Keelan: My apple pie purchase will now be taxed

By Don Keelan

In early February, the Vermont Tax Structure Commission delivered its final report to the Vermont Legislature. The 184-page report was authored by Deb Brighton, a land use and forestry expert; Stephen Trenholm, a CPA and high-net-worth tax advisor; and Bram Kleppner, a CEO and strong zero fossil fuel advocate. In late 2018, they were appointed by the Legislature and the Scott administration to “develop long-term recommendations to help make the State’s overall revenue system more fair, more sustainable and simpler.”

Don Keelan

As far as long-term recommendations, the commission was not kidding. Some parts of the report, dealing with climate issues, extend to the year 2070. Now, that is a long way off.

The report discussed income taxes, estate taxation, property taxes, and sales taxes. For now, I will only cover the report’s recommendations on sales taxes.

A good part of the report pertains to macroeconomic issues as well as social issues. The authors note that the Vermont economic landscape will change dramatically and that the present tax structure is inadequate in raising sufficient revenue.

According to the report, the Covid-19 pandemic will be overcome but not its economic fallout. It is forecasted that there will be a devaluation of commercial real estate due to many closing businesses, curtailed retail shopping, and employee remote working. Not to mention, Vermont’s ultimate conversion to electric vehicles (a topic from my previous articles) that will have a significant impact on the State’s revenue source from taxation of gasoline and diesel fuels.

The report authors looked to mitigate the loss by recommending a vast broadening of the sales tax base (an idea suggested in the Blue Ribbon Tax Commission in 2007) to include close to another possible 150 consumer spending areas.

Not everyone spends money for veterinarian services, legal and accounting services, or even for hiring a plumber or electrician. Still, those who do could be looking at paying a sales tax on such services if the Legislature adopts the Commission’s recommendations.

The Commission contends that broadening the tax base could reduce the sales tax rate from its present amount of 6% to 3.6%. As a long-time student of taxes, I don’t believe the rate of 3.6% will be around long before it is raised to 4% and higher in the not-too-distant future.

I took the liberty of seeing what impact the change in the sales tax base would have on my household. It was no surprise; there would be a $450 net annual increase if the base were to include haircuts, home heating fuel, lawn and snow services, plumbing and electrical repairs, and even my favorite apple pie. I don’t have a dog anymore, so no vet services.

The state of Vermont needs to have a tax system that is fair, equitable and simple. The state requires revenue, and the Commission’s report addresses this. What is not dealt with is how the state works the issue’s other side — spending. Where is the report among the plateau of this year’s published reports that explains how the state can reduce spending?

A classic example that is discussed but lacks action is education. How is it possible that we are approaching $2 billion to educate a PreK-to-12th-grade school population that has decreased by over 30% in the past 10 to 15 years (another 2,600 student decrease this year alone) when the cost was about one half of what it is presently?

Another area of out-of-control spending (and the state doesn’t even know how much is being spent) is the non-state entities that conduct business that the state would customarily do. A good example is Efficiency Vermont. The 350 employee plus nonprofit collects over $90 million from electric users. According to its most recent tax filing, it has an executive team of a dozen or more people, each earning more than $150,000 per year.

Yes, it is time to take a comprehensive look at our State’s revenue-generating sources, but let’s not ignore the other side — spending.

Don Keelan writes a bi-weekly column and lives in Arlington, Vermont.

Image courtesy of Public domain

8 thoughts on “Keelan: My apple pie purchase will now be taxed

  1. And nothing will change. The taxes will pass. What is wrong with the people in this state? Too much apathy? An older voter base who really doesn’t care cause they won’t be around long enough to see the impact? I cannot figure this out how people keep voting for representatives who keep this 5hit going on and killing themselves in the process. . .

  2. This last election….

    Let’s bribe all the students, with loan forgiveness!
    Let’s bribe all the state and teachers retirement with money for covid—going to them!
    Let’s bribe all the blue states with covid money.
    Let’s bribe all our pet politicians with pork barrel spending in a 1.9 Trillion dollar bill that only has 10% funding for covid related problems.

    In our local town it was amazing the number of intelligent people who fell for free grant money.

    We built a pocket park, which is cute, in a flood way (the major current of a flood) consisting of some plantings a couple of park benches and stone work. The engineering and permitting cost $45,000. NOT JOKING….for what was initially a $200k expenditure.

    When I called out the insanity, that perhaps it’s totally insane to spend $45k on engineering for a couple of park benches, flowers and some stone work…guess what happened?

    On Monday morning my account was permanently removed. Just stating the facts….when reporters or people point out the lunacy going on, it will get you canceled. When you ask too many questions to the Governor… get cancelled. They are terrified, TERRIFIED of the truth.

    The epic wasteful spending in our state is monumental. They do not under any circumstances want anyone, anyone challenging their cozy little cabal and crony-capitalism. People are getting stinkin’ rich off keeping Vermonters poor and oppressed.

  3. It seems that Vermont’s legislature has finally run out of options to “stealth tax” citizens. From Efficiency Vermont, Bottle deposit unclaimed monies to hidden taxes on real estate- and now new taxes on energy- Vermont may be the at the pinnacle of “stealth taxes” Now comes a panel of three, not really representative of the majority of Vermont taxpayers- to tell us all how to fix our spending problem. I have no doubt that the ideas of these three will become law in the next decade, as Vermont government continues to feed itself at the expense of the taxpayer.
    The Vermont legislature has proven to us in the last 30 years:
    Spending cuts are non-negotiable.
    No matter how much tax revenue is raised, it’s not enough.
    We (the taxpayer) are not paying our fair share.
    We (the governed) are not capable of managing our own affairs- and require decrees from the legislature, with new funds to pay for it.
    As the demographics of Vermont continue to change- probably now at a quicker pace- Vermont will indeed become the socialist reality that so many politicians seek. Unfortunately for us common folk, reality isn’t going to be anything like what’s been promised. And there may not be much money left over for Apple pie.

  4. The law of unintended consequences: Cash, Barter, Trade & Swap…. Underground, black market economies always thrive under totalitarian governments. And for those living next to the CT River, go east young consumer, go east. Let the Burlington – Montpelier beltway folks pay all the taxes they can muster.

  5. You know communism doesn’t come cheap.

    1st you have to give away a whole bunch of free money to people to convince them your plan is really good!

    2nd then you find out you still don’t have enough lazy stupid people to get them to vote for communism, so you need to give away even more money! Grant money for EVERYONE…it’s free!

    3rd you still don’t have enough money to give away, to convince people of your really stupid idea of communism…so you have to tax the pies, the hair cuts, the air, your house (cause it’s not green enough) so that you can give away even MORE money….Grant money, seed money so you can convince company owners that your stupid idea of communism is a good one.

    Our government officials a complete puppets of the NWO, the united nations….all of which would love our country to become part of their little communist love fest. Did anyone notice that China and Russia and Cuba and Venezuela, don’t want freedom.

    See in those countries, the rich have way more money in than the poor. They have the poor’s money! So true in Montpelier…..THEY HAVE ALL OUR MONEY….

    Well except for that piece of apple pie, yes Don, they’ll tax your apple pie too!

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