by Rob RoperRob Roper

Let’s say you run a small, struggling business in Vermont and, like many if not most, are operating on thin profit margins.

If our legislature has its way, after this year you will have to pay your employees a higher minimum wage on the way to $15 an hour, devote time to the paperwork required by a new 0.57% payroll tax, and deal with the labor complications associated with a mandatory Paid Family Leave program. There will be a doubling of your fuel tax, making it more expensive to heat your shop, prepare food, etc. You will also have to eliminate the use of convenient “single use” plastic bags and start charging your customers at least ten cents for each leaky paper bag instead. No Styrofoam coffee cups or food containers can go into those leaky paper bags, or you’ll face state imposed fines, and heaven forbid you offer a customer a plastic straw.

This, of course, doesn’t take into account any increased fees that may apply, which are going up this year as well. Good luck staying in business.

And, by the way, if you say “enough of this” and sell your business with plans to retire on the proceeds, the legislature is poised to reduce the percentage exclusion for the Capital Gains Exclusion from 40% to 30% and limit the percentage exclusion to up to $450,000 in capital gains, so the state will keep more in taxes (and out of your wallet) from the sale of your business. Isn’t that nice?

How does any of this signal Vermont is “open for business” or a good place to set up shop?

What if you’re a working family? During the debate on the House floor over how much to raise the tax on heating fuel  (50%, 100% or 200%; not raising it was never a consideration for the majority because they have to save the planet), one legislator snarkily quipped about the regressive penalty, “$15 a year,” the estimated amount the average household would pay in increase, “isn’t going to break anybody.” But add to that the $70 or so dollars that will come out of your paycheck for the Paid Family Leave payroll tax, a 25 percent increase in the “universal service charge” tax on your phone bill, increased costs for goods and services due to the higher minimum wage, and the extra $30 to $50 a year you’ll have to pay for non-plastic shopping bags, and pretty soon you’re talking about real money.

If you have kids in child care, one Lamoille County provider estimated the increased cost per child brought on by the $15 minimum wage alone would amount to $40 per week – and, yes, that could break somebody.

Again, how does any of this signal Vermont is a good place to settle down, work hard, and invest in your own future?

On a macro-scale, our legislature is asking our little state of 620,000 souls to shoulder an additional $75 million from a new payroll tax to fund a new entitlement program likely to explode with future cost growth, $4.5 million in heating fuel tax increases, and over $70 million in increased education spending for a system with fewer kids in it every year. We’re looking at $8 million in increased fees, and the $15 minimum wage will cause an estimated $60 million in new Medicare and Medicaid costs. Where’s that money going to come from?

And, they’re not done yet. The legislature is still looking for tens of millions of dollars ($50 million per year?) to fund lake and waterway clean up, our chronically underfunded and mismanaged state pension fund crisis is creating an annual $120 million (and growing exponentially) black hole in the budget that will have to be filled at some point. The debate continues over whether or not to fine citizens as much as $675 for not having health insurance they can’t afford in the first place.

All on top of what is already considered to be one of the highest tax burdens in the nation.

This is not sustainable or responsible governance. Maybe it’s time for our elected officials to consider that this approach to policy is why we have a stagnant population, anemic economic growth, and trouble convincing young working people to come or stay here. Maybe, if you really want to help people instead of continuously causing harm, it’s time to take a cue from Sienfeld’s George Costanza and start doing the opposite of whatever your policy instincts are telling you to do. Because this stuff isn’t working.

Rob Roper is president of the Ethan Allen Institute.

 

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March 29, 2019

by Rob Roper

Rep. Selene Colburn (P – Burlington) said Thursday on the floor of the Vermont House of Representatives that she had misgivings about supporting the proposed $6.1 billion budget because its insufficient attention to climate change could lead to “planetary collapse.” Seriously, she said this.

Her fellow Burlington Progressive, Rep. Brian Cina, similarly lamented on the floor that if we didn’t do more, Vermont’s winter snow and maple syrup runs would become a thing of the past. While this may be the case, nothing Vermont or the world does will change this one way or the other.

On Wednesday, Steve Crowley, Chair, Sierra Club Energy Committee, Sandy Levine, Senior Attorney, Conservation Law Foundation testified before House Energy and Technology Committee on H.462, the “Vermont Global Warming Solutions Act.” “The purpose of this bill is to create a fair, workable, cost-effective, and legally enforceable system by which Vermont will be able to reduce its economy-wide carbon emissions to zero by 2050.” Zero. In three decades. By law.

Essentially, this bill would make Vermont an environmentalist police state. It would make it illegal (ie, enforced by people with guns) to not meet those greenhouse gas emission targets, which we have so far, for all of our “green” virtue signaling, not come close to meeting. Per testimony, “Emissions increased 16 percent since 1990 in VT, while declining nationally and across the region.”

Why is this? Because these policies are impossible to comply with (they are also arbitrary as nothing we do will have any impact on future climate trends), especially without nuclear power in the mix. And according to our legislature, using nuclear power is the one thing worse than allowing total “planetary collapse!”

But, the attempt would require tens or hundreds of thousands of Vermonters to, for example, switch to electric vehicles, even more to change from oil, propane or natural gas heat to something like an electric heat pump, whether we want to or not.

So, how do you think the state is going to enforce what heretofore have been private decisions made by private citizens? And what’s the cost of all this going to be? That, no one wanted to discuss.

But, as Rep. Mike Yantachka exclaimed at the end of Sandra Levine’s testimony, we have to do this “or we’re screwed!” He actually believes this. A large number of or our elected officials believe this. They really think that if Vermont does not build electric vehicle charging stations, put insulation in a few hundred aging houses, and force everybody to buy a Tesla – at whatever cost to the taxpayers or our economy — the entire planetary ecosystem will collapse. This is what is driving their decision making process. And, it’s delusional.

Rob Roper is president of the Ethan Allen Institute.

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March 28, 2019

By John Pelletier, Director of the Center for Financial Literacy at Champlain College

For several years now, there has been discussion regarding the impact of the migration of Vermont’s citizens to other states on Vermont’s tax revenues. For the most part, we have been reassured that nearly as many taxpayers leave Vermont as relocate here. And we have been told that the dollars involved are about the same especially for high income individuals. So, it looks like we have nothing to worry about. Or do we?

Our tax policies are not very welcoming to the mobile wealthy retiree. According to Kiplinger 33 states have no inheritance or estate tax, 37 states do not tax social security benefits and 9 states have no income tax. Vermont is not one of these states. The Tax Foundation notes that only 5 states have higher marginal income tax rates than Vermont and Vermont is ranked 49th, nearly in last place, with regard to its property tax burden. Not surprisingly, Kiplinger ranks Vermont as the 4th least tax-friendly state for retirees.

In January, Governor Scott asked the legislature to change Vermont’s estate tax so that it would be competitive with other states (two-thirds of all states do not have this tax). This policy change is intended to keep more wealthy taxpayers in Vermont (mostly retirees) by reducing the economic incentive for high tax paying citizens to move to low tax states like Florida and New Hampshire. The goal is to have Vermont retain more tax dollars that can be spent on government provided services.

The proposed tax change assumes that Vermont’s current tax policies incentivizes older rich tax payers to leave Vermont solely for estate planning purposes. Such tax payers will likely migrate to another state long before they die. The result—Vermont never collects their inheritance tax and their income tax while they are residents of another state for the years prior to their death.

An analysis of the IRS files that contain the state tax migration data for the most recent five years available appears to confirm Governor Scott’s concerns. The time frame reviewed was from 2012 to 2016. Please note that the discussion below focuses on tax filers that have left Vermont, not individuals. Individuals who have left the state are a larger number than tax filers since many tax filings are joint (e.g. married couples) and some include dependents.

Over this five year period nearly 48,000 tax filers have left our state and nearly 44,000 tax filers have moved to Vermont[1].  Over this time frame Vermont gained tax filers from net migration from only seven states and lost tax filers to 37 states and the District of Columbia.[2] From 2012-2016 Vermont has lost 4,012 tax filers, resulting in a total aggregate net loss of about $271 million in taxable AGI (adjustable gross income). The net AGI lost is approximately $68,000 per tax filer leaving the state.

Net Migration out of Vermont. When you net the migration on a per state basis (e.g., tax filers moving from Vermont to Maine netted against tax filers moving to Vermont from Maine), only thirteen states had net migration from Vermont of more than 200 tax filers in the aggregate from 2012 to 2016 (an average of 40 tax filers or more per year leaving Vermont)[3]. Vermont “exported” 6,489 tax filers to these thirteen states and lost a total of $588.4 million in taxable AGI over this five year period. On average, the net tax filer lost to these states had an AGI of approximately $91,000 per tax filer.

State Net Migration of Tax Filers from Vermont 2012-2016 Net AGI that has left Vermont 2012-2016 Average AGI per net Tax Return leaving Vermont
Florida 1,769 $332.7 million $188,053
California    838      $5.6 million* Not Applicable*
North Carolina    796    $44.6  million   $56,019
Colorado    503    $12.8 million   $25,414
South Carolina    445    $40.2 million   $90,270
Maine    436    $26.8 million   $61,408
Washington    302    $14.0 million   $13,964
New Hampshire    264    $68.9 million $260,936
Oregon    253    $10.1 million   $39,787
Texas    253      $9.0 million   $35,727
Georgia    217      $9.5 million   $43,820
Tennessee    209    $11.3 million   $54,124
Arizona    204    $14.1 million   $69,083
Total 6,489 $588.4 million   $90,676
Total of 4 states (FL, SC, NH & AZ) with AIG higher than $68,000 2,682

(41% of Total Net Migration Tax Filers)

$455.9 million

(78% of total AGI that has left Vermont 2012-16)

$169,985
Total of 9 states  (CA, NC, CO, ME, WA, OR, TX, GA & TN) with AIG lower than $68,000 3,807

(59% of Total Net Migration Tax Filers)

$132.5 million

(22% of total AGI that has left Vermont 2012-16)

 

  $34,804

*California’s net migration results in positive net AGI of about $6 million to Vermont despite losing 838 tax filers. Migration from Vermont to California was 2,735 tax filers (AGI lost was $122 million or $44,615 per tax filer) and migration from California to Vermont was 1,897 (AGI gained was $128 million or $67,285 per tax filer).

As you can see in the chart above, there are four states (Florida, South Carolina, New Hampshire and Arizona) where the AGI per net tax filer leaving Vermont is greater than $68,000, the approximate average of all tax filer net migration from the state from 2012-16. These four states appear to be where Vermont is “exporting” rich tax payers with an average AGI of about $170,000 per tax filer lost. The total AGI lost to these four states is $455.9 million or 78% of the total AGI lost to these thirteen states.

Vermont is “exporting” 42% more tax filers in the remaining nine states, but they are not rich tax filers. The average AGI of the tax filers lost to these nine states is approximately $35,000. The rich and the not so rich are leaving Vermont in a manner that suggests that tax policies are playing a large role in these migratory patterns.

As indicated in the tax policy chart below, all four states where the rich are migrating to have no estate or inheritance tax, do not tax social security income and have no income tax or have marginal income tax rates that are lower than Vermont’s. Interestingly, all thirteen states, where net migration of more than 200 tax filers over five years is occurring, are much more generous than Vermont to social security recipients. Twelve of these states do not tax social security payments and the thirteenth state, Colorado, exempts $24,000 in social security income per recipient from taxable income.

All thirteen states are considered by Kiplinger to be friendlier to retirees with regard to taxes than Vermont.  Although 10 states (including Vermont) are ranked by Kiplinger as be Least Tax Friendly to Retirees, none of these states are where material net migration from Vermont occurs (a total net migration of 167 tax filers to these nine other least tax friendly to retirees states or 4% of all net migration from 2012-16).

State Estate or Inheritance Tax? Tax on Social Security Income? Highest Marginal Income Tax Rate (flat or progressive tax) Retiree Tax Friendly Rating by Kiplinger** Worker Tax Friendly Rating by Kiplinger***
Florida No No No income tax Most Tax Friendly Most Tax Friendly
California* No No Yes (Progressive 13.3%) Mixed

 

Least Tax Friendly
North Carolina No No Yes (Flat 5.49%) Not Tax Friendly

 

Tax Friendly
Colorado No Partial ($24K exclusion per recipient Yes (Flat 4.63%) Mixed

 

Tax Friendly
South Carolina No No Yes (Progressive 7%) Tax Friendly Mixed
Maine Yes (Progressive 8-12%, Exemption $5.6 million) No Yes (Progressive 7.5%) Mixed Least Tax Friendly
Washington Yes (Progressive 10-20%, Exemption $2.19 million) No No Tax Friendly Tax Friendly
New Hampshire No No No Most Tax Friendly Tax Friendly
Oregon Yes (10-16%, Exemption $1 million) No Yes (Progressive 9.9%) Not Tax Friendly Not Tax Friendly
Texas No No No Tax Friendly Mixed
Georgia No No Yes (Progressive 6%) Most Tax Friendly Mixed
Tennessee No No No (taxation on dividend interest of 3%) Tax Friendly Tax Friendly
Arizona No No Yes (Progressive 4.54%) Mixed Most Tax Friendly
Vermont Yes (Flat 16%, Exemption $2.75 million) Yes+ Yes (Progressive 8.75%) Least Tax Friendly Least Tax Friendly

*California is the only state on this list where the negative net migration from Vermont results in positive AGI income to the state (see previous chart). California’s top marginal income tax rate is 13.3% compared to Vermont’s top marginal income tax rate of 8.75%. California is one of 10 states identified by Kiplinger as being Least Tax Friendly for individuals who are not retired, see: https://www.kiplinger.com/tool/taxes/T055-S001-kiplinger-tax-map/index.php

**Kiplinger’s November 2018 State-by-State Guide to Taxes on Retirees at following website link: https://www.kiplinger.com/tool/retirement/T055-S001-state-by-state-guide-to-taxes-on-retirees/index.php

***Kiplinger’s October 2018 State-by-State Guide to Taxes at following website link: https://www.kiplinger.com/tool/taxes/T055-S001-kiplinger-tax-map/index.php

+ In 2019 in Vermont, for single filers Social Security benefits will be exempt if AGI is less than $45,000 and partially exempt if AGI is between $45,000-$55,000. For married joint filers, Social Security benefits will be exempt AGI is less than $60,000 and partially exempt if AGI is between $60,000-$70,000.


Only three of the thirteen outflow migration states, listed have an estate or inheritance tax (Maine, Washington and Oregon). All three have progressive rather than flat estate tax rates like Vermont has.  Maine has a much higher tax exemption than Vermont’s.  None of these three states appear to be “importing” wealthy Vermonters.

Net Migration into Vermont. When you net the migration on a per state basis, only five states had net migration into Vermont of more than 200 tax filers in total over the last five years[4]. As you can see in the chart below, there are five states (New York, Connecticut, New Jersey, Massachusetts and Pennsylvania) that are “exporting” relatively wealthy taxpayers to Vermont, but just not enough of them.

The net migration into Vermont from these five states was 2,950 tax filers over the past five years resulted in a total gain to Vermont of $358.7 million in taxable AGI or an AGI of approximately $122,000 per net tax filer gained.

 

State Net Migration of Tax Filers into Vermont 2012-2016 Net AGI that has migrated to Vermont 2012-2016 Average AGI per net Tax Return migrating to Vermont
New York 1,155 $129.1 million $111,762
Connecticut    700   $77.6 million $110,879
New Jersey    534   $63.4 million $118,695
Massachusetts    333   $68.4 million $205,477
Pennsylvania    228   $20.2 million   $88,522
Total 2,950  $358.7 million $121,593

 

Interestingly, as the tax policy chart below indicates all five states, over the time period measured, had an estate or inheritance tax (New Jersey repealed their estate tax as of 2018). Vermont may be “importing” mostly working age tax filers from these states rather than retirees. For individuals who are not retired yet, Kiplinger ranks New York, Connecticut and New Jersey as Least Tax Friendly and ranks Massachusetts and Pennsylvania as being Mixed Tax Friendly.

—  John Pelletier is Director of the Center for Financial Literacy at Champlain College

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State Estate or Inheritance Tax? Tax on Social Security Income? Highest Marginal Income Tax Rate (flat or progressive tax) Retiree Tax Friendly Rating by Kiplinger** Worker Tax Friendly Rating by Kiplinger***
New York Yes (Flat 16%; Exemption $5.49 million; is a cliff tax—if estate is more than 105% of the exemption then entire estate is subject to the tax) No Yes (Progressive 8.882% plus an additional 3.879% in New York City) Not Tax Friendly Least Tax Friendly
Connecticut Yes (Progressive 7.2% to 12%, Exemption $2.6 million rising to $3.6 million in 2019) Yes (exemption for single taxpayers $50k and for joint $60k) Yes (Progressive 6.99%) Least Tax Friendly Least Tax Friendly
New Jersey Yes (During  2012-2016 but None currently (repealed for tax year 2018; prior rate was Progressive 11% to 16% with $2 million exemption in 2017 and $680,000 exemption in 2012-2016) No Yes (Progressive 8.97%) Mixed Least Tax Friendly
Massachusetts Yes (Progressive 0.8% to 16%, unlimited marital deduction, Exemption $1 million) No Yes (Flat 5.1%) Not Tax Friendly Mixed
Pennsylvania Yes (No tax on spousal property; 4.5% for transfers to direct descendants (lineal heirs), 12% for transfers to siblings and 15% for transfers to other heirs) No Yes (Flat 3.07%) Most Tax Friendly Mixed
Vermont Yes (Flat 16%, Exemption $2.75 million) Yes* Yes (Progressive 8.75%) Least Tax Friendly Least Tax Friendly

* In 2019 in Vermont, for single filers Social Security benefits will be exempt if AGI is less than $45,000 and partially exempt if AGI is between $45,000-$55,000. For married joint filers, Social Security benefits will be exempt AGI is less than $60,000 and partially exempt if AGI is between $60,000-$70,000.

**Kiplinger’s November 2018 State-by-State Guide to Taxes on Retirees at following website link: https://www.kiplinger.com/tool/retirement/T055-S001-state-by-state-guide-to-taxes-on-retirees/index.php

***Note that New York, New Jersey and Connecticut are ranked as Least Tax Friendly for individuals who are not retired.  See Kiplinger’s October 2018 State-by-State Guide to Taxes at following website link: https://www.kiplinger.com/tool/taxes/T055-S001-kiplinger-tax-map/index.php

The charts below show the percent of total net AGI leaving or entering into Vermont based on the migration patterns of the 18 states with material net migration patterns (more than 200 tax filers) over the period measured. The charts use the Kiplinger worker and retiree tax friendly ratings of the states to see if any noticeable patterns emerge.

 

 

Kiplinger Retiree Tax Friendly Rankings Most Tax Friendly State Tax Friendly State Mixed Tax Friendly State Not Tax Friendly State Least Tax Friendly State
OUTFLOW: Percentage of Vermont AGI Lost to Net Migration 70% 13% 8% 8% 0%
INFLOW: Percentage of Vermont AGI Gained from  Net Migration 8% 0% 18% 55% 22%

 

Kiplinger Worker Tax Friendly Rankings Most Tax Friendly State Tax Friendly State Mixed Tax Friendly State Not Tax Friendly State Least Tax Friendly State
OUTFLOW: Percentage of Vermont AGI Lost to Net Migration 59% 26% 10% 2% 4%
INFLOW: Percentage of Vermont AGI Gained from  Net Migration 0% 0% 25% 0% 75%

Charts above are of states with net migration to or from Vermont more than 200 from 2012 to 2016

Vermont’s net migration of tax filers appears to be correlated to our state’s tax policies. The following appears to be occurring in response to the tax policies of Vermont and other states:

  • Rich retirees and workers are leaving Vermont for more tax friendly states. These retirees and workers are looking to avoid Vermont’s estate tax and income tax on social security benefits and other income. Eighty-three percent of taxable AGI that left Vermont went to states recognized by Kiplinger as Most Tax Friendly or Tax Friendly to retirees. Eighty-five percent of taxable AGI that left Vermont went to states categorized by Kiplinger as being Most Tax Friendly or Tax Friendly to workers.
  • Vermont only appears to be able to generate material net migration (retirees or workers) from states whose tax policies very similar to Vermont’s. Seventy-five percent of taxable AGI was gained by Vermont from states categorized by Kiplinger as Least Tax Friendly to workers. Seventy-seven percent of taxable AGI “imported” into Vermont came from states recognized by Kiplinger as Least Tax Friendly or Not Tax Friendly to retirees.

The percent of Vermont’s population over age 65 is nearly 20% and continues to grow. Vermont is one of the oldest states, by median age, in the nation and continues to get older. Vermont is not growing its population. Vermont needs tax policies that reduce the number of rich tax filers leaving the state and policies that will attract more rich tax filers to move here. Modest changes in these net migration numbers could generate enough taxable income to pay the tax changes and generate additional tax revenue for the legislature to spend on needed public services. That is the theory behind the proposed estate tax modifications that the Scott administration is pursuing.  Tax policies designed to retain and “import” more rich retirees and rich working tax filers is certainly worthy of more study and consideration by Vermont’s legislature.

[1] Measures only migration between the 49 other states and District of Columbia and does not include migration to or from foreign countries.

[2] In five states (Arkansas, Nebraska, North Dakota, South Dakota and West Virginia) the migration numbers were so low that the IRS suppressed the data in certain years to prevent individual disclosure of income.

[3] There is a large drop off in outflow net migration per state below 200 over the five year period measured. Virginia was ranked number fourteen with 194 net migrants out of Vermont followed by Montana at fifteen with 98 net migrants.

[4] There is a large drop off in inflow net migration per state below 200 over the five year period measured. Maryland was ranked number six with 28 net migrants into Vermont followed by Iowa at seventh place with 13 net migrants.

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March 27, 2019

By John McClaughry

            The House Health Care Committee has brought out a bill (H.524) that at best has nothing to recommend it, and at worst, would make Vermont’s health care situation worse for thousands of innocent people.

            The main impetus for this bill seems to be the determination of Chairman William Lippert (D-Hinesburg) to defeat, in Vermont, any effort by Republicans in Washington to relax some of the restrictive and compulsory features of the Affordable Care Act of 2010.

            A key feature of the ACA was a mandate to purchase Federally-approved health insurance, enforced by taxing persons for not buying such insurance. The penalty tax was the greater of $695 or 2% of household income. This was so unpopular that the Obama administration created fourteen classes of exemptions, including vaguely defined “hardship”, to keep from having to levy its own tax on vulnerable families.

 In 2017 the Republican Congress set the Obamacare penalty tax rate at zero, effectively eliminating it. Chairman Lippert, a long time partisan for universal government-run health care, wants it back in Vermont.

Thus he has pushed his committee to fully reinstate the ACA mandate and tax on working people with incomes above the Medicaid eligibility level and not covered by employer insurance, who don’t enroll in plans offering expensive “minimum essential coverage.”  If those people can’t afford to buy such insurance, even with ACA tax credits, his bill (H.524) would lay on a new Vermont tax to force them to buy it.

Lippert is quoted in the media (Politico, 3/8/19) as saying. “We don’t want to disincentivize people.” His perverse idea of the “incentive” he wants to preserve is threatening people with penalty taxes until they comply, and if they still won’t pay, starting the tax collection process, ending with putting liens on homes and vehicles.

 Last year the legislature passed a Vermont ACA mandate for 2020, and created a 7-person Working Group to recommend “a financial penalty or other enforcement mechanism”.  That group could not agree on a new tax to force working people to buy insurance, but Lippert’s committee decided it was a good idea.

The good news is that last week the House Ways and Means Committee balked at levying that new tax. Its proposed rewrite of H.524 preserves the mandate enacted in 2018, but scraps the penalty tax. Instead, Vermonters would have to indicate on their tax returns whether they had minimum essential coverage the previous year. If they did not, the Department of Vermont Health Access would reach out to persuade them to take advantage of the ACA subsidies.

The House will likely vote on the two versions this week. The odds are that the Lippert penalty tax version will be rejected. This may not be the final episode: The Senate could reinstate it. Gov. Scott’s spokesperson announced on February 2 that “we will not support a financial penalty as a mechanism to induce health care coverage.”

There is more not to like in the Lippert version of H.524. The ACA specifically exempted participants in four well-established Health Care Sharing Ministries from the individual mandate. These are faith-based groups whose participants each month make payments sufficient to meet the health care expenses incurred by members the previous month. More than 500 Vermonters belong to these groups, and the number is likely to grow.

The Working Group refused to support an individual mandate that would strip these caring and sharing people of their exemption from a penalty tax. The only advocate in the group for removing this exemption was the representative from Blue Cross Blue Shield of Vermont, supposedly a socially conscious mutual insurance company. The demand for corporate welfare never flags.

Lippert declares of health sharing ministries that “this isn’t insurance”. He’s right; it’s not. It’s people giving from their hearts to succor their fellow believers in need. No matter, to a legislator whose motto seems to be “No Escape!” If the legislature should ultimately revive the penalty tax, the Health Sharing Ministries should be given the ACA exemption, alongside the religious conscience exemptions for such groups as Christian Science.

Both versions of the bill mandate making small businesses of up to 100 employees (up from the current 50) be pooled to their competitive disadvantage with the individual market pool. That needs to be dropped. But the legislative rejection of the penalty tax would certainly show that even a left-leaning legislature has enough good sense not to lay new tax burdens on vulnerable working families.

John McClaughry is vice president of the Ethan Allen Institute.

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March 26, 2019

by Rob Roper

In addition to doubling your taxes on home heating fuels ($14 million), forcing you to pay a new payroll tax (over $100 million) and to cover  the increased costs brought about by a $15 minimum wage, as well as presumably pay some new tax to cover lake clean up ($50 million?) and pick up host of new fee increases, there’s something else our legislators want you to dig deep into your wallets for: paying reparations for slavery.

Frederick Douglass

Yup. The bill is H.478, and it’s stated purpose is to, “Develop Reparation Proposals for African Americans… This bill proposes to establish a task force to: (1) study and consider a State apology and proposal for reparations for the institution of slavery; and (2) make recommendations to the General Assembly on appropriate remedies.” Really? Is this what you elected your state representatives to travel to Montpelier along our crumbling roads each day to do on your behalf?

First of all, it would be impossible to ever truly compensate for the inhumanity of slavery. And how could you ever find a just and fair way to do so today when nobody involved in the transaction has ever owned a slave or ever been a slave? But, as long as the issue of what to do about this awful part of our history is up for discussion, perhaps Frederick Douglass, a former slave who escaped to become an international figure in the abolitionist movement, had the answer way back in 1865.

Everybody has asked the question, and they learned to ask it early of the abolitionists, “What shall we do with the Negro?” I have had but one answer from the beginning. Do nothing with us! Your doing with us has already played the mischief with us. Do nothing with us! If the apples will not remain on the tree of their own strength, if they are wormeaten at the core, if they are early ripe and disposed to fall, let them fall! I am not for tying or fastening them on the tree in any way, except by nature’s plan, and if they will not stay there, let them fall. And if the Negro cannot stand on his own legs, let him fall also. All I ask is, give him a chance to stand on his own legs! Let him alone! If you see him on his way to school, let him alone, don’t disturb him! If you see him going to the dinner-table at a hotel, let him go! If you see him going to the ballot-box, let him alone, don’t disturb him! If you see him going into a work-shop, just let him alone,—your interference is doing him a positive injury.” (What the Black Man Wants, 1865)

Well-meaning politicians in the modern era have presided over the destruction of the African-American family, too many African-American children trapped in failing public schools, disproportionate unemployment and incarceration rates…. These results are not the product of inactive, uncaring government, but rather incompetent government “here to help.” These are the results of affirmative action programs, welfare, the public school system, minimum wage laws, etc. What Douglass said over 150 years ago is just as true today: your interference is doing a positive injury. So, stop interfering.

Rob Roper is president of the Ethan Allen Institute.

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March 22, 2019

by Rob Roper

Due very soon on the House floor is a measure to double taxes on home heating fuel and dyed diesel fuel. The bill, H. 439 – An act relating to the Home Weatherization Assistance Program, currently calls for a 2 cent tax per gallon increase (4 cents total) on heating fuels paid directly by the customer, plus a doubling of the gross receipts tax paid by the dealer from .75 to 1.5 cents a gallon. This, of course, gets passed along to the customer.

Springtime in Vermont!

In total, the Joint Fiscal Office estimates this will cost cold Vermonters an additional $9.3 million to heat their homes in 2020 and 2021. Just as an aside, I am now looking out the window as the first flakes of a foot or more snow storm greet the first days of spring!

So, what will this money be used for? The state’s home weatherization program. According to testimony from that program’s director, $500,000 allows for the weatherization of about forty-five homes, so this tax increase will allow them to weatherize over 400 homes. This is great – if you’re one of those lucky 400 homeowners who gets a free or subsidized weatherization job. But, if you’re a member of one of the other 240,000 plus Vermont households, this tax and this program sucks for you. You just get the bill for your neighbor’s new windows.

According to an article in Vermont Digger, “Rep. James Masland, D-Thetford, proposed an amendment this week to increase the taxes after hearing testimony from a government adviser, the Regulatory Assistance Project.” We reported on that testimony as well (though from a different committee) in “Non-Pricing” Carbon Reduction Relies on… Carbon Pricing!” These guys were peddling the notion that to lower Vermont’s carbon footprint it would require new government programs or more funding for existing government programs. And, such programs require new taxes – and not the “revenue neutral” kind – preferably on Carbon.

Well, here we go! This is a carbon by another name hidden in a different bill, but it is a carbon tax just the same.

– Rob Roper is president of the Ethan Allen Institute.

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March 21, 2019

by Rob Roper

A recent headline boasted, “Attracted by the promise of $10,000, new workers start arriving in Vermont.” Great. How many? Eighteen. Forty-seven when you include the non-working family members who tagged along. The article goes on, “Acknowledging the success of the program, Gov. Phil Scott’s administration proposed that the state spend $1 million in the coming year….” Wait a minute. The success of the program? By what metric?

The governor has said in the past that we need to attract 10,000 new workers a year to replace what we are losing. This program, at ridiculous expense, scraped up eighteen. Only 9,982 to go! How is that a success? It’s pathetic in more ways than one.

But, worse than this failure of numbers, is the damage this program will do to Vermont’s brand over the long term. In his best selling book on leadership, Start with Why, Simon Sinek offers a cautionary tale from General Motors. In the 1990s, facing lots of competition and losing customers, GM started a program of offering “cash back” incentives to buy their cars — anywhere from $500 to $7000. But, in the 2000s, GM realized that this approach was fiscally unsustainable. They were losing money, so “GM announced it would reduce the amount of the cash-back incentives it would offer, and with that reduction, sales plummeted. No cash, no customers.”

This is exactly what Vermont is doing with this poorly considered program. If the message you are sending is that Vermont is a place we have to pay you to come live, ultimately the lesson you’re teaching the world is “don’t move to Vermont without a check.” And, no way, no how can we afford to write these checks to all the people we need to come and/or stay. This is an even less sustainable business model for Vermont than it was for GM.

Sinek’s point was to illustrate the difference between manipulation and inspiration. GM tried to manipulate its customers with a gimmick, but that’s not a long-term winning strategy. True success – real leadership – comes from building a brand that people aspire to be a part of without the gimmicks.

We will always be able to count the number of people brought into the state through a government program (even numbers as small as 18), but it’s not as easy to count the number of people who don’t move to Vermont because they didn’t get their $10,000 bucks. Or would never move to a state so unattractive they had to pay you to live there. Or those who leave because they feel like paying full freight in a state that uses their tax dollars to bribe outsiders to come in is a rip-off only a fool would sit still for.

They’re saying this program is a success? I’ll ask again: by what metric?

Rob Roper is president of the Ethan Allen Institute

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March 18, 2019

by John McClaughry

Proposal 5 to amend the Vermont Constitution to promote “reproductive liberty”, is now under Senate consideration. I don’t propose to discuss the “right to personal reproductive autonomy” that is the focus of that proposal, but the opening sentence would create a lot of problems.

That sentence reads as follows: “The people are guaranteed the liberty and dignity to determine their own life’s course.”

First off, this is a passive construction: “are guaranteed”. Who and what exactly is doing the guaranteeing? The Bill of Rights, to which Proposal 5 would be an addition, declares the rights of the people – for instance – to exercise freedom of speech and press, to be protected in the enjoyment of life, liberty and property, and to bear arms. But nowhere does the Constitution guarantee anything, let alone “the liberty and dignity to determine their own life’s course.”

Could a person, under this language, bring a lawsuit against the State for being made to wear an undignified helmet while riding a motorcycle? Could a person sentenced under Ch. II sec. 64 to perform hard labor in full view of the public, object that being seen in an orange jump suit cleaning up trash invades his dignity? Could a person bring suit claiming that food stamps and welfare payments are not sufficient to allow him or her to live a life of dignity at taxpayer’s expense?

I’m not keen on the rest of Proposal 5, but this first sentence really has to go.

John McClaughry is vice president of the Ethan Allen Institute

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March 15, 2019

by John McClaughry

Here’s an interesting story from Associated Press, dated June 29, 1989:

“A senior U.N. environmental official says entire nations could be wiped off the face of the Earth by rising sea levels if the global warming trend is not reversed by the year 2000.”

“Coastal flooding and crop failures would create an exodus of “eco-refugees,” threatening political chaos, said Noel Brown, director of the New York office of the U.N. Environment Program, or UNEP.”

“He said governments have a 10-year window of opportunity to solve the greenhouse effect before it goes beyond human control”.

As the warming melts polar icecaps, ocean levels will rise by up to three feet, enough to cover the Maldives and other flat island nations, Brown told The Associated Press in an interview.

“Coastal regions will be inundated; one-sixth of Bangladesh could be flooded, displacing a fourth of its 90 million people. A fifth of Egypt’s arable land in the Nile Delta would be flooded, cutting off its food supply, according to a joint UNEP and U.S. Environmental Protection Agency study. . . ”

Well, thirty years have gone by since that outburst from a United Nations official, and nineteen years since nations were supposed to disappear. Notice any missing nations?

This is just an early example of the hysterical hype fed to us by the UN and its climate bodies. When their scare stories don’t pan out, they just invent new ones.

John McClaughry is vice president of the Ethan Allen Institute

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March 12, 2019

by Rob Roper

When the state started to ramp up its government-funded, government-run pre-k programs in 2005-2006, the rhetoric was all about how great this would be “for the kids.” We needed to get more children into these “high quality” programs for their own good. Brain development is at a critical point between birth and five…. You’ve likely heard the story. But what was and is still missing from this discussion is the undisputed fact that the best situation for a child from birth to five is to be home with a parent, or, barring that possibility, a family member.

So, why isn’t figuring out ways to make it easier for kids to stay home with a parent (or grandparent) in the early years the objective of state policy? Back in 2006, speaking to the Lake Champlain Chamber of Commerce on the issue of universal pre-k, I pointed out that the real reason for this is that the programs weren’t concerned with what’s best for children, but rather what’s best for businesses: getting mom and dad away from their baby and back to work, even if that had a negative effect on childhood development (not to mention taxpayers!). My remarks were met with shock, indignation, and protestations of innocence. How could any feeling human being believe such a thing?

Well, here we are today. Let’s Grow Kids paid for a 3500 word infomercial article in Seven Days (perhaps elsewhere) touting, “Right now, some young parents who want to work are dropping out of the workforce because they can’t find care for their kids. Vermont can’t afford to lose them.” And, “This financial assistance could be described as an investment in the state’s future workforce.”

This “financial assistance” (aka government spending) could also be described as “corporate welfare,” and damaging to our state’s future work force.

Since 2006, Vermont has grown state spending and regulation of pre-k programs significantly, and now Let’s Grow Kids is asking for $800,000,000 a year for a comprehensive birth to five program. What are the results? 4th grade scores are falling and behavioral problems are on the rise.

Back in 2017, then House Education Committee, chairman David Sharpe (D-Bristol) noted that there has also been, along with falling test scores, an increase in number of disruptive students in the classroom. This prompted him to inquire, “I applaud your [Pre-K advocates] efforts,” said Sharpe, “but are we creating these agencies to replace parents because we’ve created a culture where mom and dad get up every day and go do work and aren’t a part of their kids’ lives? Did we create this problem by creating a culture where children are without parents for so much of their life?”

Yes! These programs are not about what’s best for kids, they are not about what’s best for parents. They are, in fact, damaging to both. Government funded pre-k is about what’s best for employers – forcing taxpayers to subsidize their employees’ childcare expenses.

Rob Roper is president of the Ethan Allen Institute.

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