that's good.

[Sen. Ann Cummings (Chair)]: Okay. I think if these guys think the order should be turned or changed and all this different changes.

[Ted (Joint Fiscal Office)]: Yeah, think that's how

[Kirby King (Legislative Counsel)]: we, so Kirby King, Lichten Council, the way Pat and I split it up, is that I'll walk you through kind of explaining, doing a deeper dive on on what's being proposed, and then Pat will supplement that with a little bit of inquiry about to the extent that he's can. Okay. Mhmm. Yeah. So, again, with the council.

[Sen. Randy Brock (Member)]: Second. I

[Sen. Christopher Mattos (Clerk)]: have presentation for you now.

[Kirby King (Legislative Counsel)]: So in s February, there's a proposed wealth proceeds tax is what it's called. Okay. Great. It's it's based off of and adapts something called the net investment income tax. That's a federal tax that exists. I don't know if they've since been for a while. So we're gonna we're gonna go through the net investment income tax first to get an understanding of that, and then we'll talk about what the wealth proceeds tax is doing using that. We'll kind of compare the two, and then I'll go over just some decision points at the end just to make sure that you're aware of them. So, you know, this is this net investment income tax, federal tax that's existed for more than ten years, it's not something that I crossed paths with. It's something that seems to come up very much, but there it is. It's a federal tax just sitting there.

[Sen. Ann Cummings (Chair)]: First time I've heard of it.

[Kirby King (Legislative Counsel)]: So some background, it it was part of the Health Care and Educational Reconciliation Act of 2010. It became effective in 2013. This was during the Obama administration leading up to the Affordable Care Act, and so it relates to those things. Its purpose was to help fund health care reforms during the Affordable Care Act. Sidenote, it does go into the US Treasury General Fund, though. It doesn't go straight to to Medicare or something like that. But but that was why it was made. And there's been a little bit of history because the Tax Cuts and Jobs Act eliminated the individual mandate that was part of the Affordable Care Act, but it did not touch this. It it left the net investment income tax in place. And at the federal level, it's called a surtax. You know, sometimes we've talked about surcharges in here, which is the same thing. It's a it's a tax that's on top of another tax. So in this case, this is an income that's on top of the personal income tax at the federal level. It's a it's an additional tax on income from investments. Anybody have any questions about that stuff before we go on? Okay. So just to help contextualize this, because I know we're all getting to know it, Don't take this slide as any sort of advocacy. I'm just I'm putting what ITEP has said is the reasons for taxing us, at least why a low proceed tax would be what they think is a good idea. So number one, on their website I would say go to their website if you really wanna see the full pitch, and then just give me some context. They say that there's some tax disparity because earned income from work is often taxed more than passive income from investments. I can support that long term capital gains and qualified dividends at the federal level have a lower rate often than wage income at the federal level.

[Sen. Ann Cummings (Chair)]: So this is taxed now because of the

[Kirby King (Legislative Counsel)]: yeah. This is this is just, like, their reasons for thinking that taxing this investment income is a good idea.

[Sen. Ann Cummings (Chair)]: Okay.

[Kirby King (Legislative Counsel)]: They also say, you know, it's part of progressive tax policy because individuals who have a lot of income tend to have a lot of investment income.

[Sen. Christopher Mattos (Clerk)]: Okay. So

[Kirby King (Legislative Counsel)]: moving on, that's just to contextualize things. Let's talk about the tax base and the calculation for the net investment income tax of the federal. It's a tax of 3.8% that applies to the lesser of net investment income, which we're gonna walk through everything that goes into that. Okay. Or the amount that your modified adjusted gross income exceeds certain thresholds that are set in federal statute. For an individual, that's $200,000 which is modified adjusted gross income.

[Sen. Ann Cummings (Chair)]: Okay. So this is a present existing federal tax?

[Kirby King (Legislative Counsel)]: Yeah. Right now, we're just talking about the federal tax incentive. So you so you can understand that before we move on to the other part. To give you some examples about what this means, let's say just completely hypothetical individual who inherited some song royalties and they just live off that. That would be investment income. They're living off of the income that comes from some royalties. Maybe their their grandparent was famous musician, something like that. They would have all of their income would be net investment income. It would be all that royalty income. But let's say it's a $150,000 a year and they live on it. Under this, the MAGI threshold, the modified adjusted gross income threshold is 200,000. They would not pay this because it's the lesser of the two and their modified adjusted gross income would not exceed 200,000, so they wouldn't pay this. Let's say you have a doctor in Vermont who earns $400,000 cheaper, but they have retirement accounts but they don't have investments, They would not pay this because they wouldn't have any net investment income to apply it to. If that same doctor had, say, a small amount, like 10,000 in investment income, that 10,000 would be taxed at 3.8%. So here are all the things that go into that investment income. Again, this is the federal tax base. First, it's income from capital gains, short term and long term. Doesn't matter how long it's held. All capital gains are included. Dividends, and in parentheses, I've kind of, you know, explains what these things are in the short range. Taxable interests, so the interest you get from a savings account or bonds. Rent and royalty income, I mentioned royalties a second ago, which didn't come from intellectual property, but also income from personal property would be rent. Passive income from investments. Passive income means that the taxpayer's not actively involved in the business that they Would

[Sen. Ann Cummings (Chair)]: that be your IRA? Would that be, like, your IRA? Like, retirement account? Yeah. No.

[Kirby King (Legislative Counsel)]: No. It this is this is, business type income where you just invested in it and you're just receiving income from that investment and that you're not actually running the business.

[Sen. Ann Cummings (Chair)]: So four zero one ks, four zero three, which is?

[Kirby King (Legislative Counsel)]: No. No. And I'll show I'll show you all in for another.

[Sen. Christopher Mattos (Clerk)]: Got

[Kirby King (Legislative Counsel)]: it. And that's those are some of the things that are

[Sen. Christopher Mattos (Clerk)]: not good. What

[Kirby King (Legislative Counsel)]: is included is business income from trading financial instruments. That is when you're doing short term stock trades, and you've set up a business to do that because this is business income. For an individual, if you just sell some stock, that could be a capital gain, but there's this subcategory of actual traders who set up, and it goes down to business income for them instead of capital gains. So for that stuff's included, the income from that. And then the taxable portion of a non qualified annuity, this is when you go to an insurance company and set up an annuity and you're receiving income as that money grows. So those those are the types of investment income that the net investment income tax applies to. Not included. Wages, social security benefits, unemployment pay, qualified retirement plan withdrawals like the four zero one ks or the IRA, many different types of retirement systems with defined benefit plan for compensation plans, interest from municipal bonds or funds, income from the sale of a primary residence, life insurance, and then active business income is also excluded. I'm going too fast. Let me

[Sen. Christopher Mattos (Clerk)]: So far. Okay. Perfect.

[Kirby King (Legislative Counsel)]: So now we now Mary can talk about modified adjusted gross income. Is that something that's used for these thresholds to determine whether a taxpayer has to pay this? Modified adjusted gross income is something that's used all throughout the federal tax code, and it means different things in different places. So when we talk about it here, it's pretty simple. It's AGI, plus if you've used the foreign earned income exclusion, you have to add that back. So if you're a US citizen living in Paris and you you can exclude up to 130,000 of your wages that you receive from your job there in Paris, that gets added back for this, but at the same time, all the deductions that you don't get to take because you took that exclusion, such as taxes paid to France on that on those wages, you get you get to include that. So basically, for most people, it's just gonna be the same as AGI, the exception being if someone has earned income and they've excluded it. Okay, so what are the thresholds? I hinted at this before. For a single individual, dollars 200,000. That means going I'll show you again. For married filing, we're at least 250,000, and for married filing separately, it's half of the married filing jointly, and that gets applied to this, where we look at the amount that MAG I exceeds the thresholds. So if you have modified adjusted gross income less than those numbers, you would never pay this, that's probably why so many of us haven't heard of it, but if it exceeds it, then possibly you start paying tax on bonds or net investment income if you have any. Some notes here, these thresholds were set in '13 when this first became law, but it hasn't been changed. There's not an inflator associated with these thresholds.

[Sen. Ann Cummings (Chair)]: Okay, so 200,000 in 2013 was worth more than it is

[Kirby King (Legislative Counsel)]: That's yeah. That's part of why I'm noting this is to tell you that

[Sen. Ann Cummings (Chair)]: Thank you. That's a point. That sounded fairly low. It's a start up as a wealth tax.

[Sen. Christopher Mattos (Clerk)]: Just so I get it right, you have a single income earner making 225,000, 10 of that falls into the net investment bucket. Just that $10 is 3.8%.

[Kirby King (Legislative Counsel)]: Correct.

[Sen. Christopher Mattos (Clerk)]: Additional. An additional three point So you pay your regular income tax all the way up to that $2.25, and then you get an additional 3.8 on that 10,000 or whatever the portion is. Absolutely correct. Okay.

[Patrick (Joint Fiscal Office analyst)]: Good job, Chris.

[Sen. Ann Cummings (Chair)]: Yeah, thanks, Chris.

[Kirby King (Legislative Counsel)]: Thanks. I'm impressed.

[Sen. Christopher Mattos (Clerk)]: Just had to say it out loud.

[Unidentified Committee Member]: Yeah, know, it's helpful. Okay,

[Kirby King (Legislative Counsel)]: so now that we're understanding how this federal tax works Oh, I gave some examples on the next slide. Oh, shoot a way to do it.

[Unidentified Committee Member]: It proves you knew it.

[Kirby King (Legislative Counsel)]: Yeah. So some examples to help understand that, let's say a person has $50,000 in net investment income and modified adjusted gross income of $300,000 for a single filer, that means their modified adjusted gross income is $100,000 over the threshold, so in this case the lesser of would be the 50,000 in net investment income, and that's what the tax rate would be applied to, And it would be the vaccine $100. K. So now we're gonna leave the federal stuff. Everyone's got that. Right? Got it. Mhmm. We gotta make it a little bit more complicated. I'm bringing it to Vermont. So just some high level things to know about the wealth proceeds tax. It adapts the federal net investment income tax to Vermont law as a surtax on a similar tax base. It's a tax on certain types of income that is in addition to income tax, which I think everybody gets that. It does not directly tax the value of a taxpayer's wealth. It you know? So so I think when because of we've had in recent years some proposals to tax wealth, In that case, it's taxing the value of assets. Mhmm. And I think people's minds could go there, so just wanna make it very clear that that is not what this is. This is this is not the income. Unrealized is the example. And and people talk about unrealized gains. Yes. That's this is on incomes, realized gains. You have drawn it down.

[Sen. Christopher Mattos (Clerk)]: You're you're your

[Kirby King (Legislative Counsel)]: sign. Yeah. Yes.

[Sen. Ann Cummings (Chair)]: Not in an account being reinvested.

[Kirby King (Legislative Counsel)]: Mhmm. If there's one instance of something that were something we're gonna go over, like, with those unrealized. But

[Sen. Ann Cummings (Chair)]: Okay.

[Kirby King (Legislative Counsel)]: But, yeah, that that that's the way to think about this. It's about income. So the wealth proceeds tax is as proposed is a 4% rate applied to the lesser of wealth proceeds, which is that net investment income base we talked about before, but there's several adjustments so we can get into, Or the amount of modified adjusted gross income that exceeds the thresholds and for the way that this is proposed is the same thresholds as we were just looking at. There's a couple of places where when I'm going through this more thorough review after drafting that I would like to go back and draft better, just hoping to flag that. One of them is that there are some references to Vermont taxable income and the imposition of the tax. Looking at it with fresh eyes doing this, I think I should go back and do that. I would take that part out because it kinda confuses things.

[Sen. Ann Cummings (Chair)]: I think it's safe to say we're not gonna go over this out. Right.

[Kirby King (Legislative Counsel)]: Yeah. Yeah. So there's what I'll and I'll mention again later some other there's there's some other stuff that I won't wanna polish it.

[Sen. Ann Cummings (Chair)]: But So this would be 4% on top of the 3.5% at the federal level, so it would be a seven per seven and a half.

[Kirby King (Legislative Counsel)]: It's almost eight. It's three Almost eight. Seven. It's 3.8. Yeah.

[Sen. Ann Cummings (Chair)]: Okay. Oh, yeah.

[Kirby King (Legislative Counsel)]: Okay. So what is the wealth proceeds tax adding in addition to the tax base beyond what we already talked about with the investment? For one, it proposes to increase the tax base by adding income from state and local obligations outside of Vermont, that's bonds from other municipalities or states. This is something that's not included in the federal tax base because it's exempt federally, but states are allowed to tax this income, and Vermont does for the income tax, so it's adding that back. Second, gains from qualified small business stock is excluded under federal law. We've talked recently about the changes, the federal changes from last summer from H1 that expands the amount that's excluded at the federal level for gains from qualified small business stock, I think this part is in response to that tax policy at the federal level to get some of that back for Vermont, so to speak. Same thing goes for the third bullet there, which is the gains from investments in opportunity zones. That was another area where under HR1, it was expanded federally, and this is an attempt to

[Sen. Ann Cummings (Chair)]: get And that would exclude the opportunity zones in Vermont.

[Kirby King (Legislative Counsel)]: Yes, investments into those, yeah. It also proposes to increase the tax base with capital gains from the disposition of property held in a trader business and not subject to the net investment income tax, so this would be some the gains from a business, from running a business. The NIIT kinda draws the line at passive income and active income, but this would be including some of those active gains back.

[Sen. Christopher Mattos (Clerk)]: Can you talk, like, property as in, like, personal property

[Kirby King (Legislative Counsel)]: inclusions? Like, the difference, like It could be. Sell a piece of equipment? Mhmm. Could be. That's yeah. So obviously, and I'll go over this later too, but I'll just go ahead and, these are all policy decisions for you, obviously. These are all different discrete things whether he wants to be if you wanna go forward with this, whether you want to be part of the tax expense report.

[Unidentified Committee Member]: Can I follow-up on senator Mattos' question? So if it was a piece of equipment, say you run some, you're selling a dump truck or something, say, you no longer need. What are the capital gains on that? Because usually, you would sell it for less than you bought it. So when what what would be the capital gains on selling a dumping or or less than you purchased it?

[Kirby King (Legislative Counsel)]: That I I wouldn't wanna answer that often. Okay. Because that's Yeah.

[Unidentified Committee Member]: Out how the disposition of I suppose if it's land and it increases in value, then, like, you if you have

[Sen. Christopher Mattos (Clerk)]: a Yeah.

[Unidentified Committee Member]: Piece of property that you're selling. But usually usually for equipment, it's depreciated, and so you're not getting capital gains from equipment, generally speaking.

[Kirby King (Legislative Counsel)]: Yeah. So I'm just answering, you know, hypothetically.

[Sen. Christopher Mattos (Clerk)]: Okay. I

[Kirby King (Legislative Counsel)]: say that the facts of every situation can be different. Okay. I would also note that as far as, like, the policy reasoning behind any of these inclusions, I would, you know Joking to the We public assets involved, I think. We have ITEP, so getting some further testimony on that is a good one.

[Sen. Ann Cummings (Chair)]: We'll have I'm not available at all. The public accountants in, they have a association. Whenever we've done these kinds of things, we've had them in. We've talked about what it might look like in the real world.

[Kirby King (Legislative Counsel)]: Exactly. And we'll we'll be getting some other things too that that with comparison testimony, you'll see.

[Sen. Ann Cummings (Chair)]: The school has a ways to go to get your interviews.

[Sen. Christopher Mattos (Clerk)]: So that's true.

[Kirby King (Legislative Counsel)]: Others, we have more more additions that are being proposed to the bankruptcy tax. So any amount of gain that's not subject to the net investment income tax from the disposition of a partnership interest or S corporation stock, that's an exemption at the federal level, and it's being proposed to not allow that exemption here. Something called net unrealized appreciation and securities of an employer corporation in certain retirement accounts. This is when, for example, when an employer sets up a trust for an employee and puts its own, let's be a C corporation putting its own stock into the trust for the employee, the appreciation in that stock, by adding this back, you would tax the appreciation in that stock even though it's

[Sen. Ann Cummings (Chair)]: What if the stock depreciates next year? I

[Kirby King (Legislative Counsel)]: don't know. You would have a good yeah. It wouldn't have a

[Unidentified Committee Member]: It It says says net. So it would take it's you you subtract the depreciation of your stocks from the From the account. Appreciation. Yep. Right? We're gonna.

[Kirby King (Legislative Counsel)]: So not an account.

[Sen. Ann Cummings (Chair)]: Yeah. Mean, it could be worth a lot. That's always been a problem. You start to be worth a lot this year if I draw that money out, it's income. But next year, it might be worth half of what it's worth this year and

[Kirby King (Legislative Counsel)]: Mhmm.

[Unidentified Committee Member]: These are specific things, though. This is a security of an employer corporation in certainties, so this is a specific thing, so there must be some bad definition of a net unrealized depreciation.

[Kirby King (Legislative Counsel)]: It's, you know, these niche scenarios that come up where the net investment income tax is not taxing it.

[Sen. Christopher Mattos (Clerk)]: Okay.

[Kirby King (Legislative Counsel)]: But other places in the tax code for income tax purposes, they're taxed. And so I believe that it's being asked to be added back here because it's sort of a why not. It's a gain. It's not a traditional retirement. But again, I think getting testimony from folks advocating for this, they'll would be able to describe why they want this better than what other people do.

[Sen. Ann Cummings (Chair)]: Yeah. I don't wanna have at least everyone over the age of 65 sending me emails because I'm taxing their retirement account. That's why we do that once, upping the investment estimate income for Mhmm. Retirement.

[Kirby King (Legislative Counsel)]: It's yeah. This is see, these these are the traditional types of retirement. Yeah. This is like a a corporation sets up a trust for their employees. It's not something that's, from my experience, has done that often. And then last of all, the proposal is to include in wealth proceeds the income that's from an incomplete gift non grantor trust that would be subject to federal income tax if the trust was a grantor trust. I'm gonna try my best to explain this issue. This is an issue that exists outside of this context. This is a state income tax avoidance issue. A grantor trust is a trust that a person can set up where they're putting assets into the trust, but they're keeping some control of the trust. That's the grantor trust part of the equation. The grantor is the person forming the trust, and they're keeping some control. The way that that works for tax purposes is the income from that trust is treated like a grand swore's infantry. So if that person lives in Vermont, they're taxed like they live in Vermont. Through some tax planning, you can set up a trust in a different state that doesn't have income tax, and the grantor can give up some control of the trust, where the trustee, the entity running the trust, gets more control, That's when you can have something like an incomplete non grantor trust. Tax wise, since some control was given up, it's not treated like The income from that trust is not treated like the grantor's income. Vermont would not be taxing it in that case. It would be taxable in the state where that trust is. It would be the trust's income that would be getting tax impeached. So you can see that this is something that a person can use too.

[Sen. Christopher Mattos (Clerk)]: Avoid HIPAA.

[Kirby King (Legislative Counsel)]: Especially if they're in a state that has a relatively high personal income tax, this is something that can be used. Right, so yeah, getting

[Sen. Ann Cummings (Chair)]: State, 30 miles, 40 miles to the south, that has no.

[Kirby King (Legislative Counsel)]: Mhmm, And, yeah, lots of policy arguments here because when you set up a trust, can be beneficiaries, so maybe it's not the grantor that's benefiting from that income anyway. Right. You know? So there's and and also in the language that's used to set these trust up, I think there's some legal debate about if if it's really truthful. Like, it's the grand court really does it because people have control. So so there's there's a lot there. Point is that this is an attempt to look past that and say, if this would be taxable as a grant for trust at the federal level, then we're gonna apply the wealth proceeds tax to the income from that trust. The things that are being taken out of the tax base by the wealth proceeds tax are things that you would legally have to do, so there's not a lot of policy decisions here. Vermont cannot tax income from US obligations like bonds, certificates, things like that issued by the federal government. And then any and then there's also the provision of any amount exempted from tax from state taxation with US law. I was trying to come up with an example for you. I I don't I didn't come up with one. I was thinking about, like, diplomats, like, we can't tax foreign diplomats, but when are they gonna have the investment proceeds that are sourced from government? Mean, so these are rare situations, but these are things that we're not. So there's a table. When it comes to individuals, at least this is the comparison. Really, it's not that complicated. You know, wealth proceeds tax, the big difference is it's adding those individual items to the tax base. That's where I think the policy questions for you mostly lie. I was gonna also just briefly go to trusts and estates and in the process of reviewing the language that I drafted for this, I realized this isn't coming together like it should. So this is another area I would want to polish to make sure it's very clear how trusts and estates will be treated, but assuming that the general assembly would want to follow treatment similar to the net investment income tax like this already does for individuals, it would end up, after some drafting changes on my part, would end up being applied to any undistributed net investment income that is, if that income has been passed out of the trust to beneficiaries, then that will be distributed, so you don't look at that, you just look at what's undistributed. Would the tax apply to the lesser of that or the excess HEI of the trust over a certain amount? Under federal law it's set at the highest tax bracket for for trusts. I'm not sure that that's a great thing what Vermont's necessarily linked to because it's we don't really link to the federal supermarkets like that normally. But, you know, there could be a policy decision there for you whether you wanna set a Vermont's highest bracket, keeping in mind that those brackets are not modified adjusted gross income, they are Vermont taxable income. So it's a little bit apples to oranges. So if you did that, it would be $15,200 Vermont taxable income would be the threshold. For states and trust, the threshold, that like, the highest bracket is quite low and preferred. Or you can set an amount of HEIs. So just some considerations to make you aware of. Clarifying language is needed. I've talked about that. I've also talked about how a lot of these policy decisions are coming down to which of these additions to the tax base do you want to include. I've also mentioned I think it's a good idea to get testimony on those. I think that at least when it comes to the grant or trust issue, that's a greater tax avoidance issue. It could be something that you might wanna get a testimony on, perhaps you could be board of experience, or experience with that. And then the last thing that I haven't mentioned is us staff, we need to do some more work on allocation question. When it comes to the federal tax and this investment income that happens, it's happening in The US and it's being taxed in The US. We have the extra wrinkle when it comes to our income tax that has to be applicable to Vermont. We can't you know, we don't tax a capital gain that's the sale of a house in California. So learning more about how many of these things can we actually trace back to Vermont is really important to know what can Vermont expect as far as the revenue. So our assets are located in Vermont. That's fairly easy. But in other things, they they can get tricky. And that's that's something that we're we're continuing to look at.

[Sen. Ann Cummings (Chair)]: Okay. Any questions at this point? I think, good job. We have a long way to go to get our heads wrapped around.

[Kirby King (Legislative Counsel)]: We

[Sen. Ann Cummings (Chair)]: will we have some practicing CPAs fill out these forms and see if they can help us.

[Kirby King (Legislative Counsel)]: When it comes to the trust question, I think, you know, attorneys who do tax planning, you know, I think there are some firms in Vermont that do do that kind of work, you know, I One Peter. I have testified before, and and I know they put out a lot of information on this issue and have drawn attention to tax avoidance issue.

[Sen. Ann Cummings (Chair)]: Yes, thank you. Herbie, I don't know if you have an answer for this, but there's so many qualifiers above and beyond the income threshold. Do we have a sense of how many people this would apply to or anything like that?

[Kirby King (Legislative Counsel)]: As far as, like, how many people that would be subject to this in Vermont who who actually are above that month by adjusted gross income threshold? Yeah. I think or at least, you know

[Sen. Christopher Mattos (Clerk)]: Well, Vermont.

[Kirby King (Legislative Counsel)]: Coming close, but it's packed much.

[Sen. Christopher Mattos (Clerk)]: Okay.

[Kirby King (Legislative Counsel)]: Should have said that.

[Sen. Ann Cummings (Chair)]: We've got numbers coming up. There's an attached department on my area.

[Kirby King (Legislative Counsel)]: Okay.

[Sen. Ann Cummings (Chair)]: Any other random chicken questions?

[Sen. Randy Brock (Member)]: Just an observation, is it somewhere in all of this we need to, I think, include an economics scientist or psychologist rather, because the thing that we're really concerned about as much as anything else is as you raise a revenue of a certain kind, what's the human behavior of the person who has that revenue when you apply it across a group? And what are the things that you do that actually cause your revenue not to increase as much as you want, but at some point to decline? And there's a point at which you tax people, particularly who are more mobile than others, in which you don't get the increase that you want, and in fact you get a decrease. The second is there's kind of a myth about dollars in that we don't apply the rate inflation to them. When you have people who have dollars that have depreciated because of time, there are calculations that you can do, probably less so those on a year by year basis, those that involve capital gains in which you can. You buy something for X amount thirty years ago, and you have this huge amount that you have now, and you think you've made a lot of money, and in fact, it's conceivably a loss money. Then when you tax on top of that, at least go to people who figure it out, who have accountant smart enough to figure it out, you're really doing damage.

[Sen. Ann Cummings (Chair)]: The first thing that struck me was that $200,000 starting place. I think that definitely needs to get adjusted to what 200,000 in 2013 was a lot more money than it is today if you look at money head by how what you could purchase for. Could buy a house for $200,000. Can't do that anymore.

[Sen. Christopher Mattos (Clerk)]: So we will

[Sen. Ann Cummings (Chair)]: see where this goes. This is our first walkthrough on this part. We

[Sen. Christopher Mattos (Clerk)]: are going

[Sen. Ann Cummings (Chair)]: you've been walking through it a lot. But I think maybe we'll have we'll see if see how much money we're gonna make out of major

[Sen. Christopher Mattos (Clerk)]: You're real

[Sen. Randy Brock (Member)]: going worse. In fact, if

[Sen. Christopher Mattos (Clerk)]: you go to physical office, boy, am I getting disappointed?

[Sen. Ann Cummings (Chair)]: Maybe it isn't worth the effort?

[Patrick (Joint Fiscal Office analyst)]: Well, let's see. I think I can comfortably say the revenue for this is on the order to the tens of millions of dollars. To give you a little sense of where I'm at with it right now, though, my the sort of low and high end of my range right now is about $40,000,000 apart from each other. And some of the some of that goes back to things that Kirby was talking about, we're working through with our colleagues at the tax department, is the question about abortion then, and also some expectations of behavioral changes. I guess just to give you one sense of, like, this lump of money that we're talking about, it's about 58% of it is this is cited in the high-tech report. 8% of it is from capital gains. And capital gains is probably the source of income in this bucket that people have the most control over in terms of timing their sales. So that's that's one thing we're thinking about when coming, you know, when working on this estimate. I did think maybe I'd just give you a little profile of how other states treat this investment income. That would be helpful. Yeah. So for the majority of states, and Vermont is one of these, investment income is treated as ordinary income, and it's just subject to the personal income tax, regular brackets, which is kind of income tax that way. There's, I believe, six or seven states that actually tax investment income like this at a lower rate than ordinary income, and I think that's really more of them mirroring the federal treatment, where at the federal level, they do tax the sick income. I'm specifically talking about capital gains right now at a lower rate than they do earned income, like wages. Okay. And then there are two states that tax capital gains at a higher rate than ordinary income. One of them I don't think should really count because it's Washington, and they don't have income personal income taxes, but they do tax capital gains. And then

[Sen. Ann Cummings (Chair)]: Oh, it's Washington State. Washington State. Yes.

[Patrick (Joint Fiscal Office analyst)]: Yeah. And then Minnesota currently is the only other state or is the only state that has a net investment tax, net investment income tax. They just implemented it though, so there's not really a whole lot of information we can glean from them at this point in that process. But their their set of it is different too. It's the income threshold is over $1,000,000, and it's 1%.

[Sen. Ann Cummings (Chair)]: But That's total income?

[Patrick (Joint Fiscal Office analyst)]: Wish you are

[Sen. Ann Cummings (Chair)]: 200,000 if you go to our top bracket, we're 300 plus or minus.

[Patrick (Joint Fiscal Office analyst)]: The income threshold Kirby was talking about with the Maggie, Magi that he was talking about, just replace all Yeah, those so just replace all those numbers with 1,000,000 is the threshold on that.

[Sen. Ann Cummings (Chair)]: Okay. And Washington State taxes investment income, but it doesn't have an income tax?

[Patrick (Joint Fiscal Office analyst)]: They don't have a personal income tax, but they do tax capital gains at a rate of 7%, and they may have just added a higher 9% above 500,000 In capital gains, not in income. Correct, Just capital gains. So those are the two states that tax capital gains at a higher rate than just what, yeah, just our ordinary income. So, Minnesota is probably the most analogous setup, although some of the numbers are obviously different, 1% versus 4%, 1,000,000 versus 200,000. Yeah, so trying to think of it, haven't touched on anything. We are still, I'll just reiterate, we need to do a little more work with the tax department to work out some of the, treatment of the income in terms of apportionment, and how that would be administered, because there is some potential because we are a state and not the feds, there could be a lot of leakages compared to what we see for monitors take at the federal level for the NIIT. And actually, sorry, Gulick, to answer your question from earlier, from the IRS, I was able to claim that about 12,000 returns with Vermont addresses on them in this tax. Now, the small caveat of that is they don't necessarily have to be Vermont residents in, but the Vermont address on the tax return, federal tax return. So that's just one, you know, with the data that we're in with one little quirky, but it's not 12,000 returns the Fed said would make us.

[Sen. Christopher Mattos (Clerk)]: We might

[Sen. Ann Cummings (Chair)]: make tens of millions. If we upped that basic income to I'd like to get that top tack bracket up somewhere in 500,000, but up over because I'm gonna start taking some testimony out next week, week after, on our tax burden and what it's doing to recruiting professionals that we need because when we said that, $294,000 was a lot of money needed, isn't that much money anymore. 200,000 is to teachers in Chittenden County. It's not really want to discourage coming here if they can or in New Hampshire or New York.

[Sen. Randy Brock (Member)]: I think we also need some testimony on the behavioral side of things and to get that in particular, private accounting firms. The experience they've had with high net worth customers over the past X number of years and what motivates them to change their tax home.

[Sen. Ann Cummings (Chair)]: I'm gonna ask, there is, I used to feel this building a lot, but there is a CPA association. And I think we'll ask them if you know anyone, anyone knows anyone that might do that.

[Sen. Randy Brock (Member)]: And then there are also firms like organizations on the other side

[Sen. Christopher Mattos (Clerk)]: of the

[Sen. Randy Brock (Member)]: economist's field. We have a tendency to deal with the ones here who generally are much more left leaning than there are others such as the tax foundation that tend to be more right leaning. You get at least some balance in the information that you get.

[Sen. Ann Cummings (Chair)]: And we have had the tax on it.

[Sen. Randy Brock (Member)]: We've had the tax on it previously, yes.

[Sen. Ann Cummings (Chair)]: Yeah. We will hear from all sides of this issue before making a I think at this point we're just wrapping our heads around what it is and what maybe in a best case scenario we could hope to make, then we can start talking about adjusting numbers. Think that 200,000 from 2013, given inflation rates, is probably something we want to look at and we can look at the behavioral aspects and we'll have, you know, people that do tax preparation in and ask them, you know, what they've seen in that. Maybe we could even find this practice in Minnesota and ask them, you know, I don't know how long they're

[Sen. Christopher Mattos (Clerk)]: have to stay in place to ask them. They have slip into when we come for, you know, tax seasonals. Right?

[Sen. Ann Cummings (Chair)]: Okay. So they haven't had it. Exactly. Massachusetts, it does take a while for people to pack up and move.

[Patrick (Joint Fiscal Office analyst)]: I don't think how long it took us to get the administration of the payroll tax coming. That's true. That's a difficult one for education coupons. So,

[Sen. Ann Cummings (Chair)]: yeah, it takes a while for things to settle out. We will look at all of this before we're done. Any questions for Patrick?

[Patrick (Joint Fiscal Office analyst)]: Hopefully I'll have more concrete figures for you next time.

[Sen. Ann Cummings (Chair)]: Maybe we'll have more concrete wording.

[Patrick (Joint Fiscal Office analyst)]: It's a wordy word in practice.

[Sen. Ann Cummings (Chair)]: Okay. Next, we have Jake Feldman. Is, can I go ahead and testify?

[Patrick (Joint Fiscal Office analyst)]: It's gonna come for the next bill

[Kirby King (Legislative Counsel)]: on your wall.

[Sen. Ann Cummings (Chair)]: Oh, okay. I've got a microphone.

[Kirby King (Legislative Counsel)]: And then I can all lose me.

[Sen. Ann Cummings (Chair)]: Oh, okay. You're on this one. Okay.

[Sen. Christopher Mattos (Clerk)]: Jake Feldman, tax department. Do you want me to only talk about this tax? Because the testimony's about past February and February, so was a few different tax ideas in them.

[Sen. Ann Cummings (Chair)]: What's your time like?

[Jake Feldman (Vermont Department of Taxes)]: My test is really short. And

[Sen. Ann Cummings (Chair)]: I mean, it if you could stay and do the second one, but if your time is short, I this is a lot for us to wrap our heads around. I don't know if we can wrap our heads around two what's the second one? Meals All of schools. Alright. Meals and rooms. Nielsen rooms is a little easier to understand, yeah, if you want to do both at once. I think we can scratch that one.

[Jake Feldman (Vermont Department of Taxes)]: Okay. So, thank you, Jake Feldman, Tax Department. There's a short handout under my name on the committee page. And I am gonna talk about a few different things, but mostly about wealth proceeds tax. But we're gonna start with an s two eighty two. There is a proposal to have a new non homestead residential property tax classification and a tax that goes with it. And I would just like to give the committee a heads up that that was included in Act 73. Yep. But it was contingent on the school districts being enacted.

[Sen. Ann Cummings (Chair)]: I think that part, we've got, I think, three bills in here asking for that, and it is part of it is set up in '73, so I don't think we're

[Jake Feldman (Vermont Department of Taxes)]: Yeah, gonna take that it's not at all. We wrote an implementation report that I linked, and you should check it out. Yeah, Yeah, Ways and Means is working on it right now. Okay, so that may be easy to talk about. There's also an Equifax surcharge in S-two eighty two. And I wanted to point out a table that I've shown the committee before. Basically, Vermont already has pretty high income taxes on a very small population of high earners. In 2024, there were about 1,300 residents who had over a million dollars. And then if you look longitudinally, there are very few people who have that level of income year over year. It's about 10%.

[Sen. Randy Brock (Member)]: 8% is like 1,300.

[Jake Feldman (Vermont Department of Taxes)]: Yeah, so maybe 130, we're making over 1,000,000 every year. This is really important, these people keep talking about Massachusetts. Massachusetts instituted a 4% surcharge on income over $1,000,000. And if you look at my table on the right, it's about, for people who make $10,000,000 a year, how much do they pay? And you'll notice that Vermont is higher than Massachusetts, even including the surcharge. And you wonder how could that possibly be the case? Well, our top knowledgeable rate is 8.75, but it starts at $350,000 ish of income. Massachusetts is 9%, but it starts in a million. So if you kind of imagine two lines going out, it takes a while to get to the point where your taxes are actually higher in Massachusetts. If you're a run of the mill millionaire, you're already paying a lot more in Vermont. You have to be like around 11 or 12,000,000 before you get the paying more, paying more in Massachusetts. Okay. So that's income taxes. Those are the rooms taxes. Similarly, we're already pretty high in the region. I wanted to really do a good study of that for you guys today, couldn't. My Google ad was not approval enough. Found something from JFO. Meals tax, 9% is already number one in the region, so that includes New England and New York. And then, our roofs taxes tied for number two is Connecticut. So we're already pretty high there. If you have something about overall affordability and taxes and then a chair, we would love to do a more holistic

[Sen. Ann Cummings (Chair)]: I think that might be helpful. I do remember when we were looking at the surcharge on short term rentals, I was concerned that doing some short term rentals and not all of them might be a problem, and we were told if we did it on everyone, we would be the highest in New England and that wasn't a really good place to be when a significant amount of your state's revenue depends on tourists.

[Jake Feldman (Vermont Department of Taxes)]: Right, yeah, so that's not including the short term rental surcharge, which is 3%. Right.

[Sen. Martine Larocque Gulick (Member)]: Okay. Thank you. Thank you, Madam Chair. Jake, aren't a lot of these folks in this bracket gonna be getting quite a few tax cuts in HR1? So isn't this kind of like balancing it out? And the other states that you're mentioning, do you think they're gonna be instituting something similar in response to HR1?

[Jake Feldman (Vermont Department of Taxes)]: Similar to what?

[Sen. Martine Larocque Gulick (Member)]: Similar to what, like doing something in response to try to get, claw back some of the money that they're

[Jake Feldman (Vermont Department of Taxes)]: going to be losing. I think states consider surcharges on income, or maybe even, well, the wealth proceeds tax is more exotic, although Virginia is looking at it. But states are in a competitive environment with each other, so when you have something like HR1, there's gonna be some marauders who benefit, but there's, you know, no matter what state they're in, they benefit. So if one state says, Oh, well, let's try to take that back, let's try to take that tax capacity back, they're at a disadvantage with respect to all the other states. True.

[Sen. Martine Larocque Gulick (Member)]: We know because there's been a tendency to say rich people are going to do better than middle class people under the tax cuts, and they are probably as a general class. But it's a logical fallacy to say some are, therefore all are, I don't remember the last. You know, if we knew which groups of rich people, or are they all, is everybody I have a feeling some of the people in that bracket may be active business owners now who are providing jobs and and some of them are retirees with really good investments. Some of them might even be veterans that got really good jobs after they retired. There's not every they're not a homogenous group, and we've already heard in that top bracket, I think it's 50% in and out every year. I mean, it's a lot of churn in that top income group.

[Jake Feldman (Vermont Department of Taxes)]: Yeah. On the effects of the federal legislation, I'm not fully sure. Okay. You know, I've heard anecdotally, probably like you, that it's going mostly to higher income people, but I haven't seen, like, a, you know, a study on that.

[Sen. Martine Larocque Gulick (Member)]: Yeah. So the November for sure. The last one, most of the benefits went to if you owned a business partnership kind of thing, and there were a lot of tax appreciations and things you could do. But if you were just working for a salary with the salt exemptions, you did not make out so well if you didn't make out poorly. So I think it's because that top bracket is so wide in this state, it would be helpful if anybody could help us figure out exactly, you know, is there one group that's there?

[Jake Feldman (Vermont Department of Taxes)]: Yeah, yeah, no, that's a good question. I don't know for sure. I know that they expanded the salt production.

[Sen. Martine Larocque Gulick (Member)]: Yes, they did.

[Jake Feldman (Vermont Department of Taxes)]: From 10,000 to 40,000, so that's gonna benefit my family, for example. Because our property taxes are already 10,000, so now we can take our income taxes too, so will become itemizers. That will benefit a lot

[Sen. Martine Larocque Gulick (Member)]: of Vermonters whose property taxes are over $10,000

[Jake Feldman (Vermont Department of Taxes)]: Yeah, potentially. I'd her. Yeah, yeah, no that's a good pleasure. So onto the wealth proceeds tax or the net investment income tax. The only other state that has this is Minnesota. And I hope I'm not budging this, Pat, but the rate is only 1% in Minnesota, and I think it's only on investment income that's over a million dollars. So it's not that you have to be a millionaire, it's that you have to have a million dollars of that income, but

[Ted (Joint Fiscal Office)]: I could be messing that up. But I

[Jake Feldman (Vermont Department of Taxes)]: think that's what I read. So the bill that s two eighty two would be 4% and it would be on any investment income no matter how much you have.

[Sen. Ann Cummings (Chair)]: If you make over 200,000 a year.

[Jake Feldman (Vermont Department of Taxes)]: Yeah. If you take a look at your tax returns from last year, you'll probably notice that you have some of this, like qualified dividends. You'd see it on your ten forty, regular people may be subject to that. I will say also that the federal rate is 3.8%, and for Vermont to go higher is unusual. Usually Vermont, when you're looking at federal things, use a rule of thumb that Vermont taxes are about a third, or 30%. So if you look at a lot of our credits, they're like 27% of federal, or 30%, so to have something that's beyond what the Feds are doing is a little bit unusual.

[Sen. Ann Cummings (Chair)]: And this isn't a tax that was cut in HR one. I

[Kirby King (Legislative Counsel)]: don't think there

[Jake Feldman (Vermont Department of Taxes)]: are any changes to this in HR one.

[Sen. Ann Cummings (Chair)]: I haven't heard any mentioned today.

[Jake Feldman (Vermont Department of Taxes)]: So Yeah.

[Sen. Ann Cummings (Chair)]: This isn't the area that benefited.

[Jake Feldman (Vermont Department of Taxes)]: Not not that I know of. It may just be a drafting thing, but we noticed that the thresholds on an S-two 82 are different than the federal thresholds. It's based on Vermont taxable income. So that would create a situation where you are not subject to the tax federally, but you are in Vermont, which would be pretty confusing, or vice versa, and that's not great. So that's just a technical thing. We've been talking to JFO about how we would do a apportionment for this. It it could be pretty complicated. Apportionment is where, like, you look at your income and you say, where's it from? Is it from Vermont or from somewhere else? And we just don't know how this would play out, but it would need its own apportionment schedule. So that's a complexity. If the feds do repeal this tax, like if the, you know, they perk up and they say, Hey, you know, states are trying to create a wealth tax out of this bill and they repeal it, then that kind of leaves any states that have it in tough spot. You have to kind of recreate it all, which could get quite complicated. My most important point is the very last one on the page. Vermont has, a lot of the revenue from this would come from capital gains, as Pat mentioned. Vermont has a 40% capital gain exclusion. Why? The reason that it has such a generous exclusion is because it's an acknowledgement that we have really high tax rates. And for people who like shepherd a farm, they've got a long business through fifteen, twenty years of development, when they go to sell it, Vermont doesn't want to penalize them. You know, they've been making not a lot of money each year, but then one year all of a sudden they make a couple million bucks because they sell their coffee roasting business to, you know, a local or regional fancy food distributor, right? So that's why we have it. This would tax that. So it doesn't make sense for Vermont to, exempt something in one spot and then tax it in another spot. That's our So there needs to be some thought about what's our goal here and how we treat this kind of income. And,

[Ted (Joint Fiscal Office)]: you know,

[Jake Feldman (Vermont Department of Taxes)]: it drives me crazy that Vermont has an alternative, this is a little bit of a tangent. Vermont has an alternative minimum tax. It's 3% if your AGI is over 150,000. But what it does is it taxes people's medical expenses, and it taxes what's called bonus depreciation. It's like when you buy a piece of equipment, you have a different depreciation schedule, and that is what the ad in the beginning, you can just track later on, but it's on a those two things, right? So if you're gonna say to somebody like, hey, you have extraordinary medical expenses, we want to give you a deduction for them, fine, but don't tax it in a backdoor way. Right? So we've tried to get it repealed by ways it means to not fight. But it drives me crazy because it's really inconsistent, and this also would be inconsistent too. It's saying, we have a capital gains exclusion for you. Hey, person who developed like a a pod for breastfeeding in airports, you nurtured your business for twenty years, and now you have this capital gains exclusion. But, oh, look, next page in the booklet, your tax on that same capital gain. It doesn't make any sense at all. So that's something to think about if you keep talking about this kind

[Sen. Ann Cummings (Chair)]: of device. And this

[Sen. Christopher Mattos (Clerk)]: is the kind of you heard before, And it's

[Sen. Randy Brock (Member)]: a question almost of whether or not Vermont needs to have a tax fairness and consistency standard. I'm certain we're gonna say commission. At the various things that we do and say, are they consistent with one another or are they counterintuitive, not just counterintuitive, but counter effective. We never look at taxes as a whole. Look at this one and that one and this one over here.

[Sen. Ann Cummings (Chair)]: This, I think we're in on some ways and means, we don't always agree, but I think we are definitely going to look at this because we don't really make decisions on income tax and don't look at how that all interplays. We spent one whole year when the feds were changing doing inheritance taxes because everybody used to just piggyback off the feds and then the feds played with it and but to sit back and look at the whole picture and that's I've had two hospital executives in ways and means or tells them well, tell us that the cost burden, the tax burden in Vermont is keeping is making it very difficult for them to attract doctors, especially up to the rural areas where your average patient is on Medicaid. So we're gonna have a whole school where you will do your residency in Vermont and the hope is you'll stay here, but if you're gonna make less and get taxed more, that's not that's I don't think you want your tax policy to do that, so no this might be a good opportunity to kind of look at the whole picture rather than just playing off of, well, we need people made out better by HR1, therefore we will tax. Wilding people, We get really upset when they say that about poor people and SNAP benefits. It's the same fallacy. It's saying some are there for all. And we'll try to avoid that and see where we go. Okay, any questions for Jake?

[Sen. Randy Brock (Member)]: Thanks, Jake.

[Sen. Ann Cummings (Chair)]: Thank you.

[Sen. Christopher Mattos (Clerk)]: Okay.

[Sen. Ann Cummings (Chair)]: That is 282 for today. We're gonna do 286. And that Kent is doing that?

[Kirby King (Legislative Counsel)]: I was with the first meeting. I think Okay.

[Sen. Ann Cummings (Chair)]: I want someone get looked at that. Okay. So we will go Kent, are you I've got Patrick on here, but, again, you are Patrick today?

[Sen. Christopher Mattos (Clerk)]: I am Patrick today. Okay.

[Ted (Joint Fiscal Office)]: Yes. I was appraised with that.

[Sen. Ann Cummings (Chair)]: Got you both on board, but I gather it's

[Sen. Christopher Mattos (Clerk)]: one off.

[Sen. Ann Cummings (Chair)]: That's right. Jake's already been, so you're it.

[Ted (Joint Fiscal Office)]: Great. Then I will set in the track.

[Sen. Christopher Mattos (Clerk)]: Alright. Oops. Sorry.

[Ted (Joint Fiscal Office)]: I was expecting Kirby to go for a little bit of time. I have a document that is posted to the committee page. Would you like me to share my screen?

[Sen. Ann Cummings (Chair)]: Yes. Great. It's in everybody can see it and people at home can see it.

[Sen. Randy Brock (Member)]: Perfect.

[Kirby King (Legislative Counsel)]: Well, then I'll

[Sen. Ann Cummings (Chair)]: They might not all have the committee page on speed dial.

[Ted (Joint Fiscal Office)]: That's fair. Alright. Well, it'll take me twenty seconds to hop

[Kirby King (Legislative Counsel)]: in the Zoom, if that is.

[Sen. Ann Cummings (Chair)]: We are so ahead of time. We might get a fifteen minute break. And all my meetings today got canceled. I'm feeling rejected.

[Sen. Christopher Mattos (Clerk)]: No.

[Sen. Ann Cummings (Chair)]: I'm not caught up in my emails. That's what I'm staying here tonight. I'm still working through the supreme court emails. Okay.

[Sen. Christopher Mattos (Clerk)]: Okay.

[Kirby King (Legislative Counsel)]: Okay.

[Patrick (Joint Fiscal Office analyst)]: So

[Ted (Joint Fiscal Office)]: brief version of the walkthrough. This puts a 2% surcharge on the meals and rooms tax base. It allocates that revenue to the school construction aid special fund. Just the general reminder of the general meals and rooms tax. Under current law, the allocations are 69% to the general fund, 25% to the education fund, 6% to the clean water fund, and the education fund receives a 100% of that 3% short term rental surcharge. In FY '25, the total meals and rooms tax raised $262,300,000 including the STR 3% surcharge. I wanted to also put together I put together a table that shows how the tax rates on different aspects of the meals and rooms tax, what they would look like with the 2% surcharge. Meals would go from 9% to 11%, rooms would also go from 9% to 11, short term rentals would go from 12 to 14%, and alcohol from 10 to 12, and then you can add an extra percent to those calculations for towns that have a local option. If we're thinking about rates, did also want to note that Burlington and Rutland have special provisions in their charters to do their own, they call them gross receipt taxes, and when you layer that 2% surcharge, for example, on Burlington's four percent, the hotel motels, the tax rates, you know, thinking about competitiveness in comparison to other jurisdictions, are getting relatively high compared to our neighbors. In looking at some preliminary revenue estimates of that 2% applied to various aspects of the meals and rooms tax, and this is looking at the base removing the short term rental surcharge.

[Sen. Ann Cummings (Chair)]: We

[Ted (Joint Fiscal Office)]: are estimating that in total, in FY '27, 2% would raise $53,100,000 It's a first year implementation, in the first year, right, you you need an extra month to account for the tax change, and then in FY '28, the total revenue raise would be, I think, a flat 60,000,000 estimated, noting that 100%

[Sen. Christopher Mattos (Clerk)]: of these revenue would flow to the School

[Ted (Joint Fiscal Office)]: of Construction Aid Special Fund, which was created last year in 1973. The Special Fund does not currently have a dedicated revenue source, and then the next bullet outlines the envisioned set of awards for school districts for aid in school construction. Base awards would be 20% of debt service costs. There are bonus incentives. Chris is in the room, and you might know a little bit more about those bonus incentives, but that would provide up to an additional 20% of debt service costs, and then there's also a provision for emergency needs within the special fund. Wanted to provide a little bit of context for what the revenue might be used for.

[Sen. Ann Cummings (Chair)]: Okay. Where would this put our tax rate in comparison to the surrounding states? Like, New Hampshire, Massachusetts, Maine. Do we know that?

[Ted (Joint Fiscal Office)]: It is so Jake, I think, mentioned that the meals tax, I think, is pretty much, we're 9%, we're pretty much the highest in the region. I can provide I have a summary table that I would be happy to provide for the rooms portion, lodging taxes in different jurisdictions. Those, it's harder to apply kind

[Patrick (Joint Fiscal Office analyst)]: of blanket

[Ted (Joint Fiscal Office)]: competitiveness statements because independent jurisdictions like, New York City has their own specialized race.

[Kirby King (Legislative Counsel)]: Boston has their own kind of regime.

[Sen. Ann Cummings (Chair)]: I have Museum, waterfront redevelopment. Yeah.

[Ted (Joint Fiscal Office)]: Exactly. So I have a couple tables on

[Sen. Ann Cummings (Chair)]: How long in some cities?

[Ted (Joint Fiscal Office)]: Totally, so I can provide a couple tables for you all to

[Sen. Ann Cummings (Chair)]: Okay, see but just, I mean, just the general statewide rate, unless, I know New York had regional sales tax, I don't know if they have regional rooms and meals. But Maine, New Hampshire, Western Massachusetts, they've got Boston. The places that would be more competitive, lots of trees, place, no buildings. To see what that would do for I am sure the minute that's on the board, we will hear from the wedding planners. We heard from them last time. But it that's one place where you have a really it's a really big number, and it's laid out, and it's a highly competitive business. They were impressive when we were doing this for the short term rentals, so

[Sen. Christopher Mattos (Clerk)]: we will see where that goes.

[Sen. Ann Cummings (Chair)]: Yeah. Then you're due Mattos.

[Sen. Christopher Mattos (Clerk)]: Ted, I don't know if you have the information for this. You able to parse out Vermont residents versus out of

[Ted (Joint Fiscal Office)]: state? Would. ACCD has some tourism market research, and I can certainly take a look at that, and they have spending in state out of state and see what the split would be. It would be different in different categories, Your meals and alcohol would be much more resident based, whereas the rooms is much more reliant on out of state tourism, understandably. But yeah, we can definitely provide that information with ACCD, if that helps.

[Sen. Ann Cummings (Chair)]: Yeah, and I've got ACCD to come down and go talk to us. They too were probably winding up to volunteer as we speak. It was just our pastor's wants. Okay. So

[Sen. Christopher Mattos (Clerk)]: I don't know. Yeah. We'll have to wait for.

[Sen. Ann Cummings (Chair)]: Well, really, questions for Chad. Anybody you would like to hear from on either of these bills? I've got the CPAs that they talk to me on.

[Sen. Christopher Mattos (Clerk)]: I know in the past, maybe not this the other one day in July. Oh, Dan. Dan. He deals with a lot of clients that are in the categories that we're talking about.

[Sen. Ann Cummings (Chair)]: If you do the Get contact information.

[Patrick (Joint Fiscal Office analyst)]: I'll get his email

[Sen. Ann Cummings (Chair)]: for Charles. For Charles. See if he'd be if he'd be willing to Yeah. To come talk to us. K. Okay? K. Committee, I'm gonna give you a whole ten minute break. Oh,

[Sen. Christopher Mattos (Clerk)]: I I got a chair. That would be a