Vermont taxes and economic no growth
February 1st, 2007
Opinion, Politics
The aging demographics of our state, together with its overwhelming urge to provide a full slate of human services while insisting on preserving its green pastoral heritage has created what is essentially an intractable problem. While the per capita tax burden places Vermont in the top 6 states (and one places Vermont at #1), its per capita income ranks it at #25. Our age weighted demographics will increase this spread, which is to say income will fall while taxes will increase.
Economists insist on “growth” by increases in productivity and cannot at all evaluate static economics, much less a “negative” growth function. The solution of course (!) is to bring more jobs into the state or create more jobs (there is a “real” difference), creating economic growth to support the tax requirement of the state. However, this glaring inconsistency is precisely what makes Vermont untenable for new business. We offer nothing in terms of resources, either in the extant or trainable labor pool, and because there is little real growth of capital, we export the few resources we might point to, which is our educated young.
Liberal politics suggest that the “state” can best manage its own welfare by government; improve our educational system and provide affordable health care to all, among a myriad of other “services”. And of course we do it by taxes.
Equipped with a college degree and marketable skills, do they remain in (or return to) Vermont and find a job that typically pays much less than other regions, pay more in taxes to the state, and find it difficult to afford housing because the real estate taxes are among the highest in the country? And, if they put down roots and their mediocre paying job downsizes or moves offshore – they have fewer options to find other employment? Or do they move to a more competitive area where they really are willing to pay for those skills, where the growth exceeds the rate of local government’s ability to tax it, and more new jobs are being created because people are excited about what they are doing, not worried about being outsourced?
The creative solutions do not rely on a “green” economy. They arise by asking questions politicians were elected NOT to ask: why is health care so expensive? (rather than how can we pay for it all); why is educating our shrinking youth population getting more expensive? (rather than “leave no child behind”)… How do we DECREASE taxes rather than simply (!) keep them from growing faster than our economy – which incidentally is not growing as fast as Gov. Douglas would have us believe. (or rather he was lead to believe…)
The Ethan Allen Institute published a policy report this past December entitled “Off the Rails“. It is required reading.
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