Vermont Business Roundtable Blog » tax policy

Blunt Instrument or Functional Tool?

Sherra Bourget — Fri, 23 Oct 2009 20:59:20 +0000

During testimony before the Blue Ribbon Tax Structure Commission this week, Ken Perine, Chair of the Roundtable’s Tax & Fiscal Task Force was asked the question, should the state’s economic system be used to incent social policy, or put another way, should Vermont’s tax system be used as a “blunt instrument or a functional tool?” Actually, the question perhaps should have been asked, “should the state’s economic system continue to be used…”, because that is indeed how we operate today.

Over the past 218 years, Vermont has designed its revenues structure, regulatory environment, and spending priorities to achieve certain social ends in the educational, environmental, health care, and human service arenas. And in doing so has achieved national accolades in some cases. But, unfortunately, the escalation in costs has become unsustainable and events of a year ago have forever changed our ability to support the status quo.

As the Roundtable responded, we believe that it is possible to support both economic and social priorities in the same tax structure and that what’s needed now is a rebalancing. Vermont’s business markets are not in-state, they’re out of state. Their competitors are not across the street, they’re across the dateline. Efforts to modernize Vermont’s tax structure should incent business and consumer activity much more than it has before. The Commission gets it, but will lawmakers and the public?

Roundtable Mobilizes Around Tax and Fiscal Policy

Sherra Bourget — Tue, 07 Jul 2009 15:43:00 +0000

As we begin our emergence from the Great Recession and see budget deficits forecast through FY13, the Roundtable’s Tax and Fiscal Policy Task Force has been taking a fresh look at these and related issues. The Task Force, which began meeting earlier this summer and will continue through November, is chaired by Ken Perine, President of National Bank of Middlebury, and a member of the Roundtable’s Board of Directors. Recommendations will be submitted to the Board for consideration at its November planning retreat.

The Task Force will not only update the Roundtable’s position on tax policy, but will exercise its educational mission and conduct an awareness campaign throughout the state around the structural fiscal issues plaguing Vermont. Also, it will serve as a resource to the Blue Ribbon Tax Commission that was created by the legislature this past session, and which is chaired by Roundtable Member Emeritus, Bill Schubart. The commission has been charged to investigate structural issues in its first year and tax expenditures issues in the second year, with deliverables by January of 2010 and 2011, respectively.

During the period 1991-2001 the Roundtable published five different reports on tax and fiscal policy. These reports are available on our website at http://vtroundtable.org/article/view/19096/1/3358 .

Time to Think and Act Anew

Sherra Bourget — Thu, 26 Feb 2009 19:33:04 +0000

The Wall Street Journal’s Review and Outlook article was entitled, “The Decline of California”, but the table included Vermont as having the third highest income tax rate (9.5%, behind California at 10.5% and Rhode Island at 9.9%, and just above Oregon at 9.0%). This is the quote that caught my attention: “The tragedy … is that the political class still won’t address the root cause of its financial problems, which is that the state is becoming less economically competitive.” The article suggests that Californians will not solve their woes unless they reduce their tax burden and adopt more radical spending controls. (http://online.wsj.com/article/SB123491737158404543.html)

Everything is relative, but Vermont’s challenges are similar. Our public generosity has become unsustainable, our tax base is small and capacity is limited, and we now find ourselves on the horns of a dilemma. How do we make it through this recession while inflicting the least harm on the neediest, and how do we invest now in the near term so that we are positioned for a fast start when it’s over? There are certainly proposals floating throughout the halls of the State House that merit thoughtful examination. But in this era of profound pressures and demands on state government, do we have the will to think and act radically rather than incrementally?

In addition to rethinking the structural organization of state government, is there capacity and political will to think anew about how we fund state government? Some would suggest it’s time for temporary tax increases, or whatever euphemism is used to describe the same thing. But, does the current tax structure reflect the old economy or the new economy? Are we taxing the right things? Are the rates at the right levels? Would such an effort accomplish the intended goal?

There is spirited chatter on these questions from all sides. Perhaps it is time after all, as some suggest, for objectively examining the state’s tax structure and all its myriad fees so that we are encouraging those things we desire more of – like the creation of new wealth that can support the state’s reprioritized obligations.