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Editorial: Tax is not a four-letter word

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Posted on March 21, 2013 |
By Angelo Lynn



Perhaps a year from now the general public will begin to understand that, as Rep. Mike Fischer, D-Lincoln, said at the Addison County legislative breakfast this Monday, ‘We don’t print money (in Montpelier)’ and it doesn’t grow on trees in the rest of the country either. The general public, however, has gotten so used to the government not raising taxes and still paying the bills that it’s taken a while for reality to set in: the feds are tightening up (honest) and the state can’t meet its needs without one of three things: raising taxes, reducing spending or stimulating growth.

It’s obvious Vermont will need to do a bit of each.

How is the question Montpelier is grappling with today. It’s the question that provoked the most discussion at Monday’s legislative session in Bristol. No doubt it is complex, but it is not rocket science. Rather, it is basic math; simple arithmetic.

It is why the governor proposed reducing the state’s portion of the earned income tax credit (EITC) by $17 million and putting it toward increased subsidies for child care (so the lower income could afford to get jobs), weatherization of homes (to prevent wasted fuel and income loss), promoting renewable energy (to continue the creation of jobs and address climate change), and heating assistance funds.

In the process, his proposal would have helped reform the state’s Reach Up (welfare) program that is on an unsustainable spending binge. It’s notable that Vermont’s is the only program to offer uninterrupted lifetime benefits. It’s a wonderful gift, but it’s expensive. In the past eight years the state’s contributions have jumped 49 percent — and they’re still climbing. Moreover, it’s not as if the governor were asking for the state to drop its funding (as many other states have done). Rather, Vermonters paid $26 million this year into the program; only one other state in the nation pays more.

At some point soon, however, shifting strategies will be mandatory. Tight budgets are not going away. To accomplish growth, we just might have to sacrifice being at the tippy top in contributing to welfare programs. (We’ll always be generous, but there should be a limit to that generosity.) We’ll also have to increase taxes on those who have the most. As Rep. David Sharpe, D-Bristol, correctly noted, there is plenty of money in America, but it resides with the wealthiest 1 percent “and they don’t want to share.”

Actually, the public hasn’t asked them to share much for the past 14 years. President George W. Bush set the tone with two tax cuts in 1991 and 1993, and the predominant group-think in Congress and throughout the national political arena ever since has been to avoid even discussing raising taxes on the superrich.

It’s absurd. It’s not practical. It doesn’t make economic sense. Yet for some strange reason, the public politic is hestitant to grasp the obvious: if the top 1 percent controls 40 percent of the wealth in Vermont, and even more nationwide, then their taxes will have to rise a little in order for the state or country to rebuild, retool and educate the middleclass worker so we can once again lead the world in growth, innovation and productivity.

And here’s the irony: if we did and were successful in doing it modestly, the wealthy would profit the most. Perhaps in the next year we can grasp the idea of taxes as public investment that pays a good return (think gas taxes and road improvements.) That’s how previous generations looked at taxation. It’s only in recent times that taxes have become the equivalent of a four-letter word — and that’s part of the political discourse that needs to change.

--Angelo S. Lynn

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