Expert warns HR 1 could shrink state revenues and raise costs for SNAP and Medicaid in Vermont

Summary

At a Ways & Means informational session, Wesley Tharp of the Center on Budget and Policy Priorities told legislators HR 1's tax cuts largely favor high earners and will shift costs to states through SNAP and Medicaid changes; he urged Vermont to protect revenues, consider targeted revenue-raising and use savings for one-time startup costs.

Wesley Tharp, senior adviser for state tax policy at the Center on Budget and Policy Priorities, told the Ways & Means panel that the federal reconciliation bill known as HR 1 will redistribute fiscal burdens and opportunities between Washington and the states, and urged Vermont policymakers to prepare now.

"The reconciliation package . . . basically includes, aggregate tax cuts of about $4,500,000,000,000 over a decade," Tharp said, adding the benefits are "tilted pretty significantly towards the nation's wealthier households and corporations." He cited state-level estimates showing Vermont's top 1% could save nearly $60,000 a year on average while households in the bottom 20% would see about $110 in annual savings.

Why it matters: Tharp said the federal tax cuts are paired with programmatic changes that shift costs to state governments and increase the need for state revenue and administrative capacity. "Some of those changes shift significant new responsibilities to state and local governments," he said, citing changes to Medicaid and the Supplemental Nutrition Assistance Program (SNAP) as examples.

Tharp outlined three categories of fiscal challenge for states. First, conformity: some federal changes can reduce state tax revenue if states choose to adopt federal definitions of income or deductions. Second,…

Expert warns HR 1 could shrink state revenues and raise costs for SNAP and Medicaid in Vermont

Summary

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