As is customary on Thursdays, yesterday’s edition of the Burlington Free Press* once again was graced by the comedy stylings of Art Woolf, Vermont’s Loudest Economist. This time, Art was letting us know just how difficult it is to be rich.
*Newsstand price now a DOLLAR-FIFTY!!! for a few pages of wire copy and recycled USA TODAY “content.” I’d like to see Professor Woolf’s cost/benefit analysis of that little bargain.
No, seriously. The One Percent have it rough. Here’s how it starts.
Rich get richer, pay more taxes
In 2014, the state collected $650 million in income taxes from Vermonters. High income Vermonters continue to pay a very large share of that.
Well yeah, because they make most of the money.
He goes on to break down tax collections by income bracket in a way that emphasizes just how much we peasants are benefiting from the forced largesse of Our Betters. Which, if you consider state income tax in isolation, is true; the more money you make, the more taxes you pay.
But when you consider the entire burden of state and local taxes, you flip the script. Here’s a handy chart from the Institute on Taxation and Economic Policy (ITEP), showing Vermont’s total tax burden.
That’s right. In Vermont, the rich get off easy and the middle class takes it in the shorts.
See, our income tax is reasonably progressive, but our other primary taxes are not. Sales taxes are strongly regressive, hitting the poorest people hardest. Property taxes slam the middle classes. Add ‘em all up, and that chart is what you get.
There’s the fundamental problem with Woolf’s entire essay; he’s comparing apples to fruit salad. But let’s return to his flawed logic, because believe it or not It Gets Better. By which I mean, Worse.
Before you start grumbling about millionaires, or complain about inequality, or think about the Vermont one percenters, or consider raising taxes on… millionaires, you might want to think more carefully about who the rich are, why they are rich, and their role in Vermont’s economy. After that brief bit of soul-searching, you can march to the barricades, or to the polling booths, or maybe just to your bookshelf to grab your copy of “The Great Gatsby.” Or perhaps that copy of Karl Marx that’s been gathering dust since your college days.
Oh, that’s nice. Gratuitous insults. I wonder how often his former students crack open the volumes of Conventional Wisdom that inhabit his syllabi.
He then tells us that the rich aren’t really rich.
Rich people are rich usually because of a one-off event. They sell a business they’ve worked their entire lives to build (or if they’re lucky, a decade or two). Or they sell shares of stock that have appreciated, meaning their investments have helped build businesses financially — maybe even in Vermont.
“Usually”? I’d love to see a breakdown of that. But Woolf doesn’t offer any, y’know, evidence.
But let’s go along with the notion that the One Percent are a transitory bunch, One-Hit Wonders who cashed in on their hard work or hit the Lotto. Even if true, is it a reason they shouldn’t be taxed according to their income? If we raised our top tax rate — or better still, imposed limits on total tax deductions — would we reduce those one-time millionaires to penury?
Woolf closes with a creative argument against taxing the rich. Because, so he says, wealth is such an evanescent thing, we would weaken our fiscal stability by relying overmuch on top-rate taxes. See, when a recession hits, the number of rich people goes down, and so do our tax collections.
Yeah, and I’ll bet the incomes of the working poor and middle class take a hit as well. And they still have to pay their sales and property taxes, even if their earning power decreases.
Woolf’s punching a straw man anyway. I don’t think there’s anyone who proposes soaking the rich as the sole answer to our fiscal problems. But can it be part of the solution? Sure. Should the rich be paying more of our total tax burden. Absolutely.
There’s one item curiously absent from Woolf’s flaccid recitation: the old canard about “if we raise taxes, the rich will flee Vermont.” That’s the usual argument against raising taxes on high earners, despite the fact that it’s never been proven — and, indeed, the evidence suggests it doesn’t happen. I’m intrigued that Woolf doesn’t mention this, not even in passing. Maybe he finally looked at the facts and decided he should stop peddling that particular brand of bullshit.
If so, then there’s hope that this old dog of an economist might yet learn some new tricks.