The Trust-Funder Economy II 
By Martin Harris

With the arrival of yet another in a long series of demographic studies documenting the departure of one socio-economic group or another from Vermont, it seems appropriate yet again to quote FDR --"nothing in politics happens by accident"—and to ask yet one more time the rhetorical question: is the present pattern of out-migration, primarily of young families with school—age children, which explains why public-education enrollments are plummeting, a desired Montpelier objective or not? 

My opinion is that the unquestionably bright and gifted people whom Vermonters have elected to govern them, for the last few decades, are far too perceptive, intelligent, and skillful to allow such fundamental patterns as demographic change to proceed against their wishes, and therefore I conclude that the economic and population shifts now well under way are what Montpelier wants: if not overtly, then at least covertly. If they didn’t want these trends, as they have grown into 800-pound-gorilla-in-the-room size over the last generation, surely they would have taken steps to stop and reverse them. They didn’t. 

The latest study comes from that beloved Federal agency, the Internal Revenue Service, and it documents migration into and out of Vermont over 2005-06. In the benevolent view of the IRS, citizens are not people but somewhat undesirable "exemptions" who unfortunately reduce the tax take, and so the IRS reports that, over those two years, 16,297 exemptions moved in and 16,637 moved out. The IRS doesn’t know or care about the age or socio-economic status of these movers, only what they generate in tax revenue, and so it’s from other sources that we have to find out who’s leaving and who’s entering. We learn from Robert C. Clarke, Chancellor of the State College system, that "from 1990-2000 Vermont had a 19 percent decline in 20-34-year-olds" and further, but without numbers, that "Vermont has the second oldest population in the nation". From the IRS we learn only that the move-in’s are markedly more wealthy (and more tax-productive) than the move-outs –13 percent or so. For a State with one of the highest property tax burdens in the country and one of the highest ratios of government employees to taxpayers, against a below-average personal and disposable income average (all data from The Taxpayers’ Network) it’s fairly obvious why the Golden Dome folks would welcome a demographic trend wherein poorer folks move out and richer folks move in, thereby enabling more and easier access to jobs, money, and power for those who aspire to rule, either directly via elective office or indirectly via bureaucratic, commission, or education positions. 

It helps, of course, that those who move out are those who have been and would continue to be the most resistive to these trends –the most troublesome no-voters-- and the greatest threat to continued political power for those who seek it. Looking at it in terms of income quintiles explains why. 

The bottom two quintiles pay almost nothing in income taxes and are subsidized in various ways by actual taxpayers. The top two quintiles are skillful enough to seek tax shelters of various types, or to pay without much difficulty if they don’t. The middle quintile –the middle class—is neither subsidized nor undertaxed, and these are the folks who try, without any noticeable success, to keep their tax burden from rising. When they can’t, they reach a pain-point where they depart. And their no-votes depart with them. Good riddance, says the ruling gentry-left, but silently and not for attribution. The above-median-income folks who are already here or who choose to come are and will be more amenable to our government-growth/increased-spending strategies. One way to screen for these desirable entrants only is to see to it that housing prices become and remain affordable for only the upper quintiles, and that is, quite clearly, exactly what has been done by means of planning, development, and taxation policies. More on this part of the trust-funder economy strategy next week. 
 

Martin Harris is a former Chairman of Citizens for Property Rights