Update and correction after the jump: An interesting sidenote has come to our attention: one state lawmaker has a hefty financial stake in Green Mountain Coffee Roasters.

So Green Mountain Coffee Roasters needs a $250,000 VT tax break?

The Vermont House is considering changes in a tax detail that involves a high tech K-cup packaging machine and may yield Green Mountain Coffee Roasters an estimated tax break of $250,000 per year. Vermont News Bureau reports that under question, again is the tax on a portion of a high tech machine that performs “secondary” packaging.

Green Mountain hadn’t been paying tax on those machines until 2007, when tax auditors ruled the company ought to be paying tax on the portion of the machine related to stuffing K-cups into cartons. The company settled for $250,000.

Predictably GMCR is also debating whether it may or may not locate a future K-cup processing unit here in Vermont. Also by defining where manufacturing ends and packaging begins for tax purposes the issue might have implications for state revenue from future business taxes.

Administration officials say the bill “clarifies” an exemption designed to encourage companies like Green Mountain to locate their manufacturing operations in Vermont.  

“This is the type of production equipment we’re going to see more of in different industries,” Secretary of Commerce Lawrence Miller said last week. “And it’s those companies on the cutting edge that we want to attract.”  

At least one lawmaker, however, says the bill opens up yet another tax loophole, expanding by one the number of exemptions that now cost this state more than $1 billion annually in foregone revenue.  

Continued… They need a break?  

This tax break routine follows a well worn pattern of business leverage

GMCR’s director of taxes, Marge McDonnell says it’s a price tag [VT tax] that could compel the company to locate its new K-cup packaging operation somewhere other than Vermont.

It is a most gentle blackmail when Xyz widget corporation threatens not expand new activities here (or even bolt the state) if they don’t receive a gift …eh incentive. Any new loophole as with all the other loopholes will have to be made up elsewhere in Vermont’s budget. Sweeteners are for some and cuts are for others.

One international business publication notes that GMCR’s three-year compound annual growth rate is 74 percent. At the end of this years’ first quarter GMCR revenue was $1.15 billion, up more than 100 percent over the same period last year. They need a break?

Update: Vermont State Senator Hinda Miller, who is listed in a recent SEC insider transaction filing as “Director,” in February sold 25,000 shares of GMCR stock. She currently has 88,452 shares of Green Mountain Coffee Roasters, Inc. stock currently worth $1,651,410. Among her committee assignments are the Senate Committee on Economic Development, Housing and General Affairs and the Senate Committee on Finance.

Correction: Senator Miller sits on the Senate Committee on Health and Welfare and Senate Committee on Appropriations NOT on the committees listed above. I mistakenly referenced outdated information .(BP)

The question is: if this tax break issue in some form or another makes it to the Senate, will Senator Miller abstain from any vote on a Vermont State tax gift to a company in which she is a large stakeholder?  Stay tuned.