5-7-15 – The (Tax) Beatings Will Escalate Until Morale Improves

Posted by Rob Roper

What happens when states or nations pass onerous, punitive, or confiscatory tax laws? In many cases the individuals or companies subject to those law leave for greener, fairer pastures. This, of course, infuriates the Left. It’s no fun bossing people around when they can simply walk away.

Rather than taking a long, hard look in the mirror and asking what they’ve done wrong – why they deserve to be jilted — our legislators quickly formulate fantasies of knocking their ex-partners on the head and tying them up in the basement. Hence, the House Ways & Means Committee is currently discussing a plan to hit businesses that have operations in foreign nations viewed as “tax havens” with punitive taxes here in Vermont.

Where’s the logic in this? You have employers and taxpayers who are leaving Vermont because the legislature taxes them too much and does so in a way that is not competitive with other legal alternatives, and the “solution” to this situation is to levy another complicated tax.

This seems like a sure-fire way to add fuel to the fire of Vermont’s already dismal reputation as an “unspeakably horrid” (to steal a phrase from our governor) environment in which to do business. And here’s the kicker – this is being proposed as part of the ECONOMIC DEVELOPMENT bill!! (S.138)

Rather than lashing out, perhaps our legislature should figure out more ways to lure businesses and individuals that are looking for tax havens. Vermont has adopted this approach in regard to the captive insurance industry, and the results have proven successful and lucrative for the state.

How does it work? This from the state’s marketing and outreach page for captive insurance:

In 1981, Vermont realized the potential benefits of attracting captive insurance companies and passed legislation providing the appropriate regulatory and taxation environment. The objective of the legislation was to establish a business friendly climate for companies forming captive insurance operations in Vermont. The law permitted: 

  • Creation of single parent, association and group captives
  • Reasonable capitalization requirements that may be met with a letter of credit
  • Coverage of nearly all commercial lines, including excess workers’ compensation, directors and officers liability, plus property and casualty insurance
  • No approval of rates and forms required
  • No minimum premiums required
  • No investment restrictions for pure captives
  • Favorable premium tax structure

Vermont knows how to create jobs and generate revenue. Our legislature has done it before. They just choose to not to do it anymore.

{ 1 comment… read it below or add one }

jim bulmer May 8, 2015 at 9:57 pm

Rob, Right on. These clowns would bankrupt a lomonade stand. Have any of these idiots actually run a business? If they go after companies in Vermont doing business abroad, they’ll surely thow the baby out with the bath water and wake up to find that the few companies falling into that trap will be long gone. And what’s scarier is they won’t have a clue why they left.


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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.

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