ITEP witness tells Ways & Means Committee proposed 4% "wealth proceeds" tax would hit top filers and raise about $75M

Miles Trinidad, a state analyst at the Institute on Taxation & Economic Policy, told the Ways & Means Committee on April 16 that a proposed Vermont "wealth proceeds" tax would apply a 4% levy to passive investment income above current federal thresholds and could raise about $75 million for the state.

Trinidad said the proposal is modeled on the federal net investment income tax created by the Affordable Care Act in 2010, a 3.8% levy on passive income such as dividends, interest and certain capital gains. "This is not a tax on wealth. Rather, it's an indirect tax on the proceeds derived from wealth," he said.

Why it matters: Trinidad and ITEP argue the state-level tax would more effectively capture revenue from wealth-derived income without establishing a state wealth registry, and the revenue would come at a time when Vermont faces reductions in federal funding for hunger and health programs.

Trinidad described how the federal net investment income tax targets passive income over thresholds (about $200,000 for single filers and $250,000 for joint…