Repeal Vermont’s Estate Tax

February 19, 2019

by Rob Roper

Governor Scott and some key legislative leaders indicated a willingness to reform Vermont’s estate tax, raising the exemption from $2.75 million to $5.75 million. This is a good step if Vermont wants to keep wealthy taxpayers as citizens rather than see them flee entirely, or simply spend six months and a day somewhere else. However, if Vermont wants to actually attract wealthy retirees, an even better step would be to eliminate the estate tax all together.

Only a dozen states plus Washington DC have an estate tax (38 get along fine without one), so we wouldn’t be alone. But, among those states that do are neighboring (and neighborhood) New York, Massachusetts, Maine, Connecticut, and Rhode Island. Vermont, if we were smart, would position ourselves to be the financial as well as lifestyle destination for New England retirees who don’t want to leave the region, and, more importantly, don’t want to be fleeced when they die.

There would likely be quite a few candidates from just the Boston, New York, Newport, Greenwich areas who would jump at the chance to escape their local tax man and take in Vermont foliage season at the same time. These are people who will then build and renovate houses (construction jobs), eat in restaurants, shop in local stores, donate to and volunteer in local philanthropic entities, such as EMT services. They would be paying Vermont income taxes, sales taxes, rooms and meals taxes. How gratifying would it be to see New York Governor Andrew Cuomo complaining that Vermont, not Florida, was stealing his taxpayers. We don’t need all of them. We’re small. We just need a few.

Vermont has to have a tax strategy for attracting and encouraging some sort of economic activity. Right now, we have none. We tax, and therefore discourage, everything. We have high income taxes, 6-7% sales taxes, high property taxes, business taxes, estate taxes…. The only low tax strategy we employ is for the captive insurance industry, and it is tremendously successful in bringing in revenue. Why not replicate it in other areas? Retirement is an easy and sensible place to start.

Proponents of the Death Tax like the fact that it “soaks the rich.” This is shortsighted. You can’t soak the rich if they don’t live within your borders. Nobody has to live here. To harvest a crop, you need to cultivate that crop. And, to cultivate a crop sustainably, you can’t over harvest that crop. We need to cultivate a tax base, but we’re creating an economic dustbowl.

Rob Roper is president of the Ethan Allen Institute.

{ 2 comments… read them below or add one }

Deanne February 23, 2019 at 1:27 am

Could you present this in the legislature?

I have worked for two couples that fled Vermont taxes – both are well over middle class. Will Vermont ever learn?

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Thaddeus Cline February 23, 2019 at 7:26 am

And if they give thousands or millions towards nutty conservatives causes the more the marrier . Like the couple from Winchester Ma . Who pumped tons of money into both Vt. And Massachusetts for just that . Like pushing that Transvestism will have people climbing over bathroom walls to infect children with AIDS or what ever. The adds were all over Massachusetts TV to push anti laws that would have and do bring us into what we should be as a modern society and culture in 2019 .
Yup just give them more money they can invest in your nutty far right causes that very very few in Vt.belive in . Like upper middle class people who move here . Tax on the federal leval effects .0006 percent of the people and most like Trump himself find legal and illegal ways to get out of that .
So you have to cut your vacation to the south of France short for tax reasons . What average Vermonter is going to feel sorry for you .
When oh when are gullible republicans going to get that there being told what to think and how to think it by the nutty very rich . There paying to keep you gullible and it works as your lack of a tax refund is proving over and over to thousands of Vermonters they will go on believing in the very things that hurt them and help the very rich .

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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.
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