 So we are back, and Peter, did you talk to us about seven? That was, isn't that the linkage language you'd be wanting to let that slide for a while? So Peter, you have an office of legislative counsel. The section seven in the underlying language of 9-11 is the annual linked up section that gets passed every year. Our state statutes point to certain federal definitions and the way we're linked up to them is at a fixed point in time each year and you need to get a move ahead in one year. I have mentioned that Senator Cummings this morning that that section of 9-11, as I have been discussing so far, has been pretty non-controversial. I had mentioned her this morning. There might need to be a small change in there in light of some of the recent federal changes, but next time I present a draft to you, I'd be happy to present that. This usually goes in the miscellaneous tax bill, but it's up here. So we'll put it in there too, since we're not sure what's gonna make it through. Okay, today, shortly, right? We are going to hear, let me find, all right, it's gone. Cheryl, can you find me a new agenda? Since I have lost one of them, I've got yours. Thank you. Well, maybe, what time is total pristine three? Okay, yes, and Jake is here. And Jake is here. We've put Jake off so many times. Jake, I wanted to have you and Christine in because you're both gonna be talking about the charitable deduction, which is the one thing we haven't agreed on. I won't say we completely agreed on everything else, but you were gonna do some runs for us impacts on different income levels, is that? Oh, yeah, there's some stats. Okay, that's what we were looking for. All right, so, excuse those of us that are finishing our lunch, we've been off the floor half hour ago. Jake Feldman, Tax Department, thank you for having us back. So, I can't even thank you, really, yeah. So, I wanted to point out that something really wonderful has happened. Oh, great. We were faced with the tax-customer job debt. The administration put forward a reform proposal to try to keep for modern liabilities about the same and ways of means basically like that. And, except for a few minor things, it's nearly identical. So, that's kind of great. Nearly identical to the governor's proposal. To the governor's proposal, yeah. And then there was us. Great, great. So, there are really just, as you know, a few details still left to be decided, but it's really encouraging that there's so much consensus. And I also wanted to point out that either the ways of means plan or the administration's plan would be relatively easy to implement. It's gonna take us a little bit of time to do the changes to the forms and the instructions. But our IT vendor has said that it's within their annual costs for upgrades, so it's not a new cost for them. Mr. Feldman, I'm sorry to interrupt you. Your title again, and where do you fall in all of this? You're a member of JFO, I just don't recall. You're the administration, okay. That's why it's wonderful. That's why it's wonderful. My title is Tax Research Staticization to Work on Income Taxes and Education Tragedies. Thank you. You can see it. Yeah, I just didn't recall. That is not a rare time. Yes, I have it. Oh, right. It ends up next to my desk where I sit. Okay. So, there's a huge amount of overlap between what we initially presented in H911. We're starting with AGI, which is already current law. It was passed last year, I amend. So it's already on the books. The states that have an income tax, it's something like 32 or 33 start with AGI. So it's very common. The standard deduction is the same. Between the plan we initially presented in H911, the personal exemptions, we settled on a amount of $4,000 for each person in your family. The reason we chose that amount is because the way we were structuring our plan, we were trying to get people's liabilities to be as close as possible, and that value really sort of went right down the middle. I also looked at other states that define their own personal exemptions, and they're not as generous as Vermont's. So $4,000 seemed like a reasonable number, and it's also a nice round number, since we're sort of starting fresh. H911 went with $41.50, which is just slightly more generous for people, larger families, more people in your family. Earned income tax credit, both plans would increase that from 32 to 35%. Social security, we were planning to do a third of it this year, and I believe that it was being paid for in another part of the budget. My understanding is that Ways and Means and H911 wanted to do all of it this year, and they're paying for it within the income tax reform. And there's a small cost there that Graham knows, I believe it's $2 to $4 million, or something like that. When you say pay for it within income tax reform, what do you mean, push income tax reform? So both plans- This, or something else? This, this, yep, yep. And the budget that came out this morning does not have funding for this. Okay, good to know. Both plans would have lowered all marginal rates by 0.2%. H911 would have, there were five brackets and five marginal rates. H911 would have taken the top two and collapsed them into a single bracket, and they were basically setting the stage for their income tax surcharge. So they would have brought the top marginal rate to 8.6%, and then they would have added 1% on top of that, which would have come up to 9.6%, which is a point that they felt was reasonable. I asked why should they want to keep everyone under 10%? Under 10, okay. And I'd like to point out something slightly unusual, but in the testimony that I offer today, we are actually, the administration is actually advocating for a slightly higher top marginal rate. So H911 would have been a top marginal rate of 8.6%. We're advocating for 8.75, which would still drop us below New York. But the reason is that we would like charitable contributions to be entirely eligible for the credit, so no cap on charitable contributions. And we discussed that internally, and we felt it was appropriate, and it also helps sort of correct at the top to keep people's liabilities closer. So you don't want to collapse the top, or you want to collapse them and raise the rate to 8.75? No collapse. No collapse. Practice as they are, but each one would be reduced by .2%. So instead of a top marginal rate of 8.95 for Vermont, we would be 8.75, which would put us below New York. And you're starting the, okay. Yeah. Yeah, and it would start where it does now for 24 nights of the year. And then, so the main thrust of my testimony today is that the charitable contributions, H911 would cap it at $10,000 eligible for the credit, and the administration would like all charitable contributions to be eligible for the credit. It's a 5% credit. So, to just sort of set the stage, in 2017, which is the taxes that we all just filed, if you itemize your deductions at the federal level, you fill out the Schedule A, and there's a line for charitable contributions on there, and that's where you would record it. In Vermont, if you itemize at the federal level, you do something called the IN 155, and that's where it kind of sorts out which deductions are going to be allowed to pass through to Vermont. Charitable contributions is one of the ones that it fully does pass through. So, whatever you claim to the federal level, you can claim the same amount in Vermont, and it subtracts from your taxable income. It passes through as part of your taxable income. Yep. It reduces your taxable income. It reduces your taxable income. That's now. That's current. Yep. So, that's important, because that's conceptually part of the reason why we're turning charitable contributions into a credit, because, and we want all of it to be allowed towards the credit, because right now, all of it is considered when you compute your Vermont taxable income. So, in 2018, a few things changed at the federal level. The standard deduction went up so much that the percentage of filers who were going to itemize is gonna go down a lot. From about 30% of all filers to only about 10%. So, that means that a lot of middle income people, who used to keep track of their charitable contributions and their mortgage interests and their state and local income taxes, they may have no reason to keep track of them anymore, because the standard deduction is so big that they're not even gonna be itemizing. And what that further means is that you used to really keep track of your charitable contribution receipts. At some point, your tax preparer might say, hey, don't worry about that. We're taking the standard deduction. And then you might say to yourself, well, why am I even giving the charity? Some people might say. And so, part of the reason for the Vermont credit is that we are reintroducing the incentive, but it's not gonna be just for itemizers. It would be for everyone who makes charitable contributions. And ways and means like that idea. And so, that's part of H911, a 5% credit for all your charitable contributions. Whether you itemize or not. Whether you itemize or not. So, We are often itemizing Vermont level, right? No. Right now we're just doing standard deduction in Vermont. Currently? Oh, next year. Am I gonna be able to itemize in Vermont taxes? For 2018, if this committee or if no change is made, then if you itemize at the federal level, then in Vermont you would get some of those same amount of deduction. Right, that's true. But when it comes to Vermont taxes next year, the matter of what I did if something would flow through, I'm not going to itemize all my Vermont taxes anymore. Right. Exactly. Under both of these reform plans, everyone would get this standard deduction. So, conceptually, if the charitable contribution still exists as a deduction, then it's a little bit funny to have a charitable contributions deduction and a standard deduction. That's not the way it usually works. So, that's another reason that the charitable contributions are being turned into a credit. I don't accept that. We do many things on a taxable, they're not consistent. If we wanted to have a charitable deduction flow through, there's no reason why we couldn't do it with a standard deduction. You could, but if you made a charity. You're the one who's suggesting a standard deduction. The federal government has a standard deduction that may let the charitable thing go through. But if your itemized deductions are less than the standard deduction, they don't take the standard deduction. Right, right, right. So, we could, there's no reason we couldn't deal with the charitable deductions as a deduction as well as have a Vermont-specific standard deduction. We'll just be right at the tax form that way, right? I think it would be unprecedented among states. So, if you made charitable contributions that were less than the standard deduction of Vermont, would you report your charitable contributions or would you take the Vermont standard deduction? Say that again? I'm just saying that you don't do that. Let's just isolate the charitable issue. If you read everything you suggested, and you decided to do the charity thing as a deduction rather than a credit, what would stop us from doing that? You could. The question is, is it only available to people who itemize at the federal level? Well, you could either say that or you could also say it's available to everybody. It's an add-on to your standard deduction. So, everyone would get the standard deduction? Whatever way we decide it's doing the wrong thing. I suppose so. So, it sounds like there's a lot of overlap. What these plans both say is that all people get the standard deduction and then charitable contributions are sort of a separate world. You're saying to them it's a subtraction for everybody, which is doable. We're saying turn them into a 5% credit. And what the effect of the 5% credit is, is the benefit of charitable giving is the same to all the fireworks under that scenario. If it's- I don't want to talk about it. I guess one of the things that I- Watch it. One of the things that I would like to see is that people will try to preserve the charitable deduction for the people who are now can start taking the standard deduction where previously they itemized. Let's say somebody gave, itemized, gave $10,000, maybe that's the wrong number, $10,000 in charity. And previously they had itemized. But now because of this shift, because what's driving this conversation I think, that 30% of people who used to itemize is gonna go down to 10%. So, if we're gonna try and preserve the tax deductibility of the charitable or the tax savings from the charitable giving, what I'm trying to understand is if you looked at somebody who's like in the, I don't know, pick a number, $60,000 income range, if they gave $10,000 and itemized, how much would they save on there per month taxes? Their effective tax rate is likely around 4%. Okay, perfect. So they're saving $400. Under this plan they would save 5% of that $10,000, which would be $500. It's making the benefits of charitable giving available on the same basis to all filers, no matter income. But the higher income person who's at 8.9%, you're reducing their deductibility down to 5%. The highest effective tax rate you really ever seen Vermont's around 6.7%. And so, yes, there is a slightly reduced benefit. The marginal rate is 8%. The highest marginal rate is 8.95%. There is a slightly reduced benefit. That's true. There are other things like lowering all the marginal rates for those filers somewhat. I'm not saying that everyone's liability is gonna be exactly the same. With regards to the charitable contribution, what we're doing is what a lot of tax think tanks advise to do with itemized deductions, turn them into credits, because then they're available on the same basis to all filers. So the charitable contributions were proposing as a 5% credit. You get a 5% credit no matter what your income level. So if you're in the top bracket, you're still gonna get the same amount for $100 deduction as you are if you're in the lower income bracket. Right now it comes down from your taxable income. It can bring you into a lower tax bracket, which is sometimes a reason for giving if you're close. You do the figuring and figure out where you are. Present under, let's talk about presently because anyone who follows the laws we're now operating under the new federal tax system. But if the jobs in JT, TBR, whatever it is. So under, I file my taxes next year. If I give a $10,000, $20,000 donation, it is probably worth my while given that I'll have other deductions to itemize and won't flow through to Vermont now. Is that correct? Your other itemized deductions will not flow through to Vermont? But how about charitable deductions? Charitable will come through and will be converted to a credit. No, if we don't do anything. If you don't do anything. Right, if we don't do anything and I file my federal tax credits, all right? I'm gonna deduct, I'm gonna get 20,000 deducted for my taxable income at the federal level. I'm remembering from yesterday, but that's below the AGI, is that correct? Social security's above. Right, it's below AGI. Okay, so where last year that 20,000 flowed through to reduce my taxable income in Vermont. This year, it doesn't reduce my taxable income in Vermont. It reduces it at the federal level. So if we want to duplicate the old system where it also reduced my taxable income in Vermont, I think we've got two approaches. Senator Sorotkin saying we could just say, okay, you get the standard deduction and if you give 20,000, you get another deduction there or you get a percentage. We could reduce your taxable income or what everybody else but us so far has decided is it's probably, you could also say, okay, for your 20,000 dollars, you're going to get a maximum of a $500 tax credit. So rather than reducing your taxable income and then you go all the way in, you get your taxes and you take 550, whatever that 5% is off of your taxes. And that will impact on the lower end for some folks, they'll do better than they would if they reduced their tax for some. But for some on the higher end, they will also do better because it depends on if it throws you into another tax bracket or... You can work it so it does. You can work it so it does because that's what we pay it out. Turning it into a 5% credit is a progressive element in this plan, it increases Vermont's progressivity. If you left it as a deduction, more valuable to higher income tax payage. So this is a progressive element and we think that it's a reasonable approach. So does that mean that this is less desirable for the large donor than the system that we have now? It could be slightly less desirable, but there are other things happening such as lower marginal rates that may make them reasonable. By the lower marginal rates, you mean at the federal level, not at the state level? I'm talking about Vermont. But the lower marginal rates are two 10s of 1%. Across all margins, whenever you pay income taxes, your income travels through each bracket. So it's like two 10s of 1% in any case. In each bracket. That's pretty marginal, I would think. So I would say that... I don't know if I can come up. I mean, it's not meaningful. Maybe we should see if someone could calculate that. You have some very simple examples. Okay, yeah, it might be good. And Greg, I don't know if you can do it or Peter, maybe you. It's been brought up that the 2% tax, the reduction in rates at all levels. So your marginal rates only gone down 0.2, but it's gone down 0.2 at every level because we were progressive on the way up. Pick a number in that income category and see if you can figure out what that does reduce. If you're making, what is our top mark? Four categories. Yeah, if you're making 500,000, how much, I don't know if you can do that unless we find a tax liability. And just see if you can figure out what... Straight forward to do. Yeah. For yesterday's example. See he was... Yes. See if we can figure out. Yeah, we've got, so, and Jake, you had some examples, which I think might, that's what we were looking for. How this hits small, medium, and small. I have two examples, they're extremely simple. Okay. They're on the back of the handout that I just distributed. So, in each 9-11, the top marginal rate is 8.6%, and there's a $10,000 cap on charitable contributions. In what I'm offering, it's a top marginal rate of 8.75%, and no cap on charitable contributions. And the reason that we, that those are favorable provisions is because it keeps liabilities closer to what they would be now. Under each 9-11, if you're a higher income person who does not make any charitable, that lower top marginal rate is very appealing. And your liability would be lower than under the administration's original plan. So, I have an example here of $600,000 of income, and they don't make charitable contributions. It's kind of an unusual example, but I want it to be simple. It's huge. So, for 2018, they would have owed $45,100 in Vermont. Under the administration's plan, they owe about $44,100, but under each 9-11, it's lower than that, it's $43,800. Now, someone, a filer, who makes $600,000 in income, but donates $50,000 to charity, they would actually owe quite a bit more under each 9-11 than they would have had before the tax custom jobs act. And the administration's plan actually brings them back closer to what they would have owed. So, if you can imagine a line up at the higher incomes for effective tax rate, both plans are close to the line on average, but there's a lot more variance in the each 9-11 plan, and it's really decided by whether you make charitable contributions or not. So, the administration's plan actually used closer to what the way things are now. So, we asked, I think Graham, this question, maybe you have to say the numbers. If we went, would the, all things being equal, if we went with the administration's plan and lifted the cap on charitable contributions, how much more money would you have to find for the budget? Graham has those numbers. I feel like he said it was $8 million, but I'm not sure. You'd have to find $8 million. You'd have to find $8 million. If you went with the governor's plan. If you did everything in 9-11 and removed the cap on the charitable contributions, you'd have to find $8 million extra. But the thing is that that's, I'm saying lift the cap, but bring the top marginal rate up to 8.75. So, it's not 8 million, it's so much with a smaller number than that. So, in each 9-11, they collapsed the top two brackets to the 8.6% and we're saying that was 0.75. That was $3 million. Yeah, if you didn't collapse the top bracket, you gained an extra $3 million. So, I can't say how it all ended up, but we'll be looking at it. You reviewed that with us yesterday. It was mostly the high income folks that we got that $3 million from, correct? By definition, because you collapsed and removed the top bracket. Yeah, right, yeah. So, you didn't get the extra 10, and well, yeah, so do you know what it would gain to raise that marginal rate up to the 8.75? Well, if you didn't collapse the top bracket, you wouldn't have the exact same proposal. Oh, that's where the money would come from. Right, so we got through, all right. So, we got to find at least $4 million more if we wanted to do that. At least that's a 10. If we wanted to do the no cap, all right. You don't have to, you also have to collapse the brackets. Right, not the collapse. Not the collapse, right. I'm saying if we want to do the full charitable deduction on the Vermont side. On the Vermont side. Then it's an $8 million hole, all right, so. It's an 8 million hole at 8.6%, but if it's the top bracket's 8.75%, it's less than that. Right, we've got, we've got three, what, this is the end, so five $3 million. Right, so, why would that be for $8 million or $5 million? Right, we're either looking for $8 million or we're looking for $5 million. Right. In each of them increase personal exemptions from $4,000 to $4,150, that brings like families a little bit less than what they would have owed before the tax cuts and jobs act. So that, if it was $4,000, that group would be about the same and there would be a few million dollars there. It could be a little harder to put through. I think they also used some of that savings to fund the social security debt. Yes. It's been suggested here, and I know we're talking about a few minutes, perhaps not going all as far up as the other two points did, but move it down. Graham's going to tell us if we're going to make any money that way. Yes. But that's another moving piece. So on the charitable deduction stuff, we're focusing on the individual, impact on the individual in the market. Is there any way, when you say $8 million more to do the government's plan, that means doing the house plan, we're losing $8 million of revenue. Is there any way to use that number to figure out how much the charities are losing? We have to figure the federal side at the same time. The charities could be losing nothing that people keep giving at the same rate regardless of the tax impact. So that's a complicated issue. That's something like, if the cost of charitable giving increases, how much does charitable giving change? That's elasticity. And there is research on that. My colleague Andrew could offer that. I have some very simple statistics here that might help illuminate some of that. So, Senator Sriracha, in my next bullet, if charitable giving was capped at $10,000, then about $360 million out of a total of $500 million that's claimed by Vermont filers would be dis-incentivized. So that's about 70 or 72%. And I only include residents here because residents pay 93% of all Vermont taxes. And if you include non-residents, you get some pretty wild big values that throw off everything. So I'm only looking at residents. They give about $500 million a year. And if you capped it at $10,000, then $360 million of that would be dis-incentivized at the Vermont level. The administration is hoping that the non-profits can continue to receive the same funding with the same incentive because many reasons, but one reason is that it takes some pressure off the state, honestly. It's on the one side. If you want to, so if you're, which is fine, but if you're trying to measure the effect on the receiving charity, you have to also account for what's gonna be going on on the federal side. Right, so the federal benefit of charitable giving is about three times as much as Vermont benefit. And that's because federal tax rates are now about three times higher. They used to be about four times higher, but now they're about three times higher. So your rights, Senator McDonald, most of the benefits at the federal level. And that brings me to my final point and something that I heard this committee talking about. So as part of the Tax Cuts and Jobs Act, they increase the amount of AGI you can give from 50% to 60%. So I heard some members of this committee saying, well, aren't a lot of givers gonna benefit from that? That only 38% of the group who's potentially gonna be capped in Vermont give at that very high level. So most folks are giving less than half of their AGI. They're more normal amounts. And so they're not gonna see or see any benefit. So there are some who may go up to 60%, but most will not, most will just continue. This number here says 38% of all Vermonters presently are at the maximum amount of giving. No, of the ones who were over 10,000. So the ones who could potentially be capped by H911, only 38% are at the federal maximum amount. So an argument saying, well, it doesn't matter if Vermont caps them because they're gonna, at the federal level, they're gonna get more benefit. 38% of them. But most are not up there. Well, correct. But those, the ones that are up there have more money than they had the previous year because of the federal tax cuts. Right, so that gets to my previous testimony. The Tax Cuts and Jobs Act eliminated the state income tax deduction. Correct, but that's the state side. That's the federal side. The federal side. Gotcha, okay. So the Senator McDonnell, you're right, some might have more, it kind of depends on their situation, but some are gonna actually find themselves in a worse position because they used to be able to deduct all their state income taxes, and now they basically can't. Yeah, property taxes. Property, they've up to 10,000 for the two of those combined. So that's the lot to your taxes. Someone has an opinion on whether those folks, this is the third on the federal side that continue to join the level of deduction of they can be getting more, less, and the same amount of money in the deal. We don't know what we're gonna see. I'm not exactly sure. I think some might go up to 60%, some, it's hard to say. It's all individual, and we've got a witness who feels like we had, helps people plan the philanthropy, but the one thing she pointed out to me is that when you're planning, if you're doing 60% of your income, it may well be your last years when you are disposing of your income or your assets. And the federal government has also doubled the exemption for the inheritance tax. So now that you can pass twice as much on without being taxed at the inheritance tax, if you have heirs, there's more of an incentive, there's an incentive to pass more on rather than to give it away, you did. This is above my, you know, my... Or you can give more and your heirs can get more than they used to get the most. And every single taxpayer is going to be an individual circumstance and gonna make an individual set of opinions. How much do I like my kids or not, and do I want to leave them? And how much did I like my dog and want to leave the humane society? God, what the hell do you mean to the dog? That's right. They weren't the target here. Maybe I'll get buried with the dog, but... Isn't that what Leona Holmesley did with me? Yes, Leona. Got buried with the dog. Oh no, she left all her money. She left all her money to the dog. That's right, somebody else got buried with the dog. So that's what we can't predict and we can agonize over this. We can make some general inferences. The really big donors, which, when you're talking 50, 60% of your income are the exceptions. They endow buildings at universities. They build sports around this. All right? The ones we should be worried about and that, from anything I've seen, they are the bulk of the donors. They're not the people with multi-million dollar incomes. They're the people from, I think it's 100 to 500,000. Many of those, it's not, are not going to be itemizing now. Especially if they're older and don't have a lot of income. Those are the donors. I think the charities are working, but not the $10, $50 variety, but the $1,000, $5,000 variety. And that's where the change is. If I'm going to endow a building, I'm usually going to endow a building at UBM. Tax code or no tax code, because there's something else. But if I'm going to do $1,000 to the Humane Society, I may make twice, especially if I... Can I ask about you? Yeah. So how can we tell, do we know the percentage? Who gives the most? So if we were to look at a pie chart of the percentage of... The 100 to 500,000, the 40 million. Yes, so they are, but of the 296 million, given by those over a million. So that percentage... Where are you from when I was gone? Of the total, I know, unfortunately. I'm sure he's in these numbers. Yeah, so I mean, is it... These tables are just for the ones who are over 10,000 in giving. Right, and these are only for itemizers. So it's a limited dataset, but I could try to find that for you. That would be interesting. We spent a lot of time researching how much the non-itemizers give to charity, because we needed that for our model. And that was kind of interesting research. And we eventually settled on a number of about 1% of their income. So like $50,000 of income would be about $500. And that's what's in our model, that's shared with the estimates. So there is research on that, and I'd be happy to come back and share with you. Okay, but unfortunately, this bill's gotta come out. And I just think we can agonize over each individual case, but eventually we're gonna have to fish or cut bait. We can do nothing and wait and see what happens next year. We can do something and adjust next year if what we think is gonna happen doesn't. And if we decide to do something, because there are a lot of people who itemized last year and took off charitable deductions. This year, they're not gonna be itemizing because they're gonna get the double standard deduction at the federal level, so they're not gonna be itemizing. The question seems to be, will they still give $1,000 to the Humane Society, or will they say, well, if I'm not gonna get a tax credit, maybe I'll take a cruise? Which side do we err on, Chair, the side of the working of Vermonters who struggle with affordability or charities that worry about what's gonna be coming in? Some of these charities work with the folks that are struggling for accountability. On which side do we err on in our decision-making? I don't know. Okay, we'll let you know. Which side are you going to err on, Senator? The right side. And which one is that, Senator? I think you're gonna have to sort of make... Finish with a tar baby here for a while? Yes, all right. We're gonna have the other stuff. Okay, all right, so I know our next witnesses come in, and we've got anything more for Jake or Jake, you have anything more for us, or can you just not wait to get out of here? It's gonna be more of a... No, I'll just say thank you for that, so this is really the area... Yeah, it's so helpful. I know I thank you for letting me come in, and I just want to reiterate that we hope that the Tribal contributions are fully incentivized and a top marginal rate of 8.75 is an improvement, and it doesn't have to go as low as 8.6, it could be 8.75, and it could be happy. That was a correction that this administration position that if we move that rate of 8.75, that we eliminate the cap on charitable deductions, you will still have sufficient funds to do the social security change? No, we initially had social security... You were doing a third of a third of a third. Yeah. If I could get out of human services. Right. It was in the budget. It was in the budget, but now it's back in income tax, I think you would find yourself a little bit shorter. You'd find yourself short by, in this case, to fully fund it, to be short about $4 million, as I recall. Something like that, yep. This is from Senator Mandela. And for the change in the marginal rate, is there any formula by which, if you change the marginal rate by a certain percentage, that you, the marginal, all of the marginal rate, if you change it by a certain percentage, you would raise a certain amount of money? It's more of a guess and check process, honestly. So we have a micro simulation model, and what we do is we go in there and we just try out different values. Well, I guess what I'm looking for is, if we do what you're suggesting we do, in order to deal with the charitable issue, if we want to deal with the social security issue at the same time, and we dealt with it by dealing with the marginal rates, how much would the marginal rates have to change, in order to provide enough money to deal with social security? Could we take a down point one, rather than point two? Right. My guess is you would be over, you would generate some money that, if you only went down by point one. But no. How much? Point one, five. I would love to go back to an opposite. Would you want to go back and see me get a run-set? So you can tell us that, because I think that's very important, and I'm assuming that a lot of us are concerned about being able to provide the social security relief that a lot of people are asking for. But we have to know what the impact is, and we don't want to raise taxes or anything to do with it. The thing about it is that, sort of everything is connected. So if you start changing all the marginal rates, you're gonna really throw things off every one way or the other. So it's kind of a delicate recipe. Well, basically, that would be one or the other approach would be, can you come back to us by saying, if we wanted to fund the social security change, what would be your recommended solution as a way to do it within the context of this bill with rates? Well, personal exemptions could be at $4,000, and that would, families would be set, they would be made whole. So under the HN-11, they actually got a little bit of a reduction. $4,000, coupled with the lower rates, actually puts them back where they would have been. So, I mean. And would that produce $4 million? Or a less? $2 or $3, I don't remember. I wonder if you're able to give us this afternoon a proposal to have to do that within the context of this in terms of your best approach that you would recommend to us. I will send something over. Okay, if Graham's numbers said that if we didn't lower the rates or collapse the top two, that was $34 million, right? So, if we only need four or six, it seems like we might be able to do 1.999 and get the amount that we need. But the other approach, though, of lowering the exemption for $4,150 to some number lower than that might do that as well. That might be, in fact, a cleaner way to do it because that way you'd still preserve the rate reductions and the reductions in the marginal rates. That might just be a cleaner way of doing it. Either way. I mean, if you could find out what that number would look like without slaying all weekend, that would be great. Sure, I'd like to try it out, but thank you. So, Christine is here. Christine is one of my constituents who sent me these two minutes yesterday and I thought that would help the whole committee to get what she had to say. So why don't you just need you to say your name for the record because we tape everything and you just need the name to go with the voice. Great. So, Christine Zachey, my business is for philanthropy. Great, so thank you so much for squeezing me in. I know that you've heard a lot of testimony on H911 already and specifically this issue around the charitable deduction versus the charitable tax credit and the cap on it. I appreciate you taking the time to squeeze me in at the last minute as you're wrestling with all of this. A little background on the perspective that I bring to this. I am the principal of a philanthropic advising firm called Forward Philanthropy. That's seven years old and prior to that worked with the Vermont Community Foundation in several different capacities doing philanthropic advising. So I bring about 15 years of experience in philanthropic advising to the table here. Full disclosure, I am not an accountant. I'm not a wealth advisor. I'm not an attorney. But I'm a philanthropic advisor and I work with people who give. My business is centered around working with funders, specifically families, family foundations, corporate foundations. So my presentation that I wanted to share with you briefly is divided into two pieces. The first piece is quantitative and that you hold that in your hands and the second piece is qualitative. So in regards to the quantitative piece, I want to emphasize a couple points, some of which I think you may have heard already. One point in regards to H911 is that we know that taxpayers who don't receive an itemized deduction currently already give. That already happens. It's not behavior that we necessarily need to incentivize because those taxpayers, myself included, already give generously. They coupled with that, we also know that when nonprofits fundraise, the most efficient way for a nonprofit to fundraise, the way that costs them the least amount of money and where they can raise the most amount of money as effectively as possible, is through major donor giving. And so I've included those numbers for you here. And so if you look in the middle of this page here, major donor giving costs a nonprofit about 15 cents to raise a dollar versus at the bottom of that list of bullets, to acquire a new small donor by direct mail could cost a nonprofit a dollar to raise a dollar or even a dollar 25, they could lose money acquiring small donors. I think politicians understand that. I mean, you can. Right. So in regards to thinking about the most effective efficient ways to drive revenues to nonprofits to support them in doing the important work that they're doing, major donor fundraising is the way for them to do that. So briefly, so this is the status quo. When we look forward to what the projected impacts are, the tax cuts and job act, what we know right now is that the great minds who make these predictions, universally agree that there's four ways in which the tax cut and jobs act are predicted to reduce charitable giving. One being lowering the individual income tax rates, capping those state local to tax deductions, increasing the standard deductions, and also importantly, doubling the estate tax exemption, which significantly reduces the motive for charitable giving when there's a death of a loved one in a family, which is often a time for really significant gifts. So all told, what we know right now is that the TCGA will reduce the marginal tax benefit of charitable giving by 25%, which is projected to cost nonprofits between 12 and 20 billion dollars. So one of the pieces I wanna point out here, especially in terms of looking at the impact of what is already going to be unfolding with the Tax Cut and Jobs Act, and then any further implications that the state of Vermont might take with H911 is how donors give. And so donors give through their checkbook on an annual basis, as so many of us do, and also donors give at what we call taxable events in the industry. So that might be the death of a loved one when an inheritance is coming your way, or often it's a sale of a highly valued private business. And when those happen, often one way that donors choose to handle their charitable giving is to start a family foundation or a donor-advised fund. And what we know right now is through the increasing the estate tax exemption, doubling it, on the federal level, that reduces the incentive for individual donors to do that, and also by eliminating the deduction on the state level in offering a 5% tax credit, it also eliminates the incentive for people to do that. And I wanna point that out because that's when really significant assets can be donated or dedicated to charity. So when we have been talking, and as I've done my best to look back on the testimony you've received so far, my impression is that a lot of that has really focused on people who go through their checkbooks annually, who are looking at their budget and saying how much can I afford to give this year out of the extra income that I have on hand. And also, one of the times that nonprofits are really able to receive transformational gifts, gifts that help to do things like build homeless shelters and help fund new things on hospitals and conserve significant amounts of land happens during these taxable events. And it happens when individual donors are able to start family foundations and able to start donor-advised funds. And eliminating the deduction is going to eliminate the incentive to do that. So not only are we going to eliminate or reduce the amount that people are giving annually, but also when it comes to these opportunities to dedicate significant assets to charity that will continue to be dedicated to charity in perpetuity through a family foundation or a donor-advised fund, there's much less incentive for people to do that. So that is my quantitative data that I have to share with you. I also have a set of qualitative data. And I wanna make sure that you understand what this is. So this is opinion. So yesterday when I met briefly with Senator Cummings and she was so kind to ask me to come in and talk with you all today, one of the things that we identified together is that while this committee has heard frequently from nonprofits and as we all have been postulating about the behavior of major donors in response to these changes that you're proposing in H911, what I believe this committee hasn't had the opportunity to do yet is to hear from those major donors themselves. And so in the 24 hours since I knew I was gonna be coming into this presentation with you, what I did was take an informal survey. And so I simply emailed a large group of individual donors who I happened to know, major donors, and said, what do you think about this legislation? What do you, how do you think that this legislation is going to impact your charitable giving? And so these responses you have in front of you right now. This is not a scientific survey. I can't guarantee that this is the majority opinion of major donors in the state of Vermont, but this is the voice, the voices of some major donors in Vermont. Collectively the donors who are represented here probably represent about $8 million in charitable giving in the state of Vermont annually. In Vermont, right. I mean, it's certainly not every single gift from every single person on here is in the state of Vermont, but yes, mostly in Vermont. These are all, these, all of the people represented here are Vermonters. If you take a quick look through these and this anecdotal feedback to the committee, what the theme that I think that you are going to see is that these are people who are dedicated to lay profess. They're as generous as they can possibly be and tax considerations play a significant role in their considerations of how much they give. And what most of these people are saying is should H911 pass, I will still give. I am unlikely to give as much as I give right now, perhaps by far. And again, this is unscientific data. This is opinion collected in the past 24 hours, but it's major donors and it's major donors who I think that this committee has not yet had an opportunity to hear from. And I wanted to try to help fill that gap in an attempt to solicit that opinion. Are they individuals? Are they corporations? Are they foundations? They're no corporations, they're individuals. And these are people who range from giving through their checkbook on an annual basis. Some of them have family foundations. Some of them have donor-advised funds. What's the range of gift size? The range of gift size, these people give from $500 to some of the gifts. I know that some of these donors have given as much as a million dollars. One-time gifts or cumulative? No, I'm talking about one-time gifts. I mean, cumulatively, much, much more. And the $8 million collective figure that I'm talking about. Is he a regular donor? Yes, yes, would be annual. It's not a one-time, I inherited some money from my mother and I'm gonna give $1,000 to the dog shelter. Exactly. This is, I'm gonna give money to whoever every year. Right, right, yes. It's a staying donor. Exactly, exactly. So, sort of mixing the quantitative and the qualitative. My understanding, if we were to go with the governor's proposal, the change that would take place as opposed to an 8.9% deduction, we'd get a 5% credit. So that's equivalent to four and a half percent of your income. So you're saying a four and a half percent reduction in the amount, I've got this right, in the amount you're saving of the gift, size, whatever, that's driving people's decision-making, not loss of four and a half percent? Well, what these reactions are to, is to the language that is in H.9.11, as I understand it right now, which is the- The cat. Yes, including the cat. I'm saying let's assume we didn't do the cat. Would four and a half percent make a difference to people that they were giving $1,000? The fact that they're gonna lose $40 on tax savings, would that make a difference to them? Right, so that's not the question I've tested with this group. So I'll be honest about that. And again, I think that we can only question it. But overall, what I believe the sentiment that you're hearing here is that it, both from nonprofits and from major donors, is that it does not make sense to dis-incentivize giving in the state. That, yes? No, I just, I just gave a red one-side. But it almost sounds, on the fact that they don't completely like us, that there's something about this cutting back is saying we don't appreciate what you've been doing. That we're taking, you know, we gave you a benefit because we wanted to encourage you, and we appreciate what you've done. And now we're cutting back on that, and I'm getting the sense that they're not feeling that we know or understand or appreciate their contributions. I think that's accurate, I think that's accurate. And I think that the other context for this as well is that, you know, every time a nonprofit, for instance, fails to have their grant from the state increased to account for inflation, or every time federal funding gets cut, et cetera, et cetera, et cetera, these are the people who hear about it. You know, I will see those reductions or those lack of increases reflected in the proposals that I look at next week. And so that's the environment in which these, you're hearing these opinions, that there's a palpable sense of frustration that the social safety net is not being supported and that private philanthropy is being expected to support it, to create that foundation in a way that, you know, as these opinions proceed, as these individual major donors proceed, that state and federal government is backing away from. So I would assume that the charitable groups on a national level have a very strong voice. And when this was, this is being driven by the feds, not us. And the feds not only reduce the top marginal rates, which I understand probably will reduce given, but they also change the system so that more people will take a standard deduction and not be able to itemize. Was there pushback from the National Philanthropy Association and did Congress listen at all to offset that by raising the margin from 50% to 60% of the big donors? Right, so, you know, as, I'm not gonna be able to speak knowledgeably to the lobbying that happened in DC around the TCGA, but I can say that yes, I know that there were national associations of nonprofits and as well as organizations like the National Council of Foundations that pushed to ensure that the tax code incentivizes charitable giving. You know, the degree to which they were listened to in DC, I can't personally speak to that. I mean, I can only assume that it wasn't a lobbying, a very strong voice. But you know, I know, but I think that there's moving parts in the federal law that reduce the incentive to giving, but I also think that, and I agree that a lot of the giving is being driven by the big donors who very well may be affected by the allowed, or gonna continue to itemize and now can itemize 60% of their income versus 50%. And I'm wondering if that's an offset that charities are gonna do just as well under this thing as they, on the federal level I mean, as they would have beforehand. We may have a small state problem that's being driven by that the feds have done that we should fix, but that 60%, no one's been able to quantify, everybody's talking about the downside, no one's talking about that upside for charity. But we might know that and the perception is nine-tenths of the law. Think about it, if there's a cap in place and people feel that they're not being valued for the giving that they've done, that is a significant disincentive to continue giving. You're talking about the house plan. Yes, okay. And I appreciate your point about the 60%. I wish as well that I had data on how many taxpayers will be able to take advantage of that additional 10%. I don't, I can tell you my personal experience, I know just one family that is, I can't claim to know how the ins and outs and the personal tax returns of every wealthy family in the state. I only happen to know one family that will probably take advantage of that. These donations we've talked about, the Q&A in society just, that's where everyone in the old days seems to be leaving money these days. But these go to environmental groups. These go to land conservation. These go to, yes, the free health clinics. These go to an awful lot of programs that kind of, they don't subsidize but they enhance state funding so that the programs can run. We know that the BNAs have been running on their endowments, which is what's given to them for more than a couple of years. And I'm personally a little nervous about having that be cut because they are providing choices for care. Okay, so. Timing is a major issue in all of this. You take a look, you've been involved in any charitable organization in Vermont and you look at when you receive your gifts. Almost invariably you receive your gifts closer to the end of the year. Now some would say it's Christmas but I think it's the end of the tax year and the effect of that. And I think back to Fidelity and the charitable gift fund in our, the largest charitable gift fund in the country. And you look at where the contributions come in. You see that tremendous spike in December and those things are tax related. Make no mistake about it at all levels. And that's why I think this $500 cap that was proposed is a very bad idea. And in my mind it through adjustments of marginal rates or the amount of the exemption in some fashion to enable us to eliminate that. I think it'll be certainly beneficial for charitable giving and I don't think we need to forget that charitable giving displaces a large amount of potential state spending and it's not just in healthcare and poverty programs and everything from the arts to libraries. I mean it goes throughout. And I think this would be very short-sighted to have a cap like this. I have a motion for you to vote yes on that. Okay, do we have any questions? Thank you so much for your time and thank you for the rest of the best. This has been very helpful. I'm glad you could come back. Thank you for having me and thank you for what you're doing for the state of Vermont. Can I ask you one final question? So I don't know if you heard the conversation before if we chose not to do with the House or with the House did or the governor did and just said that the federal itemization could continue to pass through. Would that be better from your perspective than either of the credit scenarios? Yes, I believe so. And one of the reasons is that I think there, I suspect there will be a greater tax benefit. Again, I'm not a tax accountant but I believe that there will probably be a greater tax benefit. And also to the senator's point, there you're not creating a negative perception around charitable giving and there's less change. And I think that in this current environment where we are all trying to keep up from day to day with the daily drama in DC and how it might affect us and the issues that we care about, having less change is probably a good thing. Thank you so much. Thank you very much. Okay, Nity, I think we could probably take a 10 minute break. Maybe natural resources can finish up whatever they're doing and just kind of catch our breath and then we'll come back and we're going to make some decision points. I would like to get some of this resolved today. Oh wait, yeah, no, we've got somebody on at 3.30, right? Okay, so we have 10 minutes. And then we're going back to aviation fuels. And yeah, well, it'll be an interesting break. And then we're going to go back to this. I would like to get this decided so that Peter can draft so we can come in here on Monday, go over that draft, vote out the tax bill and proceed to the exciting world of data miners. Ken, are we going to look at the difference if we were to change the tax bracket at the top and not collapse the top two but go to an 8.75, I mean, at different levels? We haven't talked about fluctuations changing those. They're going back to, Jake is going to go back and run not reducing it, not reducing it the .2 but reducing, we know if we don't reduce it, we have three, four, so if he doesn't .5, not .5, but, right, .199, what does it take to get that extra four, five, four, five, okay? Or we can go the other way, it's 4,041. Yeah, it's 4,150 or 4,000. The house went kind of 41, they went to the 41, they went 50 over the present, yeah, just wanted to bring this back to your attention. Jenner, Jenner did give us a clean copy. Okay, this is my trial room every year on the discussion. Oh, maybe, yes, I'll talk to you, remind me of that when they come back in and once, before we go back to income tax, we'll vote that out. Okay. That'll take one minute. Are you gonna, would you like? And why, I think, it was a question of whether or not heritage would make, maintain record sufficient of abrogation gas dispensed so as to be able to keep track of the tax obligation with respect to the agency. Good, you're a transportation. And we have heritage here, so, welcome and come on up and just introduce yourself for the record. Thank you. Good afternoon, my name is Timothy McColl. I'm a Vice President at Heritage Aviation in the South Carolina County Monument. Okay, you've got the gist of our question. I did, yes, sir. So, yes, we do record all of the transactions. However, we don't meter the inbound fuel. We receive bulk loading of fuel and it doesn't actually pass through a meter. It's a pretty intricate process where we measure feet and inches in the tank as we receive from a tractor trailer. So, I've done that on a realtor. I've done that on home fuel tanks. Sure, yep, that's correct for temperature. That's a very big part of it, thank you. So, while it does not pass through a meter, we do accurately record the in and the out but in order for us to provide that to the state, it would literally be a binder of readings. It would be difficult to do, but we do have that information and we very carefully track what comes in and goes out. That's just a question though. Would you sell fuel to, let's say a plane flies in and you fill that plane? Yes. How do you know how much fuel you put in it? Perfect. So, we do on the outbound on the sale of the fuel, we have a meter that is certified as accurate by the agency of agriculture. So, every outbound sale of fuel is recorded on a certified meter. So, and we do maintain those records but it's the inbound or the other half of that transaction that is measured in feet and inches. So, on the inbound side, is that what you were a bit of a tax on? No, we were met the sales tax at the point of sale. Well, which is the outbound. It's the point of sale that we're talking about, isn't it? Yes. That's what we're looking at. That's what we're looking for. So, when you're measuring that, you would have a record of that in each case and then you add up all those records and those are the records that would be available for audit if necessary. Exactly. And then you remit the sales tax in places. Yes, sir. And all of your sales is aviation fuel. That's correct. Okay. So, if you keep it separate you put it in a plane. Right. You've got the records. So, if the vets come by and say. Where? How much have you collected in aviation fuel tax? The town, the state, whoever's getting paid that tax. Yes. This is it. Okay. Those records are maintained. Okay. We do happen to also sell, but that is not in bulk. It's in containerized sale. Okay. And you also put a jet fuel. We do. But there you are not the one who's remitting the tax. The bulk airlines subsidiaries that are responsible for that. Right. So, about 65% of the jet fuel that we handle, we don't own. We handle it for a fee. And about 35% of the jet fuel that we handle, we sell. And so, we collect and remit the sales tax on that sale. Well, that's correct. Jet fuel, do you remit a sales tax? We do. There's the, is there maybe the agency transportation? Because my understanding was that it's taxed on a different regimen. That your address is taxed on roughly 28 cents a gallon or whatever it is. 6%. Yeah. 6%. Plus the local. That's right, 6%. I'll take it back. But that the jet fuel is a different tax regimen. And I thought it was all based on bulk providers, but maybe you're considered a bulk provider for that purpose. So, just to clarify, the aviation jet fuel is taxed on a sales and use tax basis at 6% plus 1% of local option tax in the case of Wellington. The jet fuel. The jet fuel. The aviation gasoline is priced on a pennies per gallon basis. So that's sort of the two reporting regimes. Yeah, I understand. Yeah. Okay. When you purchase the jet fuel, do you pay a tax on the purchase, the wholesale? No. Any tax on that or? No, that's a purchase that we make and then we sell on a retail basis the fuel and collect the tax there. That's only a tax for that one. Right, that's the buy for resale and the tax for resale. Right. Okay. Well, I think I'm not sure where the problem has. Have you seen the wording in this bill? I have. And you can live with that? So I have issue with the new bill calls for us to record and maintain meter readings. And kind of the issue is that we don't have a meter, you don't have a stick. Right. Yes. Okay. But you could do that on that. But on the, when you deliver to the plane. Yeah, so we do maintain those meters. Then you have those, so that's what you cancel. Okay. So you just put the wording in. Yeah. And what version of this? You know what page that is? 54. Yeah. It's the second page of the little hard section. All right. We'll work with her after and I'm pretty sure she's got your contact information. Yes. She's not doing that. Well. Okay. So the issue for you is you don't have a meter coming in. So you could do a meter reading. Right. When you put it out, which is the point at which you pay the tax, you do meet. Yes, that's correct. So we just need to make sure that we're not asking you to maintain your wholesale volume for our meter. We are just asking you. So it's simple. Perfect. And I did want to say that Heritage Aviation is an employee of the company. We're 70 employees in Brooklyn and we're very happy to be here. I'm happy to come down and answer questions. Thank you. Thank you. I'm happy to have the airport there. Okay. Committee, before we go back to the happy world of taxes and charitable deductions. When we voted 9-12 out this morning, we missed, where's Senator Sorotkin? What is in the hall, do you want her to do? Yeah. I need, this is his, this is his bill and his amendment. I need him here. Anyway, I told him we neglected to amend with the cleanup language that Dan Carbon got to was early on, probably because the bell was ringing and we were supposed to be on the floor. So I've asked Jen to just combine her amendment, which was striking section 11, which had been deleted. And there was some cleanup language. She went over with us. This was all cleanup from health and welfare because the bill just thinks she caught after the bill came out. And then adding in Senator Sorotkin's language. So I'm going to ask him to withdraw his amendment. I don't know how to would. He has to reconsider, Madam Chair. He's called. And it was reconsidered without objection. Oh, okay. He has to read it. It was reconsidered without objection. So now he's going to have substance. And when he comes in the room, we'll tell him. Oh, he already said he. Either way, just not to kill a dead horse, but we've just had this testimony. We can get rid of it. We could correct this provision in 917 very easily. Do you have a? Yeah. Basically on page 55, the very last sentence, the record show, including daily motor fuel meter read, just cross that out. Right. And everything else is fine. Is that okay? Well, she left. Michelle left. Yeah. I mean, it's for both Jeff Puel and gasoline on that page, isn't it? Yes, this is a good deal to keep record of all purchases. Yeah. I was just doubting for Senator Campion. Yeah. It might. Okay. That would just, that would eliminate the problem. Except it might. It might not. If gasoline can be kept for that way. I don't know. Well, he doesn't need her until it wants to sell it. But the gasoline doesn't. I think he would allow that same, and that same sentence. Well, you know, that's talking about purchases. It's talking about purchases, not sales. Right. Yeah. Okay. Purchases. So is that true for gasoline, though? That was my question. That's gasoline we're talking about, is that true? It's jet fuel. Jet fuel. He doesn't need that. That's A and E. He doesn't. He doesn't. He doesn't. And the jet fuel is sold at Albany or Montreal to companies that contract the airlines. But the gasoline is on page 55. Can that be needed to fail? No. That's what he's saying is he doesn't need it. No, I thought he was talking to me again. And he's the largest. I mean, that ad gets sold at various airports around the state on what method they use, but we were dealing with that. That probably only arose because of something we got from the house. And it's. They don't go to the airport. I guess we're going to have bills coming out. I know it's coming down to the police. Well, if you stay, we can hand in the two bills. Oh, I can say for good. Set the surrogacy. Yes. OK, I heard I moved the resources. No, I didn't have any order. We've gone back to 9.17. 9.12? No, 9.17 aviation fuel. Secondary fraud was our representative from transportation. He says if we go to page 55 and strike the first whole sentence there, the record shall prove daily motor fuel meter readings that will solve heritage radiation problems. It still requires maintain records, but it just doesn't go to bed. And they get the records when they pump it out, which is when they, that's what they're paying the tax on. And all of this is so we know how much aviation fuel tax or purchase and use tax, we have to spend updating the airport to bring us in compliance with that law. First, the use tax play applies to jet fuel. Right. But for down to be as well as to have aviation gas. So we just take out that one sentence on the top of page 55. Right. And also, I'll double check with the trans to make sure that's on the way out. That's right. We're still waiting for Aaron to rewrite it, so we can't. We're dealing with this thing. We've got them to rewrite. Cut those out, and we know how to hold it back to 9. Sure. We've still got all the electric cargo stuff. I just want to make sure we're sticking it right first. This is not the best way we've ever done this belt because it came loose and caught up pieces. This is a surrogant move to substitute. It's moving to substitute. Wait, then you have to move to reconsider his bill? He did that already. He did that already. It's an objection. All right. So Senator Surruckin, move that we substitute graph 1.24. For the 3.360 instead of 4.0. Yeah. All right. That's what he moves. All right. For the discussion, this is the pay parity, ACO bill. And there was an amendment. You voted against it. I know. OK. For the discussion, if not, all those in favor say aye. Aye. Opposed? No. OK. It's still 610. OK. You can take that up. All right. Now we're going back to taxes. We're proposing to approve as a measure. All right. That was your move. Yes, it was my motion. All right. For the discussion, if not, all those in favor say aye. All right. Opposed say no. OK. That's right. I should have voted no on the last one. You don't know all things you like. It was adding all those technical corrections that got me. That swung you around, right? I did. All right. We're back to 9-11. I don't know how we get all these sequentially numbered bills in here this year. OK. Committee. Yeah. You can notify Graham that we're back. We need Graham. We need Graham. I am getting the sets, and we can do a thumbs up, thumbs down, that this committee is moving towards the administration's no cap on charitable deductions. All right. Senator McDonald, you're a no. Is that the only choice you have, one or the other? Well, there is another. There is another. I'm just getting a sense of the committee. Where I am is I don't like the cap that the house put in. I don't know that I want to go with the full distance to lifting it entirely, to moving entirely. And Graham told me that he has some numbers on the concept of just passing the deduction through. OK. There's another. It's on his way. Make it more. Make it more. And less progressive. Maybe. Make it more favorable to the charities. Right. Because it makes the deduction more valuable. I don't want to hurt the charities, but I also naturally believe that doing the cap idea is really going to make a big difference to whether someone gives $100 gift or not. I know. I'd better go on and make deductions. Reception? The big ones. I think that was the interesting thing, so the comments is the perception that we don't pay the government doesn't appreciate that we're doing the cap. Whether they itemize. And they are. They're going to get the cap. But even when they itemize, the deduction is less likely to do if there's no ability to itemize it on their state level. They don't pay the government to pay the insurance. If we don't do something. Right. And that's why I said one of the choices would be to give you the value of the deduction. Because they can deduct it. That's a close to a crack. And I think that would be more expensive. But let's see what we can do. Exactly. Just a way of a great appropriation scheme. And the key in all of that is what effect that's going to have on rates. Because in order to be able to do that and still be able to fund it, you may have to either fool with the amount of the exemption or somehow alter the rate. So we have a bunch of problems here. You've got the Social Security thing. The charitable thing. We've got the new $18 million. We've got a fine money for it. $18 million. The one up for the special ed that just came in. Oh, but that's school. That's school. That's the next section. That's the next section. And nothing now. No one has told us to fund $18 million additional dollars. We're not being told to level the property tax. I believe the bulk of that work is being done in the ed committee. Oh, really? Yeah. I don't. Yeah. They're the ones that are doing the special ed and the ratios. They're talking with the administration about a five-year plan. So Park Hill 9-11 is just going to be the income tax when it falls and Social Security and the whole other issue. Funding general fund. No. Yeah, we will have to put the yield numbers in there. So we will have a nexus to property taxes. And it will depend on how things work out at the end. I will check this. No one has told me to find $58 million, OK? They want me to do that, then they should have told me. This bill is just about what we're going to do with that $30 billion. The first section of this bill is what we're going to do. We're going to paint over the grant tax codes. Yes. And then we're going to paint the new one. Yes. OK. OK. Well, he was going to be back here in four hours now. Oh, you are. She and people? That's what we've got to do. So we're going to take $30 million to paint that white. Well, we have to decide on that. And then we're going to have a new fading on top, which will cost us more money. Has anyone told you this committee is supposed to find $58 million to bring the tax rates to zero? OK, no one's told me that. So they're going to find out an education down the hall? What's that? They're going to find out an education down the hall? Has it gone up since yesterday, the 58? No, no, it hasn't changed since yesterday. They haven't gone back over. So we've got another 36 minutes to hold our paint. Right now, if we put out the yield as the year, well, we will have to yield the set on what the house did. So we will have to make adjustments to the yield if we do nothing with the property tax. But I haven't heard anyone wanting to make the changes that the house did. A low yield, the yield number that you've just described. So you've got something to conference on. No, we've got to have a yield number. And or there's no property tax next year, which is the solution. But no. And I talked to the administration this morning and told them I thought there was some money to be had. But no one has asked. I mean, how this is going to sugar out is anyone's idea. But nothing has come this way. But this, I think, we do need to get out. So the other thing we have to do is figure out what we're going to do to make up for allowing more of the contributions to go through. Pardon? We have to figure out what we're going to do. We go ahead to let the contributions go forward. Right. So if we figure out what we're going to make up for that. Well, if we do the governor's plan, Graham says we've got an $8 million hole, we can get three to four of that by not collapsing the tax rates, which makes it more, keeps it more progressive. And the administration has actually asked us to do that. Don't wake me up. I'll go to the door and go back to the table. We've asked the tax department to go back and see if we could lower the rates. According to Graham's numbers, we make $34 million. If we don't lower the rates, that's point one. So if we don't lower it point one, will we make up enough? We could not. We could also have not lowered the rates for everybody. We could lower the rates for middle income people, and not lower the rates for higher income people. We could do that. Something like that. Yes. Play it around. And Graham's got a couple of runs that he's done of different options. We could also not deduct Social Security all the way up to $60,000, which is Santa McDonald's. And I think we could take that down. Or, as the tax department pointed out, what was it? It's 4,000 per, and it was 4,100. Yeah, it's 4,100. Yeah, well, the house went slight. It was 4,000, or 4,150. Right, but there was a 4,100 number. And the house went slightly above. They went to 4,150 per deduction. Uh-oh. The big gutter. Bringing a tossing with him. Evening, you're not doing this for sure. Yes. You could borrow me for two. You want me to leave this, this guy? Charge of 7,000 dollars. OK. Right. We're ready. Party. Party on. The Vermont bill's passed, and it's still a chair. Return to the office. All in favor, say aye. That was like, you know where? Go away, they won't find me. Party on, guys. Something out there's, what's this? Oh, sorry, I'll name it later. It might be also useful to have your decision points out again. OK. Yeah, what's that? You know that was the name of George W. Bush's biography, autobiography, decision points. Didn't he call himself the Decider? He said he brought him. But I got one, of course. OK. Slightly averse to the title, just the Decider. The one dated April 25th? Yes. Yeah. Yeah, so it was kind of the Decider point. The decision points, and then what I handed out today is the April 27th. Yeah, let's take it just, I'll put my arm. Everybody else has to choose one. Sure. Hi. Is this the one you want us to have now? Yeah, you should have. Yeah, I'll have that one. Which one? What does that have to do with people, I don't know. Yeah. Decision points. This was on the floor, I don't know. Sure. He was not looking to score. OK, one, two. We got it. Hey, all in favor, say aye. Aye. All right, what did you demand, though? No, we didn't. I'm sorry, we had this. That is physically good. Please. OK, we're set. Are we going to snowmen again? We haven't heard anything. We've done a little bit. Graham, tell us what we asked you to find the other day. Yeah, so Graham Campbell, GFO. So I'm going to present three things today. And just while you were not here, we did a thumbs up. We've got, at this point, it looks like a 5-2 that they would like to do more charitable deductions. Now, there's no cap. There's up to the 10,000 cap. There's, I'm sure, some room in between. We asked Jake, who was back, if he could run. If we didn't reduce the rates a full 0.2, if we reduce them maybe 0.199 or 1.15, but something short of 2, could we make up? We know we've got three to four. We don't collapse the rates. Yeah, we've got three. So we need four more, right? You would need probably around $4 to $5 million. $4 to $5 million. We also talked about reducing the amount of the personal exemptions the other way you had it. Down to the four. Yes. OK. There was two numbers. There was a 4,000 you gave us, which has been the federal. And then there was a 41, because I remember that's what the House did. But there was another, because I was thinking the House might split the difference. But they actually went 50 up from the other number. Do you remember? The standard for the personal exemption to the governor's plan is $4,000. Currently, what carries through Vermont is a federal personal exemption. And that is equal. Last year, it was the 405 year. OK. That's what you said. That's what I had. I knew there was a third number. And I was thinking that the House went marginally, but slightly above that number. So they came up with the 4150. OK. So we can do some moving in there, too. All right. Yes. OK. So I heard from the committee two requests yesterday to them looking at social security and also charitable giving. I also have a document of Chair Afterworth without showing they did those examples yesterday. I was asked to add some columns with the federal tax liability changes just for two of them. So I'll begin with this first page of proposal. So I heard two proposals yesterday, one on the social security upfront. Just as a refresher, the current proposal, which is in 9-11, is an exemption of taxable social security benefits from Vermont income taxes. For those people earning below $45,000 in AGI single and $60,000 in AGI married, they will receive 100% social security exemption. And then it's phased out over the next $10,000. In that age 9-11, this proposal is funded fully. The administration, with their social security exemption, phased it in 1.30 each year. And that was not necessarily in their income tax proposal. No. It was funded in the budget, which it no longer is. So you don't have that money to play with the present time. So just a refresher, if you remove the social security exemption totally from 9-11, you would have about $4 and 1 half million to work with. OK. So in order to get everything we need to do the complete charitable, we would have to totally work with it. You could. That's one option. Yes. The proposal I heard yesterday, one was to lower those thresholds. So instead of a $45,000, $60,000 threshold, it would be $40,000, $50,000, and see how much money that gave you. So if you did that, so like the proposal above, it would phase out over the next $10,000. And it would be fully funded in the first year as opposed to the third, third, third. If you do that, in relative to age 9-11, you'll have about $1.7 million extra to work with. How much extra to work with, sir? 1.7. That's a good idea. Yeah. Did you say phase it in? No phase in. So there's no phase in. It's just like 9-11. It's just that the income thresholds now are lower. Yes. This is now a cash windfall that we are allocating. And it was phased in, I think, because you couldn't get the full amount out of the budget this year. I don't know that the sources of it were identified for the next two years. So we didn't know at that point what we were going to have to cut or not fund. There were extra revenue. What if we took this first table and phased it over three years? What would that 1.7 go to? We'd have to technically, we'd divide it by three, but a little bit, it would grow a little bit over time. Because like I said, over and over on Social Security, that cost grows over time. So it wouldn't quite be divided by three, but it would be pretty close. Divided by three? Yes. So 1.7 divided by three. Each year you'd get a third of one point. Right. You would need to find that additional every single year. So in the first year, if you By phasing in an income tax cut, we have to pay more? So relative to 9-11, you're paying a third each year. Then paying the full 1.7 to 3.2 this year. We're spending it with the present windfall. That windfall is going to be here next year. There'll be some slight changes, but basically, whereas if you're funding it out of the general fund, you only funded it for one year. You have to come up with less of a cut in a zero sum game to fund it this year, so there's an advantage. But to us, we're not going to see that amount of cut in all probability and charitable giving. We've got the money now, and if we don't allocate it, wherever we allocate it, or take it from, that's where it's going to be next year. We're not. I can't see what the advantage is to doing it in three years. That we squeeze ourselves in the next two years from what we've done. The next legislature squeezes itself from what we've done. But for facing it in, in the first year, we would be saving more money, so that 1.7 should be higher. We're facing it in because it came out of the general fund. And in order to do that, they cut the caregivers to quadruple logistics and a couple of those social service programs. Right now, we have a windfall. We have a pot of money. So it's there. As far as we know, the same pot of money will be there next year. There's not going to be any more next year or any less need for charitable giving. So there's no advantage to phasing it in. There is an advantage, Madam Chair, so if we can spend more money this year, build the budget and let the next legislature have to deal with the fact that we've already committed to spending something that before they ever showed up. Yeah, we haven't funded it. We can fund it all this year because we're figuring out how much we're giving back into who. We've got the pot. If we give all this money away now, we allocate it or we choose not to collect it either way, then next year we're not going to have the money in this allocation. It will have to come out of the general fund budget. We've got a lot more elasticity at this point than we will next year. And it's not going to give us any more money to deal with. I think we did two. No, not two, but we're going to turn it against Monday. Didn't that? Right. I thought to prove it, I'm going to turn it on Monday because it's still worth my sympathy now. You're still trying to see if we can find a compromise. All right. So you said I could do that? All right. You don't have to turn it in the evening. No, but don't lose it. Me? Anybody in this building? Okay. Yes, Senator. No, I just spoke back to what we were on. Back to what we were on. So I can't... Is there an advantage, Graham, to facing it in? What are the numbers? We've already said divide the 1.7 by 3. 1.7. So is that the total tax impact rate? You would multiply by 3. Multiply. Yeah. So this is the savings relative to 9.11. Okay. So if you... Yeah, it's difficult to think. Well, if you only get it a third, a third, a third, it's a third of that. We phased it in over three years. The theory... So the Social Security exemption right now costs 9.11 about $4.5 million. Relative to that, this costs 1.7. So... Right. If we drop it down, then it costs 1.7. So that gives us... No, you have 1.7 to work with. Oh, to work with. That's what we're saying. That's additional money. That's additional money. So we've got that additional money to put towards charitable deductions. That's one option. There's still no benefit to phasing it in that I can see. Because... Just in general, a phase in of the exemption period would be you would have to find the money. The additional third every year. Every year. So that happens with any phase in. Right. Let me just ask the administration folks why they decided to... You know why the administration decided to phase it in? It was... I just don't recall. It was a finance... I understand Research Commons Department of Taxes. It was a finance and management decision. It was a budgeting decision. They found that money in the budget. It was in the budget. Not in this... So they didn't have to pay for it? Well, they paid for 30 years. Right. So they didn't have to pay for what they were proposing. Legally deliberate. I got it. And the House said rather than... Doing that. Doing that. They were going to collapse the rates. You know, get the extra money. Yeah. And pay for it now. And part of the way they did that was to cap the charitable deductions. So they had the money to do it. So if we don't collapse the charitable deductions, we have taken it on faith. An eight million dollar hole that we have to fill. Yeah. Now if we go back, don't collapse the tax rates and leave the 0.2% reduction. Or move it down. We save three to four million, right? Relative to 9-11, if you don't collapse the bank, just the collapse. Just the collapse. Yes. If we don't lower the tax rates, we make 34 million. Yes. That's all the tax rates. That's all the tax rates. Or we can lower the tax rates for some people. Or you can reduce the exception. Right. The 4150, you can reduce it down to something like 4,000 or above. Right. Which in some ways is less obvious. Right. Whereas then fully with the individual rates. Especially if we're increasing the EITC as in keeping it at 4,000. That's the other place that the money got spent was increasing the earning income tax credit. Because that's all state dollars. That's in addition to the bills. I lead toward the exception myself again because it's entirely new. And it still shows the individual tiers with lower rates. So it's that part, the favorable part remains. And this table here, these tables show you essentially compared to 9-11, how these groups would be impacted by that. So it makes sense that if you start, if you lower the thresholds, the people who were previously getting that exemption under 9-11 are going to pay more relative to 9-11. So right now the group between 40,000 and 50,000 is receiving an average benefit in 9-11 just from the social security of about $209. If you change this proposal, you lower that benefit would go away. Right. Right. So those people would... So relative to 2017 is a different story. This is just compared to 9-11. Right. So... Okay. What is it relative to 2017? You said you had those runs. So relative to 2017, these people, the people who would be getting the tax cut, well, it depends what you think. If you're thinking about relative to 2017, just introducing a social security benefit is different from relative to 2017 and doing 8-9-11 and this. That's true. Yes. There's just a whole lot more to play here. Right. So in general, the groups here that you see that are being impacted, they are being helped by probably three things in 9-11. They're being helped relative to 2017. They're being helped with the lowering of the tax rates. They're being helped by the raising of personal exemption and some might be helped by the earning income tax credit. Probably not that many. So relative to 2017, the people making probably below 45,000 are... Well, actually... On average, it's a relative benefit to those tax payers. The first two tiers, if you've got a $24,000 exemption, you don't have any taxable income at this point. Right? If you've got it at the federal level, if you can take an exemption at $24,000 and your income is 20... If you were making $24,000 in social security benefits... Or any income. If you had 20... Any income, yes, but your social security would be presumably some piece of that. Yeah. If you made $24,000 in social security was, say, 12 to 15 of it, then the social security part of it would not be taxed already. That's the current law. But the rest, the 9,000, would be taxed. But that's such a low income. By the new tax rate, none of it would be taxed. If you were $24,000, if you have a deduction, a standard deduction of $24,000 for a couple. On your federal taxes? On your federal taxes. It would, yes. Okay. You would have no tax liability. But that's before you were AGI, so you would have no state tax liability, would you? You would... If it's above the age... These provisions would interact with each other. So, if you were someone making $24,000 and you had $15,000 of social security income, that income right now is not taxed. The $15,000 is not taxed. Right. And so that carries through to Vermont. Under this proposal, nothing changes there. That's right. The AGI... Okay. I better mix that. The AGI, the personal exemption, you'd have no federal tax liability. But that person making $24,000 under this proposal would likely benefit... Or H&L would benefit from your income tax credit expansion. That's what I was thinking. Yeah. So, I can't say for sure whether they would have tax liability or not. We still isn't very much money to live on. And if they had kids, they would benefit from the expanded personal exemption. Can I ask a question on your chart here? Yes. Average change drilled to a 9-11. Yes. This is for the proposal to reduce the maximum from 60 to 50 and from 45 to 40. Yes. And the AGI group is for a joint file or a single file? Any file. And so you're saying people in the... Like just changing that people in the 45 to 50,000 dollar category on average would pay $229 more in taxes? Those who had to change in their taxes. So this would be those people who were previously under 9-11, hypothetically, receiving that social security benefit, would no longer be receiving the full benefit or not receiving it at all. And so their change in taxes relative to that to 9-11 would be $229. So hypothetically, if you're someone on social security and you're making $50,000 under age 9-11, your benefit just from the social security benefit on average was $229. And do we know for that group, for instance, what their average benefit savings, tax savings would be? It's $229 less than something. What was the original figure for that group? Oh, compared to... In 9-11 for that group. Just the social security benefit? Yeah, it was. You're saying that we're going to change the program parameters and that particular group is going to lose $229. From what figure are they going to lose $229? They're going to lose $225 relative to if you enact 9-11. Right. And what would they have gained under 9-11? Oh, probably very close to that number. So that group's going to be wiped out? Well, you're no longer giving them the exemption that they had in 9-11. So, yes. So this group may benefit from other provisions in 9-11. Oh, I know, but we're just talking about due to the change you're proposing. Yes, but he's not. He asked it. So if we want to lower the benefit so that the top isn't, what, $60,000? All right. We're moving into $50,000. And moving into $50,000, we would leave that top group would be paying $229 more relative to 9-11. Yes. All right. Right now, I assume they're paying the $229, right? It's taxable. Most media, that one did. But about that, yes. I guess I would prefer, if we're going to reduce this, I would prefer to not lower the threshold from $60,000 to $50,000 from $45,000 to $40,000. We'd leave the threshold where it is so more people could take advantage of this to maybe spread the percentage of deduction each of the groups in the program to get. That's what Randy was saying. We're usually on the whole group. We're still on the social group. Instead of eliminating people from this or keep those people in and give everybody in the program a little bit less. Well, you could start your rant down earlier. Wouldn't it make sense though, instead of... Yeah, well, I'd rather do that. I'm not saying we shouldn't talk about this because obviously we want to talk about this, but it seems to me like we should be looking at some of the other options as well in terms of the tax rates and those kinds of things and then come back to this. Depending on how much we can save by doing other things, that'll appear as an education of why do we want to really change this security. If we could save the money in other ways or regain the money, we'd just focus on one thing the whole time. It's kind of doing it in the vacuum. So we know we can... We know we have to trust in the folks who gave us the numbers. If we went down back to the 4,000, we could do it for exemption. That would hit mostly families with dependents. If we didn't reduce the tax rate... Jake, were you able to do a run on 1.999 or 0.199? I didn't fiddle with the marginal rates, but I did design something that I thought captured what you were thinking while I was testifying. Such as... Do you want it? It'll take a minute to go through it. Yeah. I'm just going to stretch your legs. You want to? Jake Feldman, tax department. So I should... I would probably point out initially that... and you can see Sydney back down if you don't like this. So what I'm about in this plan, which has basically all these elements we've been talking about, Social Security is only paid for at 33% for the first year. It is paid for through income taxes. It's not elsewhere in the budget, but it's the administration's very initial proposal, so in out years you'd have to pay another third and another third. But what's the advantage of doing that? It costs less than 5 million. This year? Yeah. Right. So it's taking the can down the road? Yes. If you give me a couple of hours I can think of some ideas for the next couple of years. You may have it. 2,000 million. So... The next legislation to make tax cuts is to figure out how they're going to pay for it. That's why they have to pay once. And we're ready for having it done. All right. So, okay. If you're not going to take... I did a run. And this... what I'm about to tell you, is actually slightly above revenue neutral. It has a half a million dollars of extra revenue. And... it would be the following. And these are all elements you've been talking about. The personal exemptions would be $4,000 each, which helps families bring them back to what they would have been. The top marginal rate is back up to 8.75%. There's no collapsing of the top two brackets. We still have five brackets, five rates. Such a security would be paid... the exemption value would be 33%. H911 had it fully paid for. Standard deduction would be the same as we've been talking about. $6,000 per single. $9,000 had a pestle. $12,000 joining filers. Earned income tax credit, same as we've been discussing. 32% to 35%. And then charitable contributions, all of them would be eligible for a 5% credit. But where you've got the money then is you've got the $2 million, the $3 million, by not collapsing the rates. Yes. And you've got the rest of it by kicking the can down the road and only funding a third of social security this year. Everything else was... and you took back to the $4,000. How much should you make by going back to the $4,000? It was a couple million dollars, I think. Can you confirm that? I can go back and confirm it's around $2 million. Okay, you can just read on that show. Can I ask another question? Did you do any runs in the preliminary development of the governor's proposal looking at the EITC instead of going to 35%, going 32 to 34, 33. My colleague who was just here, Andrew Stein did experiment with the EITC and the cost of an additional percent is not much. So going from 32 to 35 only costs something like about 2.9 to go from 32 to 35. So you went to 33 or 34. I'm not going to speak it out of there. I know what it was for was you. I think that was all these questions. Yeah. So the exemption winds up giving us about 2, but is that right? And that would be enough to be able to do a third easily. And kick the camp. You do? No? Okay. I'd like to be able to do it all at once and fully fund it instead of kicking it down the road, frankly. Yeah. We'll be able to do it next year. Unless you have another idea as to what that's going to be I mean, they're my own personal ideas, so I need to really talk to Kai and others to see if they're doable. But there are other parts of income taxes that are moving a little bit. They could be thought about to possibly raise more revenue in the next couple of years. And it's kind of deep in the weeds, but if you give us a little bit of time we might be able to do it. That's the one thing we don't have is very much time. And also cognizant of who you work for. So I don't want to put you in a very difficult position. And I think we can have Graham do. To learn things that fall between what the Senate and the House might come up with. We don't have time to do things on the other side of that. No, and we did very well. The other possibility is that rather than unlimited charitable deductions that we could raise the deduction up to 20,000 the credit it probably isn't it's not nearly enough. The object of this is frankly the charities are the big donors. And it's the big donors who make tax decisions at least in part on the basis of getting the benefit. And for the charities getting large donations is what makes the difference. Are we ready? And those who are charitable it wasn't the charitable ones that don't get tax deductions. Well, this one's it's a tax credit and they are going to be able to get it if they give them $50 or $100 or anything else. So in that sense it is progressive people that gave before but didn't make enough to itemize it. What if, for example I don't know who I'm asking this to Well maybe Graham I think Jake will switch. We're just jumping around here but Anybody that wants to chime in with an idea. We lowered the rates of tax rates by 0.2% for everybody. What if we only lowered the tax rates 0.2% for people making $200,000 or less? This is something that I looked at so if you don't have the charitable credit you lose 8 million or you find 8 million one way that gets you very close is not collapsing the top few brackets and not lowering the rates to a full 0.2 for the top two brackets. So if you lower them I think 0.1 it gets you to $8 million. So basically we would be doing 0.2 for everybody from half a million dollars or so. We're going to stop lowering from $200,000 standpoint. I think it's a beneficial thing. If you do that and get 8 million that sounds as though that might solve a lot of the problems. Yeah. So you want to say that again? I got Randy and Anthony agree. I know I like that. I'm supposed to serve a member on this committee. That's true. I would like to confirm this but I did this a couple of days ago and it was very close to 8 million. Okay, repeat it please. You would not collapse the top two brackets and you would not lower you would lower the rates for everyone but you would only lower them 0.1 for the top two brackets. So that's a million in infinity and half a million to a million for the top? The top brackets start at for Mary start at about $430,000 and then the next lowest point is about $230,000 I think. So they would get it with those $400,000, etc. up would get a 1% rate cut, 0.1%. 0.1% rate cut, everybody else would get 0.2 and you can keep the exemption at $4150,000. That seems fair to me. Everybody gives the tax cut. Is that a solution? Yeah. And how much would we get 8 million from them? That's my tentative. But the effect of that is that so hiring some people get less of the tax gene but it's just in a different way. So the charitable credit right now, the cap is impacting only high income taxpayers. Take the cap off. So the cap off. We don't collapse the top two brackets. We don't collapse the top two brackets except from what they got. It's not like they ever asked us this. Now what happens is you down dealt with presumably dealt with a charitable issue. We still have the social security issue to deal with. That's what 8 million don't have to deal with. Fully. They're covered. Full pay. We're going to get out of here once. If we can agree to this where I could run the numbers on a Monday morning and Peter, if you can draft this because I don't think we've done a whole lot of changes. We've just changed the We wouldn't be classing the top brackets and we wouldn't be and we would just lower the top two brackets by .1 rather than .2. And we haven't changed the deduction from we'd have a house to settle in. Would it be 41? No, we have not changed. We haven't changed. No. So you still got the better family exemption which helps families. There was a lot of fun social security. It's like what this does is Jay showed you an example of a taxpayer who made $600,000 in charitable contributions. Under H911, they were getting a tax cut. It was pretty guilty anyway. But the person who gave charitable contributions did better under the governance plan. So this would effectively change that. The person who is no longer a wealthy person who's not giving would pay more under this proposal we're discussing here than H911. And the wealthy person paying doing more in charitable contributions is not. Well I just I sense I would love five minutes in the chair to just make sure I understand we're going to move on to drive Monday. Could you just go over this last chart? Okay. I'm around. Not a question. Before you leave I would like just five minutes to make sure I understand. Feel free to call me all weekend. Before you leave. If I could ask for five minutes here to make sure. I would have a thing going on. 400,000. I think I would finish with Graham and we'll let Peter come out so he can walk us through and see if he understands what we're doing. Which may help us understand if we understand what we're doing. I just want to go through that last. What are you going through? As soon as the idea that charitable deductions go through it's more expensive to do that? Yes, it's more expensive to do that. It would cost about one point or 11.9 million dollars. This is because the deduction is worth more to high income tax payers than the credit. Right. And so by doing this it's a bigger advantage to give basically. And so the credit if you're in those high income tax brackets your expected tax rate is higher than 5%. And so the deduction is worth more to you than the 5% credit in the governance plan. So. And this assumes that everyone will be able to keep this everyone will still take the standard deduction as well. Even if you itemize it. Even if you deducted your charitable savings. I'm looking for my summary so I can we can go through this in a logical order. That's one that I want to focus on. I've got one which is fine. I think I can do it. You're doing as long as you want. We're not going to vote the tax bill out. We're going to wait for a draft to vote out on Monday. So I have nothing else to wait for from your committee? That's it. Let's make that something. No. So I was just checking. You can go now. What's the we're doing today? We're going to be here. So I was just going to say to council I know it's late. I have this sheet in front of me and I'm just going to run through it quick to make sure I understand it. Well I've got well it looks like the section by section. That's what I'm going to do. So the personal income tax changes the exemptions staying at $41.50 Sorry Peter. I just see that. It's this one. It's this one. I'm sorry. The section by section. I have extra copies. I have extra copies. Thank you. Thank you. That's right. The numbers don't work. Oh yeah. We might need to do that would make the house happy on Monday. Remember the tax bills. Yes. Well we could ask that they look we're cutting them. We don't need it. They wanted to break it out. And the guy that does it's not near that does the tax bill forms. Said he could lay it out like this right now. You do town school under each other. He said oh this was laid them outside by side. So the way that she is. Yes. So we could ask that the tax bills we're going to have to put the yield and we're going to have to work on that on Monday. Yeah. All right. We'll need Mark to give us the yield and see if we can just draft that the tax bills will be laid out separately side by side. We need to give them something. I run through this. This is an insult. I like it. Because I have the yields from Mark. So what I'm hearing is that the personal exemption and the standard deduction are going to stay the same. I talked to you a little bit day to day about how the house version stays with the inflationary index that we've been using all along. So basically number one is going to stay the same. Number two, section two deals with the rates in the brackets. You're not going to do the collapsing. The two top rates here will be 8.85 and 8.7 and then the other three brackets are going to come down 0.2. The charitable in section three is going to change that they will no longer be a $10,000 limit and go back to the government's original proposal with 5% credit unpacked. The EITC will stay the same. The Social Security is staying the same. And it's all the same as the house? As it happens. Yes, same as the house. It's 9.11. Fully bought in. Yes. But the total amount of figure will be $7.85. Not getting any traction. We keep saying we're worried about people at the bottom who 70% they live on Social Security. But you can't charge them less than zero. We're not taxing them. They don't pay taxes right now. If you can't charge them less than zero why are you going far in the rough? Because they're not living very high in the hog either. Okay. Send me some money. Me too. Okay, annual language to the language. I have a small tweak to that. Yeah. But then this is what I wanted to also draw attention to. Here in the other day, talk about the $58 million in the yields and not necessarily to be necessary in his hour. What I didn't know was whether you wanted to fill in those blanks with those numbers. Whatever. The yield for the property tax that's far pollution with those I think we need to put it in for the full bill right now. That's right. I told him I was supposed to find $58 million and he said no. And no one has told me that I have to find $58 million. We may well. And I'm having to find $58 million. Yeah. I am sure that before we get out of here there will be some adjustments and there will be a much larger property tax nexus on this. So that outlook that we gave you the other day does have yields and a non-essential rate that may the $58 million work that balance out the Ed fund. And so I wanted to make sure that that was what I was supposed to use for now. It balances out the Ed fund just so I understand an area that I don't understand. It balances it out. Right. But at this point it would likely increase property taxes a lot. That's right. That's how it's balancing. Okay. Then there was a technical change. Oh, that Mark talked about the average median piece in there as well. When I'm hearing from the chairs I'd like to see a piece on the tax bill side by side. Yeah. I wonder. Was that technical change going on the tax bill too? No, that was not on the tax bill. That was just on how the commissioners December 1st started. It's the other true of that linkage that I'm also going to put on 922 just because that has to go and I'm not sure what will end up being vetoed or not vetoed. So I'm doing the bells and suspenders. I'm sorry. Would you repeat what you're putting on 922? I'm putting in both places. Got it. It's just the annual linkage to the federal tax rates and I just want to make sure that given all the changes that we're linked in, we're linked where we need to be and that that works. And right now I'm going to have a small change to that. Right now is that the linkage just goes to taxable years 2017 and I think it makes more sense to say December 31st 2017. But it shouldn't be a huge deal. Okay. So those are the changes I have. I think that's it. Okay. The only question Madam Chairman I can ask you this afterwards. I know this room is fun. We should have.