By Keith Whitcomb Jr.
Staff Writer
Some in Vermont are hoping the pandemic-induced financial crisis will lead to state leaders taking a long look at how, and on who, taxes are levied, with an eye toward making long-term changes.
The Vermont Futures Project, an initiative of the Vermont Chamber Foundation, last week released a white paper, dubbed “Vermont’s Taxing Dilemma,” which calls for three things.
One is to commission a tax incidence study.
“I’m the first one to say we have too many studies and not enough action, but a study can provide the detail needed for the confidence to make changes,” said John Burton, president of Stormseye Associates, who worked with the Vermont Futures Project on the paper.
“The bottom line about taxation is that it’s highly personal. Any individual person pays a variety of different taxes at a different rate depending on the property they own, where they live, how they work and a variety of other factors,” Burton said. “Other states have done this kind of incidence study where they pick apart an individual’s circumstances to understand what may be a little off-kilter.”
What the group’s data already shows is that Vermonters do pay more in taxes, even compared to neighboring states.
“I think it documents fairly that we are on the high-end, particularly compared to our neighbor states,” said Burton. “As a percentage of the average Vermonter’s income, we’re at about 10% per capita. If you look at New Hampshire, it’s 3.6% and even New York is only 6.8%. I think we’ve proven pretty well we pay a lot in taxes.”
The second recommendation is for Vermont to get its tax levels down to around that of its neighbors. The Futures Project cites the Lincoln Institute of Land Policy, which has noted that Vermont has a fairly unique tax system that treats certain property taxes like income taxes.
“They reference Vermont’s property tax system as one of the most complex systems in the United States and note that Vermont is one of only four states with no state-imposed limitation on property tax rates, levies or assessments,” the Futures paper states. “In 2014, Vermont had the third-highest property tax burden in the nation as measured by percentage of personal income. Property taxes accounted for more than 22% of all state and local revenue, placing Vermont sixth from the top among all states in terms of total property taxation as a percentage of state and local revenue.”
Burton said the paper doesn’t focus on any one tax, though he noted the way the state deals with education property taxes is complex and mysterious to many, especially to those crafting and voting on budgets.
The third recommendation is to think more about how to grow the tax base.
Lori Smith, executive director of the Vermont Futures Project, said ideas for growing the tax base include increasing the level of broadband service in the state, along with access to childcare. She said the COVID-19 pandemic had laid the need for these things bare.
The paper also recommends efforts be made to expand housing options and diversify business types.
“The future success of Vermont depends on prioritizing the importance of economic development while also fostering policies and attitudes that help overcome the increasing pandemic-created challenges. Growing Vermont’s future tax base, and not just the current tax rates, must be foremost in our dialog and actions,” states the report.
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