Cut the income tax in half
It’s a well known fact that Vermont’s population growth is stagnant. Those of us who are already here aren’t reproducing ourselves in sufficient quantities and unlike the 1960s and 1970s, when Vermont was considered a cool place to come to and live, contemporary twenty and thirty-somethings aren’t following in the footsteps of their Baby Boomer antecedents and moving here. Why that’s so is an interesting question. Getting back to the land isn’t quite the draw it used to be.
It may be a sign of the times – as in the Age of Aquarius is definitely over – but a new inducement might be a dramatic cut in the income tax rate.
Right now Vermont ranks as one of the top states in the nation in terms of per capita tax burden — eighth, to be exact, according to the Tax Foundation, a nonpartisan tax research group based in Washington, D.C. More than 10 percent of Vermonter's income goes to pay state and local taxes.
The flip side of a steeply progressive tax structure, such as we have in Vermont, is that while it pleases many to make the rich pay a disproportionate share of their wealth into the public till, easing the burden on those at the lower end, it also means the state becomes more and more dependent on fewer and fewer people. These are the very folks with the means to leave the state and re-locate somewhere else where the tax code doesn’t discriminate quite so blatantly in terms of wealth – a place like New Hampshire, for example, although Florida apparently has its charms as well.
Before everyone trips over themselves to sputter that Reagan-style supply-side economics is so last century, think about it – if Vermont were to cut its income tax in half, would more people want to move here? More to the point, would fewer people want to leave?
Ah yes, there’s that little matter of a more than $60 million deficit in the state budget this year, coupled with the prospect of a much bigger deficit in the next fiscal year. Presumably, some of that will be taken care of by Uncle Sam, but not all of it, and it would be a bad idea to wait around for the federal largesse which won’t come without some kind of string, or strings, attached.
So if we were to cut the income tax rate in half, do you think more entrepreneurial people who are high achievers and already fairly wealthy would want to move here and spend a larger chunk of their disposable income here? We wouldn’t have to attract a whole lot of people to make that happen, offsetting the initial drain on the state’s treasury and neutralizing the financial impact. Meanwhile, they’d still be buying local and pumping more money into the state sales tax ledger.
And hey, those of us who are already here, and have been living life in Vermont, making $40,000 or so — or less — a year — would also stand to benefit a little, wouldn't we?
It’s an interesting idea. Too bad it probably stands no chance of passage in this session. Or does it?