economic vacuum
February 19th, 2007
Politics, Vermont, economics, taxes
One of the very unique aspects of the blogsphere and the various writings and opinions found there – mostly not the dried up anesthetized , antiseptic stuff of the “professional” journalists from the antiquated print media – is that it can get one to “thinking”; apparently a rare thing these days especially amongst our state legislators. One semi-pro (Oliver Olsen) came up with an essay tag line that really snaps: zero economic emissions.
(and Thanks to Geoffrey Norman at VermontTiger for bringing this to our attention!)
If “zero economic emissions” is an apt metaphor for Vermont’s aging demographics and its lack of opportunity for the younger generation, then Vermont’s revolutionary tax structure has created something more – an economic vacuum. To provide a “Vermont” class education for our youth, we have mortgaged a significant part of the state’s assets. Most of our aging population aged in situ – not out of state. For many, their homes represent their most significant asset. If they own it outright, they need not divert cash into mortgage interest. And if need be, they may have seen the increase in home values as an increase in their retirement nest egg. Some may have even borrowed against it. But the old adage – what goes up must come down – seems to apply to this housing market. And even more so in Vermont. Many towns took advantage of the housing bubble to re-assess all this “valuable” real estate to reapportion the local tax burden; and used valuations that were highly unrealistic. Then adding the resulting tax rate to the real cost of owning a home, and the real net value shrank… right into the pockets of Vermont’s education and general fund. Prospective buyers (and why would anyone want to buy in this state? It’s getting pretty thin to say for “the view” (which by the way disproportionately increases the appraised value of your real property…) evaluate the total cost of owning a home. So in a market where home values have fallen 2.5% in the last year, and mortgage applications have fallen despite lower interest rates – what have you got? - An economic vacuum. The problem is real and apparently for our legislature intractable.
Montpelier needs to take a look at GM, Chrysler, and Ford. They can’t survive without down sizing their work force and developing a more competitive product. Vermont needs to do the same thing.
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