Flemming: Small business in Vermont gets ready for tax hike

By David Flemming

Vermont homeowners can breathe a temporary sigh of (relative) relief. A government shutdown has been avoided, and most homeowners’ property taxes will not increase until 2020. Vermont business owners were not so lucky, and will face a tax hike in 2019.

The Senate drafted it’s final proposal and maneuvered it through the House on Monday, June 22. It was then delivered to Governor Phil Scott, who will let it become law on Saturday, rather than sign it with his blessing. With the threat of a government shutdown on July 1, Scott decided that vetoing the budget would not have been in Vermonters’ best interest.

The bill gives Vermont teachers an increased health benefit, and creates a task force with the stated goal of decreasing staff-to-student ratios at public schools in an effort to alleviate future tax increases. Current taxes were another issue entirely.

In an email, Gov. Phil Scott stated, “I am frustrated, and disappointed for Vermonters, that Democrats in the House and Senate have forced through a non-residential tax rate increase in a year we have a growing surplus. But, I’m pleased to have achieved about 75 percent of the property tax rate relief I fought for this year, including a second consecutive year of level statewide rates for residential payers.”

The bill dedicates $20 million of surplus revenue toward ensuring that the residential tax rate on homes will not increase in 2019. However, the nonresidential property tax rate will increase by 4.5 percent. This means that Vermonters owning small businesses and second homes will see their taxes increase in 2019. If Vermont does not see another windfall of surplus revenue in 2019, even primary homes will see a tax increase in 2020.

The most worrisome of these immediate tax increases is on Vermont’s small businesses. Whereas wealthier Vermonters can more easily absorb tax hikes on their second homes, low-income and middle-income Vermonters owning small businesses will likely see lower disposable incomes and perhaps even shut down. Vermont has historically had some of the highest rates of small business ownership of any state, but those rates have been falling since the 1990’s. We may already be on the road to the haves-and-have-nots, in which the only businesses that can afford to operate in Vermont are large businesses like Wal-Mart. Such businesses can leverage their size to provide products to consumers more cheaply and efficiently than small businesses.

For decades, progressive intellectuals and their legislative lackeys have operated under the assumption that a business’ revenues are somehow suspended above taxes and expenses, meaning businesses can generally afford tax increases. I sincerely hope our legislators are not operating with this assumption, and if so, it would explain a lot of the anti-business bills passed in the past couple of years.

Most Vermonters I speak with would love to pay a little more to support small, local businesses as opposed to corporate conglomerates, but they may soon have little choice if their budgets continue to be squeezed by high taxes.

Simply put, our government made the tax situation worse this year when it passed the hike. In 2017, Vermont had the third most oppressive business taxes in the country. After our 2018 tax hike, Vermont can compete with California and New Jersey for the ignominious title of “state with the highest taxes on enterprise.”

Vermont’s cozy hometown feel is a nice buffer to have against economic decline, but we cannot rely on it forever. Sooner or later, our lackadaisical spending and high taxes will catch up with us. It’s time for our legislators to wake up and see the writing on the wall: “Decrease Vermont’s tax burden. Or suffer the consequences.”

David Flemming is a policy analyst for the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.

Image courtesy of Flickr/401kcalculator.org
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5 thoughts on “Flemming: Small business in Vermont gets ready for tax hike

  1. We need independent individuals who support small businesses to run for office and stop the run away train of the progressives. We must take our state back before it is too late. Sure the easy way out is to move to another state, however those of us who’s roots are here are not afraid of hard work and it is time we get mad that our income is disappearing because of those that are afraid to work and would rather live off the government. That is not the Vermont way and these progressives have brought that to our state. Vote them out! I think it is time that all communities in Vermont have equal representation, I am tried of Burlington have the most representatives which does not reflex the state!

  2. Listen, The ship (VT) has been sinking for some time now. You have two choices, jump ship and swim to a state that will appreciate you or go down with the boat. Pretty simply choice if you ask me.

  3. Can someone explain to me what an intellectual does these days? In 1776, it meant crafting a unique way of life that gave all Americans the right to independence and liberty. Just run of the mill stuff. Today, those who brandish the “intellectual” moniker, especially the “progressive intellectual” moniker, seem to spend their time dreaming up ways to separate us from our income, giving it to those they say deserve it more than we do, thereby depriving us of the means to independently enjoy the fruits of liberty as we deem fit. Why can’t we turn the tables on these intellectuals, institute free market reforms, and actually witness the economy grow, sustain itself, and finally give Vermonters something to feel strong about?

  4. TAX THE TEACHER’S UNIONS…..AND ALL EDU ADMINISTATORS WHILE ALLOWING NO PASS THROUGHS OF THIS TAX TO THE [ahem!] taxpayers.

    A HIGHEST IN THE NATION TAX ON SMALL BUSINESS ENTERPRISE IS COMPLETELY UNVERMONT…….COMPLETELY UN GEORGE AIKEN…COMPLETELY OUTRAGIOUS.

  5. Hey Real Vermonters, read the above article look what your “legislators” have done to our state.

    And these fools will have the audacity to show their faces celebrating the 4Th while our Troops Defend, these clowns destroy. Pitiful.

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