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Health tax

05/30/05 12:00AM By John McClaughry
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(HOST) In the recent health care debate, commentator John McClaughry thinks that the Vermont Senate overlooked a critical constitutional question.


(MCCLAUGHRY) In the course of passing its health care legislation, the Vermont Senate impatiently dismissed an issue of constitutional importance. The House had passed its sweeping Green Mountain health bill, but had neglected to mention just how taxpayers would be asked to produce two billion dollars in new taxes to pay for it.

To attempt to avoid a veto by Gov. Douglas, the Senate leadership passed a stripped down version that's supposed to cost only $40 million. But the Senate also inserted some sections that raised taxes to bring in that $40 million. The tax of choice is a new payroll tax. It would be set at three percent on employer payrolls and three percent on employee wages for companies and employees who have no health insurance coverage.

Now, the Vermont constitution says very clearly, "all revenue bills shall originate in the House." This provision dates back to 1836, when the first senate was created. One conscientious senator, Mark Shepard of Bennington, raised a point of order. The Senate, he said, is constitu- tionally barred from originating a revenue bill.

Lt. Governor Brian Dubie, who also takes the constitution seriously, sustained Senator Shepard's point of order, whereupon the Demo- cratic majority voted unanimously to overturn the chair's ruling. They are in a hurry for the taxes and just didn't care to bother with a clear constitutional provision that might have slowed things down.

Back in 1974, the Vermont Supreme Court addressed this question. It upheld a land gains tax that had originated in the Senate. But the Court held that the new tax was not intended to raise revenue for the state. Its purpose was to make rapid land sales at large profits unattractive by levying a very large tax on such sales. It was a regulatory device, not a revenue raiser; and, in fact, the provision never did raise any appre- ciable amount of revenue.

The Court, backed by an opinion from Attorney General Jim Jeffords, affirmed that a bill to raise taxes to meet general government expens- es had to originate in the House. That just wasn't the case with the land gains tax that they upheld in that case. But today's enthusiasts for single payer health care do not seem to have any interest in abiding by this provision of the Constitution. They want a government takeover of health care. They want to raise taxes to pay for it. They want it now, and they can't be bothered with these constitutional niceties.

One would think that respect for the constitution and the rule of law has just taken another hit - and one would be quite right.

This is John McClaughry. Thanks for listening.

John McClaughry is president of the Ethan Allan Institute, a Vermont policy, research and education organization. He spoke from our studio in Norwich.
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