Roper: A lot of little (and some big) taxes add up

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.

Rob Roper

Rob Roper is the president of the Ethan Allen Institute.

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.

Image courtesy of Wikimedia Commons/Mike Kalasnik
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23 thoughts on “Roper: A lot of little (and some big) taxes add up

  1. Thank you for this well written, informative article. I owned a small retail shop and recently closed due to the ever increasing expenses and taxes. I love Vermont for all its beauty, but find it increasingly hard to live here. Now that I’m retired, I realize even more how this state really does not look out for it’s people, but for the(their) bottom dollar. This state is NOT local business friendly, there are very few companies here that pay affordable living wages for our children after they graduate from college. For those companies that do, they have very few openings. As for the government here or anywhere, they are either to far to the right or left. No one compromises anymore. It’s not about how we can make work together or for everyone, instead, it’s their way or the highway. Government as a whole NEEDS to change, if not completely revamp.

  2. Mr Roper thanks for your continued efforts, to bring to our attention these topics that are decided for us in the dark of night in Montpelier!!

    Fed up!

  3. Thanks for your continued efforts Mr. Roper, to bring to our attention these topics that are decided for us in the dark of night in Montpelier!!

    Fed up!

  4. Rep. Scott Campbell claims the tax is on volume, not on carbon.

    From a semantics point of view he is correct.

    It amounts to about $24/y out of MY pocket into someone else’s pocket.

    Some legislators stated, “We can always grow it”, just as happened with Efficiency Vermont surcharge, now more than 10% of my electric bill.

    The new bill takes the total gallons of the various fuels and places a tax of 2c on each gallon to raise millions of dollars for a government program that should be performed by the existing Energy Efficiency entity with an outrageous/boondoggle $70 million budget per year.

    It is a simple high school calculation to take the carbon in each gallon to get the average carbon per gallon.

    Multiply times the total gallons to get the total carbon.

    Claiming this highly regressive tax is not a carbon tax is, because it is on volume, and is used for weatherizing the rental buildings and the owned buildings of lower income folks is deceptive and far beyond rational.

    Instead of deceiving oneself and others, it is always better to call a spade a spade.

    • “Claiming this highly regressive tax is not a carbon tax is, because it is on volume, and is used for weatherizing the rental buildings and the owned buildings of lower income folks is deceptive and far beyond rational.”

      I wonder how many legislatures are slum lords?

      Scratching their own backs? Quite possibly, and on the back of the the poor with this regressive tax.

  5. Maybe it’s time for Vermont to vote Republican. Stubbornly voting Democrat as they always have is causing a decline that even the average person has got to be noticing.

    • 30% of people are receiving government aid and told if they vote Republican they’ll starve, they believe it.

      What’s the % of government employees and teachers? They have an unbelievable retirement package that is unmatched along with a salary to boot, they’ll likely not vote Republican as Republican’s would address the scam of unfunded retirement in Vermont, but we have too.

      Thinking people will suddenly vote Republican in Vermont, with our current plan isn’t going to work, they have literally brain washed everyone in school who’s under 30 to think socialism is the answer! Learned in our schools!

      The Republican ideals are true and would fix the problem without a doubt, but we need to address the people in a different way, we need to differentiate us from the rest of the Republican world…which might not be so bad anyway as it’s filled with rino’s everywhere.

      There is much work ahead of us.

  6. Then on top of it. Wallethub just did a ROI of tax dollars.

    State and Local Taxes Paid vs. Spending Received by State

    Total taxes paid per capita Rank:

    VT: 49
    NH: 2

    ROI for total tax dollars:

    NH : 1
    VT : 43

    Bottom line: Living in VT your’re taking it on the chin. And this year it;s going to get worse.

    https://wallethub.com/edu/state-taxpayer-roi-report/3283/

    The average return moving from VT to NH from 2012-2016 was north of $250,000 per year.

  7. What I find interesting is the following:

    The legislature is very concerned about taxing marijuana too much because they are afraid it will hurt sales. Think about that for a minute.

    Yet everywhere else in Vermont they are not afraid to raise taxes/fees/costs to business!! Clearly they have some understanding of business. So why is it that they are so anti every other business in Vermont?

    So clearly there is intent behind their actions, they are very coordinated, they are in lock step of each other and it’s massive. Then you see all the astro turf activity, now clearly it started before Bernie Sanders came to save Vermont, with his degree in Chicago politics (seriously schooled in Chicago for politics and socialism aka Progressive/Socialist/SJW/Communism), now we have Rights and Democracy formed in 2015, people moving to Burlington a year ago and getting elected on the progressive ticket, the list is a mile long.

    We are clearly being used as an experiment in socialism. And any country/state that adopts this type of ideology loses, they lose business, they lose children, they lose population. California, NY, Vermont, Venezuela, Cuba…..

    The UN and Agenda 21 are not the basis for Vermont governance. We need a Vermont Reformation from this socialist malaise. It’s like mud season year round or a flu that never goes away. It’s really time we say good bye, enjoy life, Love, Joy and Peace await us on the other side, socialism will only bring hopelessness, poverty and despair. Time for us to govern ourselves.

    • And so why would people in office adopt socialist tendencies? Well socialism is very, very much like crony capitalism. If you are connected or involved with the state, it’s an extremely favorable ticket. Look no further than state employees, teachers, medical, hell even gas prices in Chittenden county being controlled by two people, keeping on gas station (Costco) from competing and ruining their little gas utopia.

      See this is why we have one of the lowest ethics grades in our nation, this is why they don’t want a functioning ethics board, you’ll note the first action was to try and tear down Governor Scott, which tells you how protective they are of Vermont cronyism. It’s in the discussions about Sun Common and the wife of the CFO Kari Dolan and others pulling strings in Montpelier. Sun Common is pushing for paid family leave….which if passed will reduce the cost to Sun Common massively, coincidence? It’s also not a coincidence that Sun Common is a massive company, completely supported by Vermont tax payers and Federal Tax payers with rebates. This company would never, NEVER have gotten off the ground if not for that state and feds paying what…..50% of their entire revenue? I believe the rebates came close to that amount.

      The cronyism and socialist ties really work hand in hand, there are also crony ties on the Republican side….

      Meanwhile in 2 years Washington has investigated the “Russian Collusion” will all the secret documents and slow walked it no less. Everyone complains it took too long….Yet in Vermont…….EB-5…….all public documents, still not released 8 years later. Nobody who was watching to make sure the money was in the proper account (the state of Vermont) and not released or used for something nefarious has done ANYTHING wrong. Not even a needs improvement on their paperwork. If Montpelier has it’s way this will be swept under the rug….

  8. It’s just the saddest article I’ve read in a long time. The very simple answer is to get those Democrats out of the Statehouse!

  9. Just put a For Sale sign on the only restaurant in town due to increasing costs. Businesses are closing and will continue to unless we start voting republicans with some common sense.

  10. Taxes a penny here and a penny there, who will that hurt ??

    When you have” Liberal DemocRATs ” running the State, taxes are their fuel for there
    for funding there foolish feel-good policies, just read some of the current bills they are
    projecting …..Idiots !!

    As you can see the Vermont we grew up in is gone, people leaving and being Vermont
    is Business unfriendly, we have little to no businesses willing to stay, yes foolish policies
    that tax you to death …….

    If you want the Vermont we had, clean the statehouse of the RATs .

  11. It’s OK Rob, we’ve still got that massive inflow of folks who will be anxious to pay these taxes and fees to get that $10,000. These folks are totally detached from the real world. Seems that up in Montpelier they have the yellow brick road which will take them the the Land of Oz.

  12. The question not asked: WHY does the legislature want to discourage business owners, punish business, raise the cost of residence and motivate people to leave Vermont? Surely it must be apparent that will be the result of their proposals – and increased taxes seldom raise the optimistically predicted amounts.

  13. Outstanding article.

    We are here by a thread (that thread is the ever increasingly-underfunded state pension system)…..prob smart to take money and run while it’s still “there” (unless anyone else has any ideas or loopholes for leaving a pension 10years early)

    • The Feds will be bailing out state pensions within 5 years.They will be issuing low tax pension bonds.How do I know? It’s also lawmakers and judges pensions at risk.

  14. I’m thinking it’s time to just say bye-bye to Vermont. There are plenty of states out of the 50 where this kind of BS just isn’t even going on and never will be in my lifetime. I’m going to pick one and go there. This is rapidly becoming just not even worth it anymore.

    • See my above comment. Agreed. April vaca road trip we are scoping out a different area of the country.

    • Alex come south, we always welcome conservative yankee’s.. Everyone else can stay put 🙂

    • Consider Alabama, I winter here and know about the prosperous business atmosphere. It’s a great state. Many major business are here and more coming. In Baldwin country (biggest in the state), woods, fields, open areas. Heard that people are moving to this county every 9 minutes. Yet there are vast areas of country and a labor force. You have a sense of freedom here and there’s a lot to do and good hunting and fishing. There are no walls around VT keeping anyone there. The coldest I’ve seen it was the high 20’s then it warms quickly. No snow labor and the sun sets later (eliminating cabin fever). Can’t say enough. Joe Pattis seafood place in Pensacola is a great place to buy FRESH seafood (all types), see
      https://www.joepattis.com/Joe-pattis-photo-galleries.cfm and there the best Naval Museum and the Blue Angles Flying team.

      Many great places to expand the belly button. Near-by is McGuire’s Irish Pub. A great place politicians and sport celebs visit. On the ceiling there are about 50,000 one-dollar bills hanging in every room, all signed.
      Great Irish food and very busy. It’s behind the Civic Center, that are still having hockey games-the playoffs, $10 a seat in pigeon heaven, but you can move downward if empty seats.

      Very conservative, friendly, jobs, far better climate, low taxes, reasonable RE prices (check out Zillow, type in any town and see). I know, I spend winters in LA (Lower Alabama as they say there), near Pensacola. Go fishing instead of shoveling and shivering. You feel like living here.
      PS I don’t get paid for this info / promotion

      • Tom, I’m further east but pretty much everything you say holds true for where I am. Young vibrant folks down here, tons to do, jobs galore and I didn’t see below 23 this winter. I live down here year round though, our complete extraction from VT happened a few years ago. Just in time it looks like. I have cousins in Pensacola, we visited last spring. Wonderful place. Net in migration in my state was equivalent to nearly 10% of the VT population.

        There is a reason folks are moving down here. It’s not just retires either. We almost can’t build K-12 schools fast enough. Taxes are low and my pocket is fatter for it.

        Liberal NE folks need not apply. Keep your politics up there and enjoy them. You will be miserable down here.

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