NFIB Victories in Vermont

Legislative leaders in the House of Representatives proposed in the miscellaneous tax bill (H.783) to disallow the pass through of the entire federal domestic manufacturing deduction which would have impacted manufacturing, agriculture and many business entities.

Defeat of sales tax on dietary supplements saves Vermonters an additional $1.5 million in taxes

The Legislature supported, in H.783, the miscellaneous tax bill, a 6% tax on dietary supplements.

The dictionary defines a dietary supplement, also known as food supplement or nutritional supplement, as a preparation intended to provide nutrients, such as vitamins, minerals, fiber, fatty acids or amino acids, prenatal that are missing or are not consumed in sufficient quantity in a person's diet.

An exemption was created for supplements that are purchased with a prescription. This would have include all vitamins (from A to zinc, calcium, prenatal, etc.), as well as nutritional supplements upon which elders and others rely to stay healthy. The 6% tax on supplements was projected to raise only $1.3 million.

Defeated sales tax on soda, candy and bottled water

S.256, legislation that was defeated would have rolled back the capital gains and estate tax increases passed during the 2009 session and used a sales tax on soda, candy and bottle water to “offset” the revenue loss. During the 2010 session we made clear that rolling these tax increases back was a top-priority, but not at the expense of increasing other, taxes.

H.672, legislation that was defeated would have mandated that 56 hours of earned paid time off be compensated to employees at the same hourly rate and with the same benefits that an employee would obtain without this legislative intervention.

When it comes to employers providing paid sick time to their employees, we believe government should not intrude in the employer/employee relationship. Small businesses are often family businesses or operate in a similar way. Many small employers are flexible in accommodating employee needs or leave requests as they arise without conflict. It is inappropriate for the government to require a solution for a problem before a problem even exists. We opposed this legislation for reasons including physical or mental illness or injury, caring for a sick or injured child, parent, parent-in-law, grandparent, spouse, stepchild, foster child, or ward of the employee who lives with the employee.

Capital gains and estate tax action keeps nearly $15 million in small business owners' pockets
Last session, the Legislature passed an increase in the capital gains and estate taxes despite our vigorous opposition. These taxes discouraged business owners from taking risks, making new investments, expanding and creating new jobs. Bottom line: small business owners spend a lifetime paying sales, income, property and other taxes and fees; they should not be assessed an extra tax on their life’s work.

• Estate tax – beginning January 2010, the threshold was reduced from $3.5 million to $2 million; in other words the exemption is only on the first $2 million, a departure from the federal tax exemption.  This taxes small business owners who have paid income taxes year-in and year-out and will again when they pass their business to their heirs upon their death.

• Capital gains tax – taxing 40% (first $5,000 is exempt) , of the adjusted net capital gains income is taxable, but now the income derived from capital gains will be subject to the tax. This taxes small business owners who have continued to invest in their businesses so that one day they can retire.  There was a transition rate for farmers, loggers, and those over 70 until 2011, but this exemption goes away at the beginning of the new year.

This session, we made it clear that rolling these tax increases back was a top-priority.  We hosted a small business day in February, organized press events and asked members to take action by calling and writing their legislators. It worked! On the final day of the 2010 legislative session with the strong effort by Gov. Jim Douglas, legislative leaders acquiesced and handed Vermont’s small businesses a major victory.

On the capital gains side of the equation, Vermont’s small business owners over the next 6-months anticipated to transfer their businesses will save an approximate $3.2 million and next year are expected to save as much as $11 million. Nearly $2 million will be saved in Estate Tax payments; effective January 1, 2011 the threshold will be increased from $2 million to $2.75 million and then in 2012 the legislature agreed to relink the Vermont estate tax to the federal estate tax.  In other words, what they took away last year will be given back in 2012.