Give Progressives in Montpelier an A-plus for consistency in their appeal to add more taxes on the rich, and a D- for their failure to advance budget ideas that stimulate growth and get a handle on state spending.
Rep. Chris Pearson, a Progressive from Burlington, took the podium at a press conference this past Wednesday to go over a chart suggesting Vermont’s wealthy saw their incomes rise by 136.4 percent in the past decade, while the tax bracket with the state’s median household income ($53,000) saw a slight decrease and those under $30,000 saw their incomes decline. Based on that scant information, and an ideological preference to tax the rich, Pearson and a handful of other Progressives proposed an alternative way to fund almost $17 million that Gov. Peter Shumlin has redirected via cuts to the Earned Income Tax Credit. The proposal would generate $20 million through raising income taxes for those earning $500,000 or more; $11 million by fully taxing capital gains income, and $5 million through a franchise tax or corporate income tax on banks, and a host of other revenue sources that will tax middle-income Vermonters in a variety of ways, including reducing the exemption of the estate tax from $2.75 million to $1 million (generating $1.9 million) which would be onerous for many family farms.
But where it gets really rich is in their rhetoric: “Many of us across the state find (the governor’s) funding proposals detached from the economic reality of our neighbors. It’s downright an insult to the working families of our state,” Pearson said.
Added Barre Independent Paul Poirier: “You cannot ignore that we have a large segment of Vermonters who are doing very well — and I’m glad they’re doing very well, but at the same time… we’re not asking them to do anything to help contribute to try to make life easier for people who are struggling.”
Let’s review some facts:
• Vermont has the most generous welfare-to-work plan, called Reach Up, in the nation. While most states cap their contributions at five years, Vermont is the only state in the country to have no cap at all. Benefits, theoretically, could last a lifetime. The governor has argued, as have governors before him, that such a welfare program provides no incentive to seek work; that it traps families in a cycle of dependency and poverty. The governor’s program would bring Vermont’s benefits in line with other states by endorsing a five-year cap. Hardship cases, and those with disabilities and many other exceptions, will be granted on an individual basis (meaning that those who really can’t work won’t be left on the streets with no help from the state; but those who are physically and mentally able to hold a job will be expected to do so.)
• Vermont has one of the higher state income tax rates in the country. The funds raised from those taxes provide the generous programs that help Vermont’s low-income. And the last time I checked, there is no cap on that income tax. If a person’s income climbs 136 percent in a decade, they paid state income taxes on that increased income. To suggest somehow that the rich have not contributed more as their incomes have increased is simply untrue. And that is not even mentioning the fact that many of those wealthy Vermonters would be job creators in the state: Tax them too much and some may choose to move. We’re not big fans of fear tactics in such arguments, but at some point Progressives have to give credence to the notion that you can’t just keep increasing taxes on the wealthiest few. Spending cuts must be part of the conversation.
To that end, where is the sacrifice asked of those who simply choose to remain on the state welfare system for years on end without seeking work? And if, as Pearson and others suggested, this is an issue of fairness, where is the fairness in financing a welfare state for some while many other low-income and middle-income Vermonters chose to work hard and pay their share of the tax load?
The shallowness of their appeal and their lack of a balanced approach is why the Progressives fail to move the needle on such issues. Other similar proposals have been made in the past, says House Speaker Shap Smith, and died from a lack of broad support. “Many of these (proposals) actually don’t have broad support,” Smith told a reporter at VTDigger.org, adding that the state already has a very progressive income tax system, “the question is: Do we want to do more of that?”
Seems like every time the Progressives speak up, the governor’s moderate plan looks better.
Angelo S. Lynn