Apr
11
2024

On the LFOD Beat…

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The Google News Alert rang for a column by one Chuck Collins in an online "newspaper", the Brattleboro (VT) Reformer. Collins attempts to explain: Why some high-income Vermonters say 'raise my taxes'. Lets see how he does!

As the Vermont State Legislature debates how to pay for housing solutions – and Governor Scott laments "there just isn't any money" – a group of 35 high-income Vermonters have suggested a path forward: raise their taxes.

In a public letter to Vermont state legislators (https://fairsharevt.org/wealthy-letter), they write, "as Vermonters who have economically prospered in our state, we believe in contributing our fair share to build a state that works for all people who live here." They support a tax proposal that will increase taxes on the highest-income Vermonters, which would raise $74 million each year. On Friday, March 29, the proposal was passed by the Vermont House with this revenue being directed to address Vermont's housing crisis.

I hear you asking: did Ben and Jerry sign the letter? Reader, of course they did. Ben is the first signer, Jerry is a bit further down in position six.

Collins is billed as the "co-editor" of an eat-the-rich site, Inequality.org. He's a fan. The letter is hosted at a site called (wince) "Fair Share for Vermont". They also (quelle surprise) support a tax on unrealized capital gains.

And, as usual with these folks, "Fair Share" just means "More". With a subtext of "Never Enough".

Where does LFOD come in? Ah, here it is:

You will hear the fear that higher taxes may drive affluent Vermonters away. But this notion of the fleeing millionaire is a myth. Like all Vermonters, our wealthy neighbors appreciate the quality of life and public investments in the state. And frankly, if someone's decision about where to live were dictated by income taxes, they probably would have moved to the "live free or die" state a long time ago.

You can almost hear what Collins was muttering when he typed that last bit: "and I say good riddance to them!"

Some random observations:

  • By any measure, Vermonters are currently heavily taxed. The Tax Foundation has a one-stop state tax data resource. Vermont has the fourth-highest state tax collections per capita, behind only California, Hawaii, and North Dakota. (In comparison, New Hampshire's in position #50, aka last place.)

  • Vermont's top marginal income tax rate is 8.75%, and it kicks in at $229,550. They also hit their unlucky citizenry up for a 6% sales tax (7% in some locations, on some items). They also have a 16% inheritance tax—one of the highest rates—which kicks in at $5,000,000. Their "Property Taxes Paid as a Percentage of Owner-Occupied Housing Value" is the fifth-highest at 1.56%. (Only slightly less than New Hampshire's 1.61%)

  • Overall, the Tax Foundation calculates Vermont's state and local tax burden to be 13.6%. The only states with higher burdens: New York, Connecticut, and Hawaii.

  • I know, math is hard, but: Collins claims the income tax surcharge will raise $74 million/year. The Vermont governor's budget proposal for FY2025 is $8.6 billion, with no proposals for increased taxes or fees.

    Dividing the first number by the second gives 0.86%. I.e., it's a smidgen of what the state currently spends.

    Reader, if Vermont can't solve the "housing crisis" with $8.6 billion, do you think they're going to do it with $8.674 billion?

  • For a contrary take, see the Tax Foundation's article, Vermont Lawmakers Consider Harmful Taxes on the Wealthy.

My answer to the headline, "Why some high-income Vermonters say 'raise my taxes'": because they are deluded fools.

All in all, despite Collins' assurances, I assume treating high-income and high-worth people as easy targets for legal plunder will cause some of them to wise up and move out. Some will hop the Connecticut River into New Hampshire. I welcome them with open arms and a free copy of the Who's "Won't Get Fooled Again", which they will be required to listen to daily.