Roper: Vermont accidentally demonstrates ‘trickle down’ works

By Rob Roper

Seven Days recently ran an article asking, “Has Phil Scott Made Vermont More Affordable.” The story cites the Institute on Taxation and Economic Policy which notes that Vermont has “one of the most progressive, or equitable, tax systems in the country.”

“In 2018, the institute found, the poorest 20 percent of Vermonters spent 8.7 percent of their income on state local taxes; in New Hampshire, the same group paid 9.1 percent. The wealthiest 1 percent of Vermonters, meanwhile, devoted 10.4 percent of their income to state and local taxes, while their counterparts in New Hampshire were on the hook for just 3 percent.”

However, “At the same time, according to the U.S. Bureau of Labor Statistics, wages in [Vermont] were nearly 17 percent lower than the national average.” New Hampshire’s wages, to keep the comparison, were just 0.8 percent lower than the national average and its rate of GDP growth was nearly twice that of Vermont at 2.2 percent vs. 1.2 percent respectively.

(Also of note: though not mentioned by Seven Days, New Hampshire has a minimum hourly wage of $7.25 while Vermont’s in 2018 was $10.50, yet the median household income was nearly 20 percent higher in New Hampshire than Vermont, $74,057 to $60,076 respectively.)

In other words, Vermont’s high, so-called-progressive tax structure comes with significantly lower wages and a less vibrant economy – and this is what’s at the root of Vermont’s affordability problem.

“Trickle Down” is the derogatory term for policies that advocate for lower taxes as a spark for economic growth, which, in turn, create higher wages and standards of living. If the statistics cited by Seven Days are accurate, they bolster the argument that Trickle Down works, and the opposite — high taxes and government redistribution of wealth — does not.

Although there are many factors that contribute to these outcomes beyond tax policy, high taxes certainly contribute to Vermont’s high cost of living (the price of high taxes being factored into the cost of goods and services), and the drag on overall economic activity leads to fewer opportunities and lower wages. A vicious circle.

Unfortunately, reading between the lines of the Seven Days story one gets the message that their answer is more taxes and more government redistribution of wealth though programs like mandatory paid family leave (a new payroll tax), subsidized childcare (higher property taxes), and an even higher minimum wage (which is a de facto tax on labor). All policies that will exacerbate the death spiral Vermont’s economy is already in.

If “progressive” tax policies worked to raise standards of living Vermont would be an economic powerhouse. We are not. Instead of Trickle Down, we’re Bleeding Out.

Rob Roper is president of the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.

4 thoughts on “Roper: Vermont accidentally demonstrates ‘trickle down’ works

  1. I don’t think that driving out the wealthy with over taxation is anything to celebrate- as they want to do, it appears.
    Look at the massive amount of wealth that NY and California have lost. We are talking a lot of Billions that these two states have lost.
    Your wealthy are smart people with the ability to pack up and leave, and they are.

    Interesting use of the word “Devote”.
    Apparently us poor dirt people pay the gubbamint so that they don’t take our home.
    But yet, if you are wealthy, you devote your money to the the government, out of the kindness of your heart, the writer would have us believe.

    I’m in NH and from the looks of the Vermont plates over here in the shopping centers, cash goes a lot further here in NH than it does in Vermont.
    So in my opinion, there is more to deciding what state is more affordable than simply looking at your taxes. If you are saving a big hunk of money every single week by shopping over the border, that adds up at the end of the year.
    And as us regular folk know, money saved is money earned.

    We don’t hate rich people over here in NH, like Bernie Sanders and AOC does.
    These are your job creators in most cases and we love that. We have no interest in driving the wealthy out because that is biting the hand that feeds us.. and that isn’t good at all.

    I don’t agree that trickle down works at all. The amount of social issues alone shows that it does not work.

    • The Progressive dogma is that the government wisely knows how to spend your money, the product of your labors; if left to your own devices, you would just waste it. In their wisdom, they also know how your home should be built, how you should cook and heat your water, how your business should be run, where your children can go to school and what the history taught your children should say, even what should power the car you drive. Progressives are sociopaths.

      • Given that more than half the people in my VT county are benefiting from several of the State’s 42 ‘free programs’, it would appear there’s not a lot of labor occurring.
        Sure does keep them voting for the sociopaths though.

        • Ain’t that a shame when you really think about it.
          When I was growing up here in the 70s. You wouldn’t be caught dead taking Welfare.
          There were many poor people around that would have qualified for help but they never dreamed of asking for any.. they always felt that was for the people far worse off than they were.
          We had pride then and people were not lazy.
          It’s things like this that show us how far this nation has fallen.
          No wonder we are in debt up to our eyeballs.

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