Tag Archives: Blue Ribbon Tax Structure Commission

Panel Recommends Complete Overhaul of State Tax System Yada Yada Yada

Best: Durfee, meh background but great lighting, sharp business apparel. Worst: Tie between The Invisible Mattos and Breakfastin’ Jim Masland.

A major study of Vermont’s entire tax system, two years in the making, had its debut Friday morning before the House Ways & Means Committee. The panel recommended wide-ranging reforms, each of which would be a very heavy political lift. These include shifting education funding from property tax to income tax, eliminating virtually all exclusions from the state sales tax (which would mean a lowering of the tax rate), imposing an annual registration fee on electric vehicles to replace lost gas-tax revenue in the coming transition to electric transportation, and replacement of the Telephone Personal Property Tax with a comprehensive levy on all telecommunications.

The Tax Structure Commission’s report was labeled a “draft.” It wasn’t made clear how much work remains, and how many changes might be made, before a “final” report is released. (The report can be accessed through the Ways & Means website.)

Commission member Deb Brighton began with a cheery reminder of the typical fate of tax-reform panels. “Every five years or so, the Legislature decides it wants a fresh, hard look at taxation,” she noted. Left unsaid was the fact that these reports are usually consigned to a dusty shelf, because real tax reform means a whole lot of sacred cows get whacked. In light of this SIsyphean history, one can easily conclude that this report is also destined for the dustbin of history.

The most recent tax panel, the Blue Ribbon Tax Structure Commission, delivered its report in 2011. Many of the TSc’s bullet points are strikingly similar to the BRTSC’s. The earlier panel’s fate was partly a matter of realpolitik, but each commission, coincidentally, faces competition from a natural disaster. The Blue Ribbon report was issued less than eight months before Tropical Storm Irene devastated Vermont. The new report, need I say, comes in the middle of a pandemic and resultant economic devastation.

Any tax reform is a complicated, time-consuming process. When it has to compete with a natural disaster, it has almost no chance of getting through. Not that this report is doomed. Just that I’m not sanguine about its chances, even though reform is badly needed.

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Shummy just can’t help himself

From The Life of Shumlin, by Parson Weems:

“When Peter,” said she, “was about six years old, he was made the wealthy master of a hatchet! Of which, like most little boys, he was immoderately fond, and was constantly going about chopping everything that came in his way.

One day, in the garden, where he often amused himself hacking his mother’s pea-sticks, he unluckily tried the edge of his hatchet on the body of a beautiful young English cherry-tree, which he barked so terribly, that I don’t believe the tree ever got the better of it.

The next morning the old gentleman, finding out what had befallen his tree, which, by the by, was a great favourite, came into the house; and with much warmth asked for the mischievous author, declaring at the same time, that he would not have taken five guineas for his tree. Nobody could tell him anything about it. Presently George and his hatchet made their appearance.

“Peter,” said his father, “do you know who killed that beautiful little cherry tree yonder in the garden? ”

This was a tough question; and Peter staggered under it for a moment; but quickly recovered himself: and looking at his father, with the sweet face of youth brightened with the inexpressible charm of all-conquering truth, he bravely cried out, “I can’t tell a lie, Pa; you know I can’t tell a lie. A huge gust of wind sprang up out of nowhere and blew down your precious cherry tree.”

One of Governor Shumlin’s least endearing traits is his inability to avoid an expedient falsehood, even if it’s transparently obvious to eveyrone in the room. Well, once again he couldn’t help himself yesterday when touting a change in the estate tax that will give a bit of relief to rich folks and business owners.

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Triangulatin’ Tim

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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The budget mess, again

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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Kill the Task Force

Vermont politicians are addicted to studies. At the drop of a hat, or a tough issue at least, they’ll seek the shelter of the nearest consultant or think tank, or assemble their own commission, committee, task force, or (the Nuclear Option of Political Procrastination) Blue Ribbon Panel.

All of ’em, I say, should be dubbed “Hogans” in honor of Vermont’s Greatest Living Centrist, Con Hogan, who could always be counted on to provide a nice bipartisan sheen to any study effort.

The appointed experts scurry away to do their work, and then return with the fruits of their labors.

Which are immediately shoved in a desk drawer, never to be seen again.

Can you think of a single time when a Hogan actually moved the needle on an issue? In rare cases, a Hogan confirms conventional wisdom and prudent politics; then it can get a little traction. This may turn out to be the case with the RAND study on legalizing marijuana: it promises a rich revenue stream that may prove irresistible to lawmakers.

But if a Hogan’s conclusions are inconvenient or flout conventional wisdom, fugeddaboudit.

The most recent case in point: There were not one, not two, but three separate studies of the Department for Children and Families last year. All three came to very similar conclusions: In order to beef up child protection, DCF needs “better training, more social workers, more transparency and a stronger focus on opiate addiction’s impact on family dynamics.”

The legislature, not content with three studies, appointed its own special committee. Its highest-profile proposals: hang the threat of felony conviction and prison time over the heads of social workers.

That muffled “thud” you hear? Those three studies landing in the nearest recycle bin.

There are many examples; here’s a classic. One of the highest-profile Hogans of recent years was the Blue Ribbon Tax Structure Commission, whose recommendations would have created a fairer tax system, mainly by changing the rules on taxable income in a way that would have raised the effective tax rate for top earners. Who, I remind you, pay far less than their fair share.

But its findings would have ruffled innumerable feathers. So, as VTDigger’s Anne Galloway reported in early 2011:

…state leaders have relegated the Commission’s report to the back burner. The commission’s 18 months of research, efforts to gather a full range of testimony and public debates on policy options didn’t warrant a footnote in the governor’s budget address.

That would be newly-elected Governor Peter Shumlin, who placed a higher priority on not raising [certain] taxes than on creating a fairer system.

Not that I place all the blame on him; it seemed like everyone in the legislature treated the Commission’s report like a snake in the underwear drawer.

Oh well, it wasn’t their 18 months of hard work being flushed down the drain.

Sadly, this outcome is the rule, not the exception. Most of the time, a Hogan is nothing more than a way to kick the can down the road while looking sober and responsible: “We need more information before we can decide this contentious issue.”

Trouble is, the more contentious the issue, the less likely it is that a Hogan Report will actually change anyone’s mind. People like their preconceived notions, and are loath to abandon them just because of some ivory tower “evidence.”

But perhaps my thoughts are themselves too contentious to address head-on. Perhaps what we need is a Hogan Commission — a Blue Ribbon Task Force on Blue Ribbon Task Forces, to determine the efficacy of Hogans once and for all. Only then can we make an informed decision on whether to abandon or constrain the creation of future Hogans.