Category Archives: Taxation

Triangulatin’ Tim

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Congratulations to Tim Ashe, chair of the Senate Finance Committee, for shepherding this year’s tax bill to the Senate floor. He managed to find some new money for the budget while keeping true to the intention he stated earlier this week:

“In terms of the major tax areas, my goal is not to have the Senate need to go to those sources,” Ashe said.

The final package emerging from Senate Finance and Appropriations:

The lion’s share of the Senate’s revenue package is generated by the miscellaneous fee bill. The Senate version removes an increase in the employer assessment for uninsured workers, as well as a hike in bank taxes.

The latter two were passed by the House.

My congratulations are tempered with confusion, however. Ashe’s goal would be sensible and reasonable if he were a centrist Democrat in the mold of John Campbell or Dick Mazza, not a Progressive who now lists himself as a D slash P.

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Budget Kabuki

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The Vermont House passed a budget this week. Pretty quick and pretty painless, considering the state’s fiscal situation. Lawmakers found money in a lot of places that won’t directly impact working Vermonters’ take-home pay.

Much of the new revenue comes from raising fees on registration of mutual funds. That’s a minuscule line item in funds’ expenses, so the actual effect on The People will be negligible at most. Ditto with an increase in registration fees for large banks. In general, the House found ways to prop up necessary state programs with some fairly reasonable tax and fee hikes. Mostly fees.

Republicans, of course didn’t see it that way. There were the usual, utterly predictable cries of outrage that are repeated every time a tax or fee is increased — even when a fee hike simply reflects the impact of inflation. (Fees are fixed; if you don’t raise ’em occasionally, you’re narrowing your revenue stream.) It doesn’t help Republicans’ credibility when every single revenue enhancement, no matter how small, is a punishing blow to struggling Vermonters and a mortal threat to the economy.

This time, there were loud laments over being shut out of the process. Which, first of all, c’mon. When the Republicans ruled this roost for over a century, how much credence did they give to Democratic ideas? When state lawmakers in Kansas or Oklahoma or Michigan or any other state with a Republican majority sets policy, do you think they allow Democrats to have a fair say?

Of course not. Shoe’s on the other foot, guys. Suck it up.

House Minority Leader (and Chief Budget Scold) Don Turner presented an additional argument this time.

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The budget mess, again

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One of the annual features of the Shumlin Era is the battle to close a budget gap*. There are reasons for this: the rising costs of (1) operating a government (mostly health care), (2) operating public schools (mostly health care), and providing social services (mostly health care).

*To be fair, it was also a feature of the Douglas Era, but the dynamic was different: Republican governor versus Democratic legislature. 

And then there’s the revenue side. Vermont is suffering from a creaky tax system that doesn’t reflect current economic realities, and is bringing in less and less money over time.

The Legislature is now in the throes of dealing with Budget Gap 2016, which has many of the features of past editions. Cries of doom, unexpected revenue upgrades, patently unworkable/unpopular money-raising ideas from Shumlin’s crack policy staff, and lawmakers trying to find alternatives. This year, we also have a significant difference between administration and Legislature over the size of the budget gap; per VTDigger, House budget writers say the administration omitted more than $9 million in basic government operations from its proposed budget…

…including a pay increase for state workers (estimated at $2 million to $6 million, depending on the results of a fact finder’s report and ongoing contract negotiations), pay increases for child care and direct care workers ($1 million each), and funding for the Low Income Home Energy Assistance Program ($4 million).

Shumlin’s modest proposals for new spending have already been killed by the House Appropriations Committee, whose first priority is closing the gap between current obligations and state revenue.

It’s a depressing Rite of Mud Season that has drained the energy of the Democratic caucus, party, and electorate.

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Our favorite Taxation Imp strikes again

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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.

ITEP chart

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.

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The unintended consequences of law

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Conceptual rendering of the Act 46 debate. Dave Sharpe's in there somewhere.

Conceptual rendering of the Act 46 debate. Dave Sharpe’s in there somewhere.

This Act 46 thing is turning into a giant-sized tangle of no-win, isn’t it?

The House and Senate are at odds, with the Senate voting to repeal limits on school budgets and the House considering a range of tweaks. The Senate is also throwing the House under the bus, disavowing any responsibility for the spending limits. The Governor is hounding the Legislature to repeal without thinking about it too much. On top of all that, we discover that the Agency of Education misinterpreted a key passage of Act 46 in a way that changes the actual limits for many a district.

Meanwhile, the Republicans can just sit in the balcony, laughing and throwing Jujubes. As VTDigger’s Anne Galloway notes, unless the House gets buffaloed into changing course, the Republicans will get exactly what they want: the limits will remain in place and the Democrats will look like disorganized idiots who don’t care about rising property taxes. And if the limits are repealed, the Republicans will get something just about as juicy: the Democrats repealing a measure designed to provide some tax relief, and looking like idiots in the process.

Meanwhile, school districts are closing in on Town Meeting time with no idea how to plan their budgets.

Yeah, nice. This lame-duck session is off to a rip-roaring start.

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Tom Pelham is mad as hell. And just as wrong

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Now that Bruce Lisman has cut ties with his vanity platform, Campaign for Vermont, the organization is foundering financially and, worse, is stuck with budget scold Tom Pelham as its chief public voice.

Pelham has spent the last five years writing opinion piece after opinion piece slamming the Shumlin administration over taxation and budgets. Now, his temperature appears to be rising — to the point that he might want to check his blood pressure. Reading his latest commentary, I can practically see steam shooting out his ears.

His point, as ever, is that the Shumlin administration is bankrupting the state, wrecking the economy, and imperiling our futures by overtaxing and overspending. And in the process, he repeats a fundamental misperception about money that’s commonly held by budget hawks everywhere.

See if you can spot it:

Excluding federal funds, the state budget passed by the Legislature and signed by the governor in 2011 required $2.954 billion in revenues extracted from the Vermont economy through taxes, fees, fines, assessments, settlements, etc., and deposited into various state funds.

The key word there is “extracted,” which he repeats three times. Pelham appears to believe that all government revenue is collected, thrown onto the burn pile, and set ablaze. Which is so completely wrong it’d be funny if so many serious, influential people didn’t share that belief.

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Phil Scott, miracle worker

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Phil Scott’s proto-campaign for governor has, so far, been a matter of personality: Phil Scott is the nice-guy leader that Vermonters have been looking for. On the issues, nothing but vague hints and bromides.

Well, he gives it another go in an essay posted on VTDigger.

Sadly, it’s kind of an incoherent mess. He calls for a moratorium on all tax and fee increases, a tight rein on state spending, and expansion of several state programs.

And he claims he can do that “without cutting off services to Vermont’s most vulnerable populations or weakening environmental protections.”

Oh, yeah?

Whatcha got in that basket, Phil? Five loaves and two fishes?

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Woolf’s Duplicitous Delicatessen

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Our Motto: “Where There’s Always a Thumb on the Scale”

It’s been a while since I chronicled the dishonest commentary of Art Woolf, a.k.a. Vermont’s Loudest Economist. Every Thursday, he blesses us with a few hundred words of pro-business bumpf salted with carefully chosen figures designed to conceal the flaws in his reasoning.

Heck, I could easily write a riposte every week, but that gets old after a while.

However, the two most recent entries in the Woolf oeuvre merit scrutiny, because they touch on significant public policy debates: taxes and health care reform.

His November 5 missive revisits one of his favorite themes: Vermont’s taxes are too damn high. Well, he doesn’t say so exactly; but he presents an array of misleading statistics to bolster that popular conservative argument.

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The Chamber’s selective complaint

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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.

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Tales of perfidy from the business pages

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Hey, working folks, hope you enjoyed Labor Day. Yep, you got your one day; the other 364 belong to the employers.

We’ve got two examples of capitalism at work in Vermont: another shifty move from the formerly conscience-ridden Keurig Green Mountain, and a T-shirt factory meets its inevitable demise.

First up, from the Reuters news service:

When Keurig Green Mountain Inc said last December it was shifting its coffee buying operation to Lausanne in Switzerland from its headquarters in Waterbury, Vermont, it said the move would establish the company as a “global beverage player.”

The seller of brewing machines and single-serve coffee pods said nothing about a little-known exemption in the U.S. tax code…

Ah yes, the tax code: refuge of capitalist scoundrels.

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