2-10-15 – Reasons to Repeal the Death Tax in Vermont

by Jerry Oppenheimer

In a January 19 article in Vermont Digger, Rep. Alice Miller (D-Shaftsbury) suggested that we find our why an estimated 16,000 people move into Vermont each year (approximately the same number flee) and “try to get that number up to 30,000.” The incoming residents, according to IRS data, tend to have incomes about 18 percent higher than those leaving.

Rep. Miller’s objective is strongly applauded and supported, but she (and the rest of the legislature) should also focus on how to keep our higher-income residents here.

The most effective way to achieve both laudable goals is to make VT attractive to affluent retirees (and a leader in New England) by following the examples of the Southern states and reducing or eliminating some taxes.  If you were to modify the estate and other taxes, VT could become a magnet for affluent retirees who would stay and/or move here, pay taxes here, spend and invest here, and contribute to our civic life.  The reverse is now true.  In this regard see https://www.today.com/money/taxes-most-least-friendly-states-retirees-8C10990277 where VT is ranked among the ten least friendly states for retirees, with the following narrative:

Beloved by skiers, leaf peepers, and Ben & Jerry’s ice cream aficionados, the Green Mountain State gets extra points for New England charm.  But that hardly negates the impact of a tough tax climate.

There are no exemptions for most retirement income, and property taxes here are the eighth-highest in the nation.  Tack on an income tax range that tops out at nearly 9 percent and retirees on the hunt for a new home state might decide to vacation in Vermont instead. 

Making VT attractive to affluent retirees will, of course, require the present legislature and Governor to “think outside of the box.”  But there is successful precedent.  For example, years ago, VT made it attractive for captive insurance companies to be organized here and they and the relatively highly paid professionals who service them (think lawyers, accounts, actuaries) are now major (and “green”) contributors to our economy and civic life.

As you must know, many are now voting with their feet.  Many friends who paid the most taxes and were the most active civic “volunteers” have left or are leaving VT.  This exodus also applies to blue-collar taxpayers.  They all leave a tax hole; and far too often they are also the ones who have contributed the most in time and money to civic life.

The void left by former full-time VT expats is often not filled by the part-time buyers who replace them.  And often there is no “greater fool” to replace them because the VT expats retain their VT properties for their very limited use.  Most of the year those properties remain vacant.  No one replaces the former full time economic and civic contributions.

Looked at differently, making VT taxation attractive to current second home owners presents an important opportunity.  As an example, focus on Bridgewater, not an affluent town.  Some 14 (almost half) of the 30  most highly valued residential properties (some $25 million) on the 2013 Grand List  (the latest list at hand) are owned by non-residents (some 13% of the total Town valuations).

Most of these owners have a current large commitment to VT and its lifestyle and are residents paying taxes to nearby states (8 from MA alone).  Just think of the positive effects if only a few of them decided to take up fulltime VT residence and began to pay taxes and otherwise contribute here!  And they would consume negligible, if any, state or local services.

I have been committed to VT for well over 50 years.  There is much that drew me here, and much that normally would keep me here, but I plan not to die here.  It is simply too expensive.  To die here is to be irresponsible to my children and grandchildren.

I hope that Rep. Miller and other likeminded legislators will form a caucus to exploit this opportunity.

– Jerry Oppenheimer lives in Bridgewater, VT.  

 

Jerry Oppenheimer

Bridgewater

{ 1 comment… read it below or add one }

Jim Bulmer February 13, 2015 at 10:38 pm

Jerry’s right on. I retired here, BUT if I knew 10 years ago what I know now, I’d be long GONE!!!

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