By Rob Roper
Let’s say you run a small, struggling business in Vermont and, like many if not most, are operating on thin profit margins.
If our Legislature has its way, after this year you will have to pay your employees a higher minimum wage on the way to $15 an hour, devote time to the paperwork required by a new 0.57 percent payroll tax, and deal with the labor complications associated with a mandatory Paid Family Leave program. There will be a doubling of your fuel tax, making it more expensive to heat your shop, prepare food, etc. You will also have to eliminate the use of convenient “single use” plastic bags and start charging your customers at least ten cents for each leaky paper bag instead. No Styrofoam coffee cups or food containers can go into those leaky paper bags, or you’ll face state imposed fines, and heaven forbid you offer a customer a plastic straw.
This, of course, doesn’t take into account any increased fees that may apply, which are going up this year as well. Good luck staying in business.
And, by the way, if you say “enough of this” and sell your business with plans to retire on the proceeds, the Legislature is poised to reduce the percentage exclusion for the Capital Gains Exclusion from 40 percent to 30 percent and limit the percentage exclusion to up to $450,000 in capital gains, so the state will keep more in taxes (and out of your wallet) from the sale of your business. Isn’t that nice?
How does any of this signal Vermont is “open for business” or a good place to set up shop?
What if you’re a working family? During the debate on the House floor over how much to raise the tax on heating fuel (50 percent, 100 percent or 200 percent; not raising it was never a consideration for the majority because they have to save the planet), one legislator snarkily quipped about the regressive penalty, “$15 a year,” the estimated amount the average household would pay in increase, “isn’t going to break anybody.” But add to that the $70 or so dollars that will come out of your paycheck for the Paid Family Leave payroll tax, a 25 percent increase in the “universal service charge” tax on your phone bill, increased costs for goods and services due to the higher minimum wage, and the extra $30 to $50 a year you’ll have to pay for non-plastic shopping bags, and pretty soon you’re talking about real money.
If you have kids in child care, one Lamoille County provider estimated the increased cost per child brought on by the $15 minimum wage alone would amount to $40 per week — and, yes, that could break somebody.
Again, how does any of this signal Vermont is a good place to settle down, work hard, and invest in your own future?
On a macro-scale, our Legislature is asking our little state of 620,000 souls to shoulder an additional $75 million from a new payroll tax to fund a new entitlement program likely to explode with future cost growth, $4.5 million in heating fuel tax increases, and over $70 million in increased education spending for a system with fewer kids in it every year. We’re looking at $8 million in increased fees, and the $15 minimum wage will cause an estimated $60 million in new Medicare and Medicaid costs. Where’s that money going to come from?
And, they’re not done yet. The Legislature is still looking for tens of millions of dollars ($50 million per year?) to fund lake and waterway clean up, our chronically underfunded and mismanaged state pension fund crisis is creating an annual $120 million (and growing exponentially) black hole in the budget that will have to be filled at some point. The debate continues over whether or not to fine citizens as much as $675 for not having health insurance they can’t afford in the first place.
All on top of what is already considered to be one of the highest tax burdens in the nation.
This is not sustainable or responsible governance. Maybe it’s time for our elected officials to consider that this approach to policy is why we have a stagnant population, anemic economic growth and trouble convincing young working people to come or stay here. Maybe, if you really want to help people instead of continuously causing harm, it’s time to take a cue from Sienfeld’s George Costanza and start doing the opposite of whatever your policy instincts are telling you to do. Because this stuff isn’t working.
Rob Roper is president of the Ethan Allen Institute.