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Ways & Means committee reviews proposed Vermont investment proceeds tax, debates housing and business carve-outs
Summary
The Ways & Means Committee on April 15 heard staff presentations on a proposed Vermont investment proceeds (VIP) tax modeled on the federal net investment income tax; members raised questions about rental income, employee-owned companies and which federal exclusions Vermont could or must decouple from. The draft would set a 4% surtax on certain investment income above federal MAGI thresholds and route revenues to the general fund.
The Ways & Means Committee on April 15 reviewed a draft “Vermont investment proceeds” (VIP) tax that would levy an additional surtax on certain types of unearned income for higher-income filers.
Kirby, the committee presenter, said the draft is modeled on the federal net investment income tax (NIIT, 26 U.S.C. §1411) but would include state-specific adjustments. "At the federal level ... it's a surtax. It is applied in addition to the income tax," Kirby said, explaining that NIIT is a 3.8% tax applied to the lesser of net investment income or modified adjusted gross income above statutory thresholds. He told the committee the VIP bill under consideration would use federal thresholds and return information for administration but would apply a 4% rate in Vermont and include several add-backs to the tax base.
Why it matters: supporters frame the proposal as a way to raise revenue from high-income households that receive a large share of unearned income (capital gains, dividends, royalties), while critics warn certain base choices…
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