Democrat Candidates Pushing Unrealistic Tax Increases

June 3, 2020

by Rob Roper

Vermont is looking at a potential $430 million revenue shortfall for the FY2021 budget year. Dealing with it will require some hard choices that will hopefully lead to a leaner, more efficient, less intrusive state government in the future. Unfortunately, the first debates and public statements by Democrats running for Governor and Lieutenant Governor reflect a general desire to maintain the status quo ante COVID, relying on the old Leftist fall back: Tax the Rich!

Here are just a few of the challenges the next set of elected officials will have to tackle. Massive unemployment and the people who will need assistance, some estimates say as many as 30% of our restaruants will not survive the COVID shut down, the K-12 education system is facing a $160 million shortfall, the childcare industry has been devastated, the state college system is failing and will need an immediate infusion of $25 million just to stay afloat in the next year and likely much more after that, our hospital system has lost over $150 million, and tourism, one of our largest economic drivers, has been essentially turned off.

The notion that taxing “wealthy” Vermonters, those according to the candidates making over $250,000 a year, to cover the cost of addressing these issues is delusional for a number of practical reasons. As David Zuckerman said, “I’m one of the only candidates who’s talked about raising taxes on the wealthiest and we need to look at that for funding many of these initiatives,”

First of all, there just aren’t that many. According to the state income tax statistics for 2018, the last reported year, there are only about 13,000 tax returns reporting income over $200,000. (The state doesn’t break down the statistics at $250,000, so the number these candidates wants to tax is going to be much lower than 13,000. Just 5777 returns were for $300,000 and over). To force such a small segment of the population to shoulder this burden on its own is both unfair and unrealistic.

Second, Vermont already has one of the most progressive income tax systems in the nation at 8.95%. In other words, we already “tax the rich.” These folks ($200,000 income and up) already pay nearly half of all the income taxes paid in Vermont, $342 million, arguably already more than their “fair share.” Were these folks to cover the $430 million shortfall, it would require more than doubling their tax rates. Who’s going to sit still for this?

Third, many of the people who report this kind of high income don’t earn it every year. It is the result of a one-time event such as selling a property or selling a business. Often times, such a sale is to fund retirement. Are these candidates really going to tell someone who spent a lifetime building a small business, building its value, and are selling it to fund a well-deserved retirement that the state is going to confiscate a large chunk of that transaction? Why would anybody start and build a business in Vermont knowing that this was going to happen to them? Why would anyone invest in a home?

One certainly understands the political motivation behind this approach – tell most voters their lives will be unchanged, and the other guy will take the pain – but the policy would be devastating to Vermont. In the wake of COVID we need to attract more investment to our state, and, even before this economic downturn, need to attract more people to move here and put down roots. This would discourage both.

Vermont’s grotesque tax burden was a big reason why our state never really recovered from the Great Recession. This doubling down on a failed policy prescription will ensure an even greater failure to recover from this recession.

Rob Roper is president of the Ethan Allen Institute.

{ 4 comments… read them below or add one }

H. Brooke Paige June 3, 2020 at 8:01 pm

The Same Old Story Told Over and Over Again !

I have asked the question so many times . . . “How can the legislators, time and time again, refuse to act in the same prudent manner that every family and every business is expected to act ?”

Families and businesses must live within their means, they calculate the money they have coming in and decide how to spend (and invest) that money to care for their needs and obligations.

The Vermont Legislators, repeatedly, look at everything they spent the State’s money on in the past year and then add on as many of their dream projects as they figure they can get away with – order to “balance the books” the look for every way they can juggle and “cook the books” and then cry that they have looked everywhere for unnecessary projects and expenditures to cut and have been unable to find anything that is not essential in their opinion.

It is at this point that they exclaim that “we must ask the rich to pay more of their ‘fair share’ to get us out of our financial troubles !”

It is the “swansong” we have heard so many times we have come to view the claimed impending doom to be disingenuous at best and a down right lie at worst.

When a brave maverick in the Legislature suggests “trimming the fat” they a are excoriated as heartless and demands to produce detailed lists of exactly which of their vital and necessary programs should be subjected to the executioner’s axe.

The current state budget is more than $6B, that’s nearly $10,000 for every man, woman and child in the state – surely there is a substantial number of expenditures that could be trimmed or delayed instead of taxing folks to the point they need to flee the state, leaving the rest of us to pick-up the “slack !”

Wealthy individuals the most mobile citizens and beating them over the head, time and time again is the best way “to send them packing !” (In fact many have already moved their “tax home” to friendlier venues and merely “vacation” here – making sure to not overstay the 180 days that would obligate them to tax residency.)


Michele June 4, 2020 at 12:30 am

I hope the taxes on the seniors with fixed incomes don’t go up much. We can’t afford these taxes every year. You are driving people tight out of town.


Seth Barrows June 4, 2020 at 1:17 am

Don’t forget that a very large majority of those 13,000 returns over $200k are “married filing jointly” returns. So those married filers could be a small business owner and an electrician, a teacher and small town dentist, an active duty military member and a nurse, etc. You see my point. These are not your evil rich people. They are the backbone of our state.


Mike June 6, 2020 at 12:34 pm

Did an exercise in simple division. If I am correct, if one divides the $450,000,000 by the 13,000 filers making $200,000, you get roughly $35,000 per filer. If so, what’s a measly $35,000 to these “rich” folks????? They must understand that living in Vermont is a PRIVILEGE for which one must pay. The Democrats have been a johnny one note from day one, SPEND AND TAX, folks be damned!!!


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