Roper: Vermont better start cutting taxes dramatically

By Rob Roper

The Wall Street Journal recently looked at IRS data and noticed “an accelerating flight from high-tax states.” The editors conclude, “The liberal tax model is to fleece the rich to finance spending on entitlements and government programs that invariably grow faster than the economy and revenues. IRS data on tax migration show this model is now breaking down in progressive states as the affluent run for cover and the middle class is left paying the bills.” Though the editorial focused on larger states, such as Illinois, New Jersey and Connecticut, Vermont lawmakers should take warning. This is you.

Rob Roper is the president of the Ethan Allen Institute.

It used to be that the people moving into Vermont brought in more revenue than what was lost when others moved out. However, this has not been the case for several years. Writing a year ago about 2013-2014 Census statistics, UVM economist Art Woolf noted that among taxpayers earning over $75,000, the income group that provides the majority of Vermont’s revenue, “people moving out took with them $78 million more in income than people moving in earned. That is, middle- and high-income people moving out of Vermont tend to be richer than people moving in.” (BFP, 9/15/16)

Today, Vermont’s personal income tax revenues are down significantly so far in fiscal year 18, $6.41 million below forecasts. We have to ask how can this be given that the national economy is booming with 3 percent or better growth for three straight quarters, the stock market is at record highs, and Vermont’s unemployment numbers are at record lows.

What’s more worrisome is that everything mentioned above was occurring before the US Senate joined the House in passing a federal tax reform bill that will in all likelihood lead to the elimination of the SALT (State and Local Tax) deductions on the federal income tax. This will mean a big hit for taxpayers in high tax states like Vermont, increasing quickly and dramatically the incentives for people with already high tax bills to flee.

Vermont’s tax-and-spend business model was failing already. Federal tax reform, assuming that it passes, will be the final fatal nail in that coffin. Our lawmakers’ challenge is to implement a new business model that conforms to both the old and the new economic realities and makes our state economically competitive on a national and global scale. The status quo is no longer an option.

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

Image courtesy of Flickr/

8 thoughts on “Roper: Vermont better start cutting taxes dramatically

  1. The most distressing part of this situation is that Phil Scott is an R in name only (RINO) and spent too much time in the “swamp” with all these people and became compromised. Like all elected minority officials with 2 year terms they play it safe because they won’t have enough time to try anything bold before they are running again, as he will be next year. It is so clear that a bold departure from the status quo is needed now more than ever, despite all the vitriol that will shower down on him and anyone who followed that lead. But does he have the courage to get in front of a camera/audience and lay it out in black and white? That the current path is clearly unsustainable and we must change course dramatically in this next budget, no matter what oxes are gored and he will veto any legislation and budgets that aren’t going to move us in the right direction? Breakdowns lead to breakthroughs, marginal change brings marginal results, if you can even get that much done. So it’s time for slamming on the brakes, reorganization of departments, no new taxes, just spending reductions or we are headed off a cliff and in real trouble. Let’s not forget underfunded pensions and all the other partially buried bodies they’ve been working around for years. The party is over. We need sober decisions and we need them now.

  2. Go back and listen to an old Simon and Garfunkel song, The Sound of Silence. The song was prophectic in a way. 10,000 people bowed and prayed to the neon gods they’d made. This should be the song of all the socialist and their false gods.

  3. To quote Margaret Thatcher, “The problem with socialism is that sooner or later, you run out of other peoples money”. As long as VT is a haven for leftover ’60s hippies, the unemployable and unemployed, and those that live off the work of others, there is not much of a future here. Where are all the industries that were here back in the 60’s and 70’s? Why did they run away from this state. And what industrys are left??? Skiing and snowmobiling can’t support the beaurocracy that has taken over this once great and prosperous state.

    • We are doing great in artisanal cheese at 15 to 20 dollars per pound, 2 x the price of France, and artisanal ales, and artisanal maple syrup in fancy bottles.

      The trouble is those businesses require subsidies or other favorable treatment and then they have little profit to pay profit taxes, and their wages are about average for Vermont, so those households also pay little income taxes, and yet need school services which they hardly pay for.

      Regarding the $12.5 million, Stafford Hill solar/battery combo,

      GMP gets for the solar part about:
      – $1.16 million as state and federal taxes not paid due to write offs
      – $1.67 million as state and federal ITC cash gift
      – Makes about 9%/y on the solar asset.

      GMP gets for the battery part about:
      – $0.87 million as state and federal taxes nor paid due to write-offs
      – $1.25 million as state and federal ITC cash gift
      – Makes about 9%/y on the battery asset

      GMP loves RE, sings the praises of those combos, even claims to be fighting global warming.

      Multiply such follies several dozen times and Vermont will be collecting less and less taxes, while some favored RE folks laugh all the way to the bank.

      The Vermont business model has been falling apart for some years. Shumlin has been a 6-y disaster, and courageous Scott was handed a basket case.

      • Regarding the $12.5 million Stafford Hill solar/battery combo:

        Summary of Operations: Table 7 shows a summary of the above three items. It is clear, the total gain is grossly inadequate for a $12.5 million project, demonstration or not.

        Table 7/Annual net gain $/y
        1 Regulation 200,000
        2 ISO-NE charge reduction 400,000
        3 Loss on solar sales 185,894
        Net gain 414,106

        Cost items not shown are:

        – The GMP gain of federal and state tax savings. See table 4 and 5
        – The GMP gain of federal and state ITCs. See table 4 and 5
        – The GMP gain of 9+%/y on assets
        – The amortized cost of borrowed money for the battery system
        – The replacement of about 75% of the battery system in about year 15, or sooner.
        – Charges of GMP personnel
        – Use of other GMP resources
        – Interest on borrowed capital

        If the above cost items were fully identified and accounted for, the project would be drowning in red ink.

        Advocating more of such heavily subsidized projects would be great for GMP, but very expensive for already-struggling households and businesses trying to make ends meet in a near-zero, real-growth Vermont economy. Such poor-return projects would build up an increasingly stronger headwind against Vermont’s economy.

  4. Will Regressive/Communist legislators of all parties listen,Not A Chance,instead they will party and spend like there is no tomorrow.

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