This year the middle class will struggle to pay the bills, while the wealthy pocket big savings. Thanks to the extension of the Bush tax cuts, the top 5% will save $190 million.
Knowing this, I voted no on this year’s tax and budget bills. They raise taxes on the middle class, increase health care costs and cut important programs, but again ask the wealthiest to make no sacrifices at all.
Most of the taxes are “provider” taxes on hospitals, nursing homes, home health agencies and health and dental insurance claims. These are broad based taxes that will hit most Vermonters regardless of their income or ability to pay and raise health care costs when we should be cutting them. Meanwhile, the budget cuts $34 million in human services, including “prevention” programs – so problems will get worse and the cost in dollars and human suffering go up.
I offered a different proposal; a small, temporary increase in the income tax of those in the highest tax brackets, the folks enjoying the huge savings from the so–called Bush (now Obama) tax cuts. Unlike the provider taxes which impact most Vermonters, this would affect about 4,000, all of whom can afford to pay. It would not raise taxes on people making less than $200,000.
A Vermonter making $1 million, enjoying a tax cut of $157,000 this year, would send a small amount of their windfall back to Vermont to help neighbors in need. Someone making $200,000 – $300,000, currently getting a $10,400 tax cut, would pay $580 more. And, still save close to $10,000 on their tax bill. Their effective tax rate would increase less than 1%. It’s no surprise that recent polls in Vermont show overwhelming support for closing our budget gap by increasing the income tax on those in the highest income brackets. Most of us applauded when Bernie Sanders, Patrick Leahy and Peter Welch fought to end the Bush tax cuts that are unfair and bad for the economy and job growth. But, despite their best efforts, Congress failed.
I expected Vermonters to do better. But now most of your policymakers say no, claiming the wealthy, especially entrepreneurs, will leave if asked to pay their fair share.
Our Vermont Blue Ribbon Tax Commission and at least two recent well documented studies say they are wrong.
Princeton University researchers find the wealthy did not leave New Jersey when their taxes were raised. In fact, New Jersey ended up with more millionaires than before the tax increase. And, those who started and owned businesses were least likely to pull up stakes. Researchers said the impact of the tax increase on wealthy people moving out of state was “close to zero.”
After tracking 18 years of migration from New England states, the University of Massachusetts also found, “Taxes have essentially no impact on causing people to leave a state.” People mostly moved for job-related reasons, regardless of tax rates, they said, and the wealthy stay in high tax states because they appreciate the services and quality of life.
George Bush taught us that cutting taxes for the wealthy is bad for the economy and for the middle class who pay more when the wealthy pay less. In order for businesses to grow they need customers, so the middle class must have money to spend. But our economic policies do the opposite, favoring the rich while leaving less and less for the middle class.
They did it again, when the Governor and Legislature chose a tax policy that falls most heavily on middle class working families. I could not go along.
Recently a group of wealthy Vermonters wrote to the Governor urging an increase in their taxes. They echoed the studies, the polls and common sense economics saying; “People like us, with good jobs and careers in Vermont, would not leave our homes, friends, careers and the State we love if asked to pay a bit more to help our neighbors.”
They said asking everyone to pay their fair share is the “Vermont way.”
I hope Montpelier gets the message.
Part of my floor speech on this topic can be heard here.