VT: Most Tax-Burdened State or Just Top-10?

By David Flemming

The Tax Foundation came out with a fascinating study comparing how the 50 states ranked in regards to tax burden. I would have guessed Vermont would come in the top 10, after all that is “what we have become.” We did even worse than making the top 10 however. We ranked highest in the country for “state tax collection per capita in 2017.” That’s right, on a per capita basis, we each paid $5,015 to our Vermont government in 2017, more than any other state!

Now some skeptics might say, “but doesn’t Vermont’s state government pick up the tab for public schooling more than most other states, which fund public schools through local taxes?” And yes, there may be some truth to that. While you would need to compare 2016 to 2017, Vermont falls all the way to 10th (how great!) most burdened if you factor in state and local taxes. We only paid $5,904 taxes per capita in 2016.

Places like New York collected fewer taxes per capita at the state level: $1001 less than Vermont in 2017. They also collected more than $3000 per capita in taxes in 2016 than Vermont did, considering state and local taxes. I’m sure that is in large part due to New York City’s local taxes. But Vermont doesn’t have its own vast economic behemoth- Burlington is less than a hundredth the size of New York City.

Vermont really can’t do much worse on its tax burden ranking- in terms of changes to our relative tax burdens, we have nowhere to go but up. In terms of absolute tax burden however: we could indeed end up spending even more to cover our pension liabilities and renovated education system. As Rob mentioned last week, a taxpayer bill of rights could help restrain tax increase a good deal. We must also discipline ourselves to spend less on non-essential government services.

David Flemming is a policy analyst at the Ethan Allen Instiute

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