Daily Archives: January 25, 2015

The One Percenters aren’t discouraged by our tax system

Every time someone suggests raising taxes on the wealthy, there’s an immediate outcry that we can’t risk driving them out of Vermont. The most frequent crier is Governor Shumlin himself, who insists that wealthy Vermonters are already fleeing the state in droves. He’s got no evidence, and studies have shown little to no out-migration by the rich after state tax increases.

Plus, there’s the well-documented fact that top earners get the best deal of anyone under Vermont’s current tax system. And now comes Lisa McCormack of the Stowe Reporter with a story crossposted on VTDigger:

LUXURY HOUSING MARKET IS BRISK IN STOWE

Yeah, turns out that while property taxes are hurting the middle class, the wealthy are undeterred from buying top-shelf second homes. The numbers:

2014 was “the strongest year in the luxury market since 2009.” Overall sales of residential units in Stowe were up by nine percent, the “average sales price was $598,870, up 10 percent compared to 2013.” And…

The median price — the point at which half of homes sold for more, and half for less — rose 30 percent to $485,000.

The market shows no sign of slowing down, according to area Realtors.

One broker describes “a really strong and stable market… [that] is showing potential for long-term growth.”

The majority of residential sales in Stowe are to second-home buyers, “looking for investment properties.” Especially at the upper end of the market. So not only are they undeterred from buying — they believe that Vermont vacation homes will continue to rise in value. Which wouldn’t be the case if the One Percent were abandoning Vermont.

Meanwhile, the rest of Lamoille County is lagging. Residential sales were up, but the median sale price actually decreased by three percent. The wealth gap widens.

This isn’t decisive proof that there’s more room to tax the rich. But it’s further evidence against the fearmongering of Shumlin and his fellow-travelers.

Hey, maybe those ski leases are on the table after all.

I heard something very interesting on the latest edition of “Vermont This Week,” the usually bland and boring (see below) Statehouse news roundup on Vermont PBS.

One of the topics was Auditor Doug Hoffer’s report on the state’s outdated and not very lucrative public-lands leases with our biggest ski resorts. One of the guests was Tim McQuiston, editor of Vermont Business Journal. He ought to have his finger on the pulse of the Vermont business community, right?

Conventional wisdom is that the leases can’t be reopened, because resort operators would have to agree to the move, and the Powers That Be don’t seem to be inclined to push the issue. McQuiston thinks otherwise:

I would suspect, in knowing a lot of these people, that they would come back to the table under reasonable circumstances. They know their industry has changed a lot.

Interesting. And what kinds of circumstances are we talking about?

There’s a lot of environmental law they have to comply with. Act 250 is still out there. They’re very involved with other regulatory entities.

So they might be willing to negotiate better lease terms if they get their way on some regulatory matters. That’s one of those good news/bad news situations, isn’t it? Redoing the leases would bring the state more revenue, but it opens the door to some backroom weakening of environmental standards.

Postscript. I say “Vermont This Week” is bland and boring because, well, it usually is. It comes across as overly scripted, and the panel acts like they’re walking on eggshells. Maybe this is a natural consequence of our political media tending to be on the young side, and having relatively little experience in a panel setting. But I do wonder if part of the problem is how the show is planned and produced. If there was more free interchange, if they tossed out the script once in a while, it’d become appointment television for geeks like me. As it is, I rarely watch. This morning, I was channel-surfing and happened to catch the rebroadcast. I don’t go out of my way for it.

How to get those ski leases reopened

Last Tuesday, State Auditor Doug Hoffer issued a report on Vermont’s leases with ski resorts. The leases, he said, were outdated and were not bringing a fair return for the resorts’ highly profitable use of public lands.

At the time, you may recall, the state Parks and Rec Commissioner Michael Snyder basically threw up his hands and said there was nothing the state could do until the leases expire — decades from now.

Well, I’ve been reminded by someone more aware of state finances than I (which probably includes a substantial percentage of my readership) that the state does, indeed, have a hammer it could hold over the resorts’ heads.

It’s a tax exemption, granted in 2002, on ski lifts and snowmaking equipment. This exemption cost taxpayers $1.42 million in foregone revenue in fiscal year 2012.

It’s been suggested that this is basically a giveaway to a lucrative industry. Sen. Tim Ashe, chair of the the Senate Finance Committee, has called for a cleanup of Vermont’s cluttered, nonsensical “tax expenditure” system, and cited the ski equipment exemption as a clear example of the problem. As he put it, “every time they pay less, we all pay more.”

Well, hey. Why not dangle that juicy tax break in front of resort owners, and say something along the lines of “Gee, it looks like you’re getting a sweetheart deal on your leases AND a questionable tax exemption. Tell you what, we’re feeling generous; you can have one or the other, but not both.”

Makes all kinds of sense, at a time when the Governor and lawmakers are scrambling to find revenue and/or cut the budget. Problem is, the underlying reality hasn’t changed since I last wrote about this. Resort owners are politically connected (how many trips has Gov. Shumlin made with Bill Stenger?), and generous with campaign contributions. It would be difficult, if not impossible, to take either of their windfalls away.

Need proof? How about the sound of silence from the Statehouse in the aftermath of Hoffer’s report? Nobody wants to touch this one. It’s a shame. I expect better from my Democratic majority.