February 4, 2019

by John McClaughry

Here’s some good news for Vermonters who cherish liberty. Last week Gov. Phil Scott made it clear that he will not support a tax on Vermonters who don’t buy individual health insurance.

Mike Faher of Vermont Digger reported last Friday that Ena Backus, health care reform director at the Agency of Human Services, told the House Health Care Committee Friday that the Scott administration remains strongly opposed to an income tax-based penalty to enforce the law.

“The penalty that we’re talking about today would impact younger and lower-income Vermonters and does not align with our objectives to address demographic challenges and to protect the most vulnerable in our state,” Backus said.

The Scott administration doesn’t believe the uninsured rate is a cause for concern because at 3.2 percent, it’s among the lowest rates in the nation, according to a recent survey. That’s only a third of the national rate.

“We’re proud of this accomplishment,” Backus told lawmakers. “We believe we can continue to improve.”

Of course the Democratic legislature could pass a tax penalty to force their mandate on younger and lower income Vermonters to buy government-approved insurance. But the prospect of a Scott veto ought to give Democrats second thoughts about having to defend bringing this hammer down on the most vulnerable people the Democrats always claim to speak for. A better plan would be to repeal last year’s mandate bill altogether.

John McClaughry is vice president of the Ethan Allen Institute. 

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Last year the legislature paid a firm $120,000 to study a Vermont Carbon Tax. The results are in. What do you say? Move forward, or kill the Carbon Tax?

Make your voice heard!

CLICK HERE to take the survey!

 

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By John McClaughry

Last September the Legislature underwrote a $120,000 contract to a Washington DC firm named  Resources for the Future, that specializes in analyzing the economic impact of various policies aimed at reducing greenhouse gas emissions caused by consumption of fossil fuels. The 114-page “Decarbonization Study” has now been delivered.

Before summarizing its findings, let’s recall why certain organizations are so intent on driving Vermonters away from using gasoline, diesel fuel, natural gas, heating oil, and propane.

They believe that Planet Earth is approaching a climate catastrophe caused by the humans burning these energy-rich fuels. By far the most dominant greenhouse gas is water vapor, but that can’t be controlled by driving up the price of water. So the climate alarmists – for want of a better description – are determined to defeat the menace of climate change by making humans stop burning fossil fuels.

A flat out prohibition of these sources of energy has no prospect of happening any time soon, especially when most (though not all) climate alarmists are also dead set against nuclear electricity as the carbon-free solution that will maintain our energy-intensive 21st century civilization. They have defined their target as “GHG emissions”. Their means of reducing those emissions is to have the government drive the price of carbon-based fuels steadily higher, until most people can’t afford them anymore and will switch to something else (or move away).

Their ideal for Vermont, with one fifth of one percent of the U.S. population, is to become the perfect little climate-conscious state. Thanks to more building insulation, clustered dwellings, public transit, bicycles, heat pumps, biomass heat, and efficiency improvements, existing hydro plants, and much more wind and solar PV electricity, Vermont’s population will consume far less energy, and eventually zero fossil fuel energy.

The metric for climate righteousness has become the amount of carbon dioxide emissions produced by fossil fuel combustion. In 1990 Vermonters released eight million metric tons of carbon dioxide equivalent (MMTCO2e). At a 2005 conference of the New England Governors and Eastern Canadian Premiers, intensely midwifed by climate activists, Gov. Jim Douglas caught a serious case of emissions reduction fever.

The result was his Executive Order 07-05 of 2005, declaring Vermont’s goals to be to reduce GHG emissions to 25% below the 1990 emissions level by 2012, 50% below by 2028, and 75% below (“if practicable”) by 2050. These goals were enshrined in Act 168 of 2006. The leading advocacy group, the Center for Climate Strategies, lauded Vermont for having “the nation’s most aggressive GHG reduction goals.”

By 2015, Vermont was not emitting less than the 1990 level, but 10 Mt, 16% above and climbing. This was embarrassing.

What followed were gubernatorial amendments to Act 168, none of which were ever voted on by elected legislators. Gov. Peter Shumlin, an ardent climate warrior, declared that, regardless of state law, the new goals would be 40% below 1990 levels by 2030 and 80% below by 2050.

In June 2017 Gov. Phil Scott announced Vermont was joining the U.S. Climate Alliance, whose governor-members promise to reduce emissions by 26-28% below 2005 levels by 2025. Clearly all the renewable energy subsidies weren’t getting the job done, although they certainly produced affluence for the renewable industrial complex.

After the heavily Democratic legislature declined to consider the ESSEX carbon tax plan, the increasingly frustrated climate change warriors asked and got the $120,000 RFF Decarbonization Study.

Representative conclusions from the Study include a finding that “emissions in Vermont have been increasing since 2011, and the state is currently well above a pathway that would meet any of its GHG emissions targets. … Vermont is unlikely to meet its emissions targets with a carbon-pricing-only strategy unless the carbon price is substantially higher than the prices modeled in this study ($19 to $77 per metric ton of CO2 equivalent in 2025).…”

“A carbon pricing policy could generate $74.7–$433.8 million in annual revenue in 2025, depending on the carbon price amount and number of sectors covered… Carbon revenue is an appealing feature of carbon pricing and can allow the state to address the negative consequences of carbon pricing, especially for low-income and rural households.”

Overall, the Study found, there is a combination of carbon pricing [which it carefully avoids characterizing as a tax] and non-price policies that can lead to positive outcomes, if environmental benefits from reducing carbon combustion are added in.

The Study candidly observes that “the success of Vermont’s decarbonization strategy will depend on the extent to which it drives action in other states or other countries…if Vermont’s policy leadership were to inspire increased leadership and policy innovation in other states or nations—it would indeed amount to a significant impact.”

There is much, much more in this capably produced Study. The ultimate question legislators need to wrestle with now is, how much expense, disruption and grief are Vermonters willing to endure to produce no detectable effect on global climate, but only this symbolic triumph?

John McClaughry is vice president of the Ethan Allen Institute

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January 31, 2018

By David Flemming

National Life Hill in Montpelier, VT.

Carbon tax logic: if we make fossil fuels really painfully expensive it will force consumers to accept almost-but-quite-as-expensive alternatives that create no or little carbon emissions. But what happens when there is no alternative?

Such an example came up when Peter Walke of the Vermont Agency of Natural Resources, testifying before the House Energy & Technology Committee, recounted his own recent experience with a “green” public transportation alternative. Walke and his colleagues were using an electric bus to get around Montpelier. One day, the bus “had trouble getting up the National Life hill,” leaving several state employees stranded at work.

Now, for those not familiar, the National Life hill might be considered a vigorous walk, but its well paved, gradual incline is pretty tame compared to almost any other terrain in Vermont. This led several committee members to question the plausibility of adding such buses to Vermont’s fleet to service our rural areas, where they would have to travel over more challenging obstacles than that hill.

Speaker of the House Mitzi Johnson came to a similar conclusion in a December interview, when she explained her hesitancy to embrace a carbon tax when Vermonters don’t have readily available public transportation in rural areas. “Right now, no matter what you do to the pricing, there still are not a lot of ways to get from the Islands to Montpelier.”

Which gets us to the question, what happens when legislators create a tremendous amount of economic pain, but the consumer has nowhere to go to escape that pain? This is not creating an incentive. It’s inflicting torture. And, it doesn’t solve the problem of carbon emissions.

David Flemming is a policy analyst at the Ethan Allen Institute.

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January 29, 2019

by Rob Roper

Note: These remarks were originally prepared for National School Choice Week, but the event was unfortunately snowed out in Vermont. 

We’re to celebrate National School Choice Week and all the gains that have been made across the nation – which have been substantial – allowing families to access the educational opportunities that they know to be best for their children. But, more importantly, at least from our perspective, is the chance to celebrate Vermont’s 150 year history of school choice, which I believe is the most comprehensive and dynamic in the nation – for the too few who have it.

With this in mind I want to commend that part of the Scott Administration’s proposal to expand school choice in Vermont to all families.

More than just a good policy, school choice is a moral imperative.

Our current system has consistently left behind our most vulnerable students – those from low income backgrounds and those with special needs.

In 2016, here’s what then Education Secretary Rebecca Holcomb said regarding poor, special needs, and secondary English speaking students in our public school system:

“Our children from more prosperous families continue to rank near the top nationally. Our most vulnerable youth- those living in poverty, with disabilities, from marginalized populations and who speak English as a second – continue to have test scores that are on average lower than our general population.”

Lamentable proclamations like this have been around for decades with no improvement. This is because arbitrarily drawn public school district lines are contributing greatly to the growing problem of wealth segregation and inequality in our communities. Wealthier parents tend to move into neighborhoods with good public schools, driving up housing prices and property taxes in the process, making access to higher quality school districts even more expensive.

The wealthy, of course, always have school choice. They can choose to buy property in the best school districts. They can afford the tuition necessary to escape an educational environment that isn’t working for them. Denying all students school choice doesn’t punish the wealthy, or take away their opportunities. It punishes the poor by denying them those same opportunities.

Let me be clear that we are not here to say that public schools are bad and independent schools are better. It’s a matter of finding the right fit for the child. Kids are different. For some, a small school might be best. For others, a large school. For others, a Waldorf or Montessori environment. For others, a traditional public school environment.

I have two kids. For my oldest, the local public school was a terrific learning environment. Great teachers, a fantastic peer group. It was the perfect learning environment for her. For my youngest, however, it wasn’t the best environment. This had nothing to do with the teachers or the curriculum. They were the same as they were for my daughter. It just wasn’t the right fit for him, so we sent him to an independent school. The first school we chose didn’t work out, so we chose another. This has been an incredible, enriching experience for him.

Now, we don’t have school choice in my town, so we had to pay the tuition to get my son into the right learning environment for him. This was possible only because my family could afford it. But for other kids in his class in the same situation, this might not be an option. This isn’t fair. But we don’t make the system fair… just… practical…. or successful by denying kids opportunities, we make it fair by empowering all students with the resources to access a more diverse menu of opportunities.

Forcing kids into school environments that don’t fit their individual educational needs isn’t fair to the kids or the school. The dynamic sets both up for failure. That is not what we want for our education system.

School choice breaks down the barriers of arbitrary school district lines – these glass walls defined by zip codes – by empowering all parents with the resources they need to either find the right school for their children, or, in some cases, like with many of the cases here in the room today, start their own schools if the right school can’t be found.

This is right. This is just. And this works!

Thank you all for coming today and sharing your inspirational stories. Your school choice is something special. Appreciate it. Protect it. And most importantly, do your best to make sure every child in our state has the chance to experience and benefit from it as you have. It’s not only the practical thing to do, it is the moral thing to do.

Rob Roper is president of the Ethan Allen Institute. 

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January 24, 2019

By David Flemming

On Tuesday in Montpelier, two pro-renewable energy consultants commissioned to study the effects of a carbon tax in Vermont met with legislators from two House committees at a joint hearing. The gist of their report was, predictably, that a Carbon Tax would have a minimal impact on Vermonters, and in some cases people would actually benefit from such a tax/rebate scheme.

But at one point, Wesley Look, one of the consultants, stated that “the ESSEX Plan could be administratively quite complex.” This is classic understatement. The ESSEX Carbon Tax plan calls for the state to collect an excise tax on fossil fuels, then redistribute the revenue raised through a series of rebates for low income and rural Vermonters (which Vermonters would have to apply for), and subsidized electric rates managed by the state’s several electric utilities. The cost to oversee something this complex will be substaintial.

So I was surprised to see that there was no mention of administrative costs in his 146 page report. In fact, in today’s hearing the researches were asked directly and admitted forthrightly that they did not consider administrative costs when calculating the impact of the tax. Such a glaring oversight has to call into question the overall usefulness of this document that cost Vermont taxpayers $125,000.

Rhode Island’s 2015 plan for a carbon tax sounds similar to Vermont’s, in that it planned to “return 100% of revenue (minus overhead costs) in the form of rebates and programs.” The R.I. proposal predicted 5% of revenues would go toward “administrative overhead costs” if it had been passed, and Rhode Island’s plan didn’t include the complexity of partnering with electric utilities.

Connecticut’s 2017 carbon tax proposal called for “not more than five per cent shall be used to pay for administrative costs.” Massachusetts does not give a cost estimate, but at least it admits that carbon tax would have administrative costs, while hoping to keep them “presumably low.” British Columbia’s carbon tax was promised to be revenue neutral before its passage in 2008, but it has become “revenue-negative because of administrative costs.”

If the consultants’ estimate of $33 million raised in carbon tax revenue for Year 1 of the ESSEX Carbon Tax is correct, a 5% administrative cost would cost around $2 million to pay for the program (no estimate was given here). But, this estimate is likely low because all the logistics to administer the program need to be in place on day one, while the revenue won’t be at full strength until year ten. Therefore, it is conceivable that in its early phases the ESSEX Carbon Tax will cost more to collect than it brings in.

Vermont has already paid $120,000 for the analysis of the tax, but the report didn’t even attempt to analyze the situations facing real Vermont households. The consultants put a quarter million Vermont households into 5 income groups. They took the second lowest of those income groups, the Vermont household making $23,000-$45,000 and said that the average household in that group would receive $24 in 2020. There are at least two problems with that figure of $24. First, there is no mention of the drastic difference in fossil fuel consumption among this group of Vermont households in this income range. Second, there is no mention of the administrative costs that would be taken out of that $24.

Last year, the Ethan Allen Institute did not need $120,000 to address these questions. Among our six ESSEX Carbon Tax Profiles we looked at three actual households in the $23,000-$45,000 range, rather than the singular abstract household. The results were discouraging: the most fortunate household would stand to lose $9 in 2020 while the most negatively impaced household would lose $85. To say nothing of much larger amounts that would be lost in the later years of the program.

David Flemming is a policy analyst at the Ethan Allen Institute

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January 23, 2018

by Rob Roper

The House Energy and Technology Committee had a chance to ask the creators of a Carbon Pricing study some questions today. One of their findings that is not particularly shocking is that if the tax is “revenue neutral”, meaning that all tax revenues raised are returned (although redistributed) to the taxpayers via alternative tax cuts or rebates, it doesn’t do a whole lot to curb behavior. If the tax costs you an extra $15 to fill up your tank, but then you get a rebate check for $15 dollars, you’re probably not going to drive any less. The report writers conceded that a revenue neutral approach would not have the kind of impact on greenhouse gas emissions supporters of the Carbon Tax want.

Enter Representative Michael Yantachka (D-Charlotte), who quickly floated the obvious solution: rather than use the revenue to cut other taxes or provide rebates, government should just keep the money and spend it!

Yup, that didn’t take long.

In Yanchachta’s words, “With the amount of rebate they [Vermonters] can get on their electric bill, they’re not going to be investing any of that into anything that will help them reduce their greenhouse gas emissions like weatherization or buying an electric vehicle…. If we put a 15 cent per gallon price on carbon, we can take that money and help people do good things.” Translation: You may have earned that money, but we know how to spend it better than you.

Yanchachta also implied that a 15 cent a gallon tax on gas and home heating fuel wouldn’t be a big deal, even for low income Vermonters, because these prices can and sometimes do fluctuate more than that organically. Yes, they do. And when those prices fluctuate up, it hurts. A fifty cent spike in gas prices will hurt a lot more when it’s 65 cents because of an additional 15 cent tax. Seriously, how hard is this to understand?

Nevertheless, the sentiment was echoed later in the Cedar Creek Room where a coalition of environmental activists offered up their “Climate Action Plan for 2019.” This fourteen-page pamphlet is chock full of ways to spend revenue from a new Carbon Tax, including a doubling of Vermont’s weatherization program, creating subsidies for buyers of electric vehicles, and further subsidizing renewable energy.

If anyone ever bought the notion that a Vermont Carbon Tax would be “revenue neutral”, or, if passed as such, would stay that way for very long, today’s State House activities should put that fantasy to bed for good.

Rob Roper is president of the Ethan Allen Institute. 

 

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January, 2019

By Rob RoperRob Roper

As a result of the November 2018 elections, Vermont Democrats and Progressives achieved veto-proof majorities in both chambers of the legislature. Their first priority flexing this new muscle is to pass a mandatory, government-run Paid Family Leave program that will require a new payroll tax. This proposal demonstrates exactly why Vermont is an unaffordable, unfriendly place to live and do business.

The proposal, a version of which Governor Scott successfully vetoed last session, would mandate all Vermont workers begin paying a new 0.93 percent payroll tax, which would fund a government-run insurance program providing twelve weeks of paid leave at 100 percent of salary for new parents or those dealing with a family illness. Why mandatory? Because, according to news reports, “they [Speaker Mitzy Johnson (D-Grand Isle) and Sen. Tim Ashe (D-Chittenden)] said that a paid family leave program shouldn’t be voluntary, because it wouldn’t be able to attract the participation required to make it affordable.”

So, basically, the majority party leaders want to impose a new payroll tax on Vermont workers and create a new financial and bureaucratic burden for Vermont businesses to implement a new government program that people, by their own admission, don’t want. This is why Vermont is unaffordable for working people and has a national reputation as a terrible place to do business.

The median annual household income in Vermont is $57,808, which means the new tax will cost that household budget $538 a year for a benefit most wouldn’t sign up for and don’t need.

Not mentioned in any of the media coverage, it will create an uncalculated new cost of doing businesses for Vermont employers, who will now have to spend time and resources tracking and reporting employee data to the state in compliance with the law. It’s worth noting that many Vermont businesses already offer some form of paid leave, either formally or informally. Those that don’t tend to be small, struggling businesses that genuinely can’t afford to do so. Forcing them to do so will be a major hardship.

The program will also increase state bureaucracy necessary to run the new government program. In 2017 the Joint Fiscal Office scored the original Paid Family Leave bill, H.196, estimating that the administrative costs of running the program would consume 7.5 percent of benefits, and will require a new $2.5 million IT system, and we all know how well the state does with new IT systems!

Governor Scott proposed an alternative Paid Family Leave program in partnership with New Hampshire that would be both voluntary for private businesses and run through a private insurance company rather than the state. This is a far better — and much fairer – alternative.

Critics of the Governor’s plan say that his proposal will be more expensive for participants. Yes and no. Yes, it would be slightly more expensive for those who volunteer to participate. But, for the majority of Vermonters who choose not to participate in the program it will be much cheaper – as in zero. This is fair. Those who want the program will pay to support it and benefit from it. Those who feel their scarce resources would be put to better use elsewhere would be free to invest as they see fit. But, again fairly, they won’t benefit from the Leave program.

The fact that the Governor’s proposal would utilize an existing, private insurance provider that is expert in managing programs like this means that the state would not have to incur the unnecessary and inefficient expense of “reinventing the wheel” within an expanded state bureaucracy that is, frankly, not expert in running insurance programs. The total cost of this system would undoubtedly be less than the mandatory tax scheme.

Paid family leave benefits are certainly a good thing. The employers that are able to offer such benefits create for themselves a competitive advantage in hiring and retaining the best employees. But, this comes at a cost that the employer and the employee, and they, not the legislature, are in the best position to determine if this benefit makes sense for them.

– Rob Roper is president of the Ethan Allen Institute. He lives in Stowe.

Corrected, 1/30/19. The original publication incorrectly stated Vermont’s median household income was $74,426. This and the tax calculation based on that number have been corrected. 

 

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January 21, 2019

by John McClaughry

This week the House Energy and Technology Committee, chaired by Rep. Timothy Briglin, Democrat of Thetford, is holding four days of hearings on the decarbonization study. This study, for which we’re paying $120,000, was done by a national organization called Resources for the Future. It’s aim is to explain how Vermont can somehow drive up the price of gasoline, diesel fuel, heating oil, propane and natural gas to the point where Vermonters can’t afford using those fuels any more, and will find some other way to heat their homes and get to work and school.

The first four days of hearings will include testimony from electric utilities and state officials. Then on Friday the afternoon will be devoted to invited testimony from seven groups collectively called “Energy Advocacy Groups.”

Here’s who the Committee has invited: the  Energy Action Network; the Energy and Climate program of the Vermont Natural Resources Council, the Vermont Public Interest Research group, VPIRG; Capstone Community Action;  Vermont Business for Social Responsibility, and  Energy Independent Vermont.

Notice anything interesting about this lineup? These groups are the carbon tax spearhead in Vermont .They’ve worked furiously for four years to peddle the carbon tax, the ESSEX Plan, and numerous variations. Now the committee wants their views on this latest boondoggle study, but not the views of the organization that has led the charge against a carbon tax, the Ethan Allen Institute. This is another rigged deal.

John McClaughry is vice president of the Ethan Allen Institute. 

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January 18, 2019

by Rob Roper

Senate Majority Leader Becca Balint (D-Windham) recently penned an op-ed discussing “The Financial Predicament of Millennials.” She opens by quoting a young friend who is struggling to make student loan payments, find affordable child care, and pay the mortgage. Balint concludes noting, “Vermont’s young families face much bigger financial obstacles than their predecessors. They aren’t whining; they’re telling the truth, and we need to listen.” This is true. But the “much bigger obstacles” are the direct result of policies put in place by Balint and others who share her big-government-control ideology.

Take the first example of struggle: student loans. Who dominates the university system today? Progressives. In 1964, the average annual cost, including tuition, fees, and room and board, for a four-year public university was $1,051, and $2,202 for a private university. Those are calculated in (nearly, 2007) current dollars. It was common for students to earn their tuition for the year with a summer job as a waiter or life guard. Today you’d have to have a summer job as a hedge fund manager to pay for your college. Those same averages had by 2007 ballooned to $14,203 and $38,400 respectively (Source: National Center for Educational Statistics) and are certainly much higher today. For example, UVM’s 2017-18 rate for in-state students was $29,792 and $53,408 for out-of-state.

So, what happened? The National Higher Education Act of 1965, part of Lyndon Johnson’s big-government, Great Society agenda. The Act, as described by the LBJ Library,

… is the major law that governs federal student aid, was intended “to strengthen the educational resources of our colleges and universities and to provide financial assistance for students in postsecondary and higher education.” It increased federal money given to universities, created scholarships, gave low-interest loans to students, and established a National Teacher Corps. The original law… has been reauthorized nine times through the years.

Sounds great, doesn’t it? The government (we’re here to help!) stepped in and messed with the free market to ostensibly make higher education more affordable and accessible. In practice, however, these left-wing politicians in collaboration with left-wing academics have since turned higher education from an affordable path to prosperity into an unaffordable debt-ridden path to poverty for too many young people.

Which brings us to the second mentioned area of struggle, affordable child care. Here in Vermont we are witnessing in real time our ideologically left-leaning government create a childcare crisis both in terms of accessibility and cost. In 2016, Montpelier passed a number of draconian regulations that were designed to drive private childcare providers out of business. It worked! According to the Vermont Joint Fiscal Office, since 2015 the total number of childcare slots in the state has dropped by 1,693 or over 7%. But, as the report states, “the most striking result of this analysis of child care capacity is the significant reduction in home providers and child care slots,” where capacity declined by over 25%.

So, thanks to the Progressive policies of our government, young families now have fewer childcare options, and those that are still available are more expensive because they have to incorporate and pass on the additional cost of complying with the 2016 regulations. The nefarious objective here is to create a false crisis of access and affordability that will generate a public outcry so that the government can then provide the taxpayer-funded, government-run “solution” of birth to five public schooling. This, by the way, its advocates estimate will have a price tag of about $850,000,000 annually. Add that to our current $1.7 billion K-12 education spending and see what it does to your property tax bill!

Which gets us to the last point of contention: paying the mortgage. Unbearably high housing costs are, indeed, a plague afflicting young people trying to settle in Vermont. But every initiative the majority in Montpelier has recently pursued and is pursuing will increase – not decrease — the cost of housing in Vermont.

High property taxes are one big cost to owners or passed on to renters, but no serious reform efforts are being considered in regard to lowering them. Our regulatory and permitting processes is expensive and unpredictable – high costs, again, passed along to the owner/renter if the hurdles don’t discourage adding housing capacity in the first place — but no efforts are underway to streamline them. In fact, the Act 250 “reform” being proposed today would make it harder and more expensive to build housing by, for one example, requiring new structures to be “carbon neutral.” That may sound nice, but it will make paying the mortgage a more daunting task.

Add to the complaints Balint lists a Carbon Tax, making transportation more expensive as well as heating that already unaffordable home. And, a $15 minimum wage that will make entry level jobs more scarce. And a new payroll tax that will cost the medium household income nearly $700 a year for a Family Leave benefit most Vermonters don’t want and will never use. And “progressive” health insurance mandates and regulations that artificially drive up costs for young people….

So, millennials, it may seem nice that Senator Balint is putting her arm around you sympathetically and lamenting your plight. But, you might want to consider that she is the source of your pain.

Rob Roper is president of the Ethan Allen Institute. 

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