My neighbor Betsy Bishop, head of the Vermont Chamber of Commerce, is pushing something she calls an “impact list” of all the burdens placed on Vermont businesses in recent years — “as well as those that could be considered in 2016,” which is a big fat asterisk in itself. Given the state’s budget situation, a whole lot of potential revenue enhancers “could be considered.” Almost all of them will never get off the floor. (The carbon tax, already sidelined, is on her list.) Many are mutually exclusive. But all of ‘em, real or imaginary, make the “impact list.”
And, as VTDigger political analyst Jon Margolis points out, more than a third of the Chamber’s list of tax hits from the 2015 session were actually tax increases on affluent Vermonters, not on businesses.
Generally, the Vermont Chamber is a reasonable actor in Vermont politics. It hasn’t followed the rabid conservative path of the national Chamber. But this is a major step into partisanship for the Vermont Chamber.
And as you might suspect, the Chamber’s “impact list” tells only one side of the story. Margolis helpfully recounts many of the ways that public expenditures and tax breaks directly benefit businesses. It’s quite a list. But it’s arguably the tip of the iceberg.
You can make a strong case that most government expenditures benefit business. Infrastructure spending? You can’t do business without it. Education? You need educated workers, and there’s a big emphasis these days on STEM and workforce-oriented two-year programs. Law enforcement? One of its primary missions is protection of property rights.
Welfare and Medicaid? Many businesses fail to pay living wages or offer decent benefits. Those social costs are being offloaded onto the government. Why do you think our Medicaid spending threatens to bust the budget? Because there are a whole lot of working Vermonters who can’t get decent insurance through their jobs, and live perpetually on the financial edge.
Business benefits tremendously from a stable, orderly society. Without government, it wouldn’t enjoy the stability and order that protect its profits and property. As Margolis puts it:
Could we drop all the rhetoric about how businesses only want the government to leave them alone?
Nobody wants the government to leave them alone. Everybody wants governments at all levels to do a great deal for them and theirs. They object only when the government spends money on somebody else.
Indeed, Bishop acknowledges that the state’s in a real bind:
Bishop took time to praise the budget-cutting work that she witnessed during the past session. “It’s really tough to do,” she said. “There’s nothing in our state budget that’s easy to cut. There’s not fat there. There’s real need there.”
That’s nice. But there’s a fundamental disconnect in her message. While acknowledging the “real need” for state services, she complains about our “structural deficit problem” and resists any more taxes on business OR the affluent. That would seem to leave us with precious little opportunity to solve the problem.
But really, I don’t mind if she wants to oppose new burdens on business — but only if she’s willing to face up to the real causes of our “structural deficit.”
Many of our revenue sources have been in decline: sales taxes and taxable business revenues are hit by Internet retail. Property tax revenue took a gigantic hit because of the 2008 Wall Street meltdown. The gas tax fails to support transportation costs because it’s a per-gallon tax instead of per-dollar. The stagnation in working Vermonters’ income puts a double hit on state revenues: lower incomes and less spending mean lower income and sales tax revenue. We’re an increasingly service-oriented society but our sales tax applies only to products.
Meanwhile, stagnant wages place higher burdens on the public sector. More Vermonters on Medicaid. More qualifying for the Earned Income Tax Credit. Hundreds of thousands living paycheck to paycheck, their independence imperiled by any setback.
According to Bishop, the current tax system is too burdensome on business — but it’s also inadequate to meet the “real need there.” Which means it’s time for a fundamental reworking of our taxation system.
For that to happen, all parties would have to drop their parochial self-interest and come to the table with an honest willingness to fashion a new system that’s fairer to all and allows us to meet our social obligations.
You know, I actually got through that paragraph without bursting into laughter. Yeah, when pigs fly.