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Political notes from Free Press staff writers Terri Hallenbeck, Sam Hemingway and Nancy Remsen



Drawing tax lines

When the Senate Economic Development Committee voted out a bill last week that outlines spending of $8.6 million in federal stimulus money on various economic development measures, it included a repeal of last year’s changes to the estate tax.

Changing the estate tax is and will continue to be controversial in the Legislature. That piece eked its way into the bill by a 3-2 vote. Sen. Doug Racine, D-Chittenden, was among those who voted for it, putting him in line with his nemesis, outgoing Republican Gov. Jim Douglas, and at odds with at least one of his fellow Democratic candidates for governor.

This is the same Doug Racine who in his campaign for governor is arguing that the state should raise income taxes temporarily to help fill the budget gap that the recession brought on. He said he believes the estate tax was hastily changed last legislative session (lowering the size of the estate from $3.5 million to $2 million for taxes to kick in). He said he objected then and favors repealing the change this year.

Meanwhile, Senate President Pro Tempore Peter Shumlin, D-Windham, is not keen on erasing the changes, saying that with a $150 million budget gap, the state can’t afford to lose the revenue. Changing the estate tax would cost an estimated $3 million.

What’s not in that same bill is a repeal of the capital gains tax that Douglas wanted. Committee Chairman Vince Illuzzi, R-Essex/Orleans, said he couldn’t find a way to replace the $25 million it brings in. He’s counting on an improved economy to make up the $3 million from the estate tax.

— Terri Hallenbeck

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