Our overspending state government has had quite a few lucky years. With a rising economy, its legislatures could keep on adding to government benefits, and gaining the political benefits. And they did, until the economy started to sink.

The new Federal "stimulus" law seemed to promise salvation from a projected FY2010 General Fund deficit of more than $200 million. "Stimulus" is where Congress borrows hundreds of billions more dollars from (mainly) the Chinese, allocates $234 million of it to Vermont to keep our overextended state government from crashing, sends the bill to everyone's grandchildren, and then quits after two years, leaving state government back where it started, and probably worse off.

When even "stimulus" transfusions prove insufficient, the liberals in the legislature, faced with the choice of cutting back state spending and employment or raising taxes, invariably raise income tax rates.

There are several arguments offered in defense of the House's recent passage of income tax rate increases expected to yield $65 million in new revenues over three years. Then the "surcharge" is supposed to sunset, as it did on a similar income tax increase 15 years ago.

Let's start with "There's no spending left to cut." Put another way, "we can't agree to anything that results in fewer state employee jobs, because the state employees labor union worked hard to put us in power and we don't dare honk them off." That latter formulation is at least candid.

A more imaginative argument is this one, offered by Peter Sterling, executive director of the Vermont Campaign for Health Security. Says he, cutting back on state spending programs "is the same as raising a tax on the people who would have received the spending. That's a tax on people making less than $38,000 a year." Sterling did not explain how he happened to arrive at that earnings figure.

Then there's this one, from the Public Assets Institute. It notes that Congress has passed legislation that provides tax credits for 250,000 Vermont taxpayers. A single worker earning up to $75,000 will get a $400 tax credit.

Since Vermont workers now have all this new money from Federal tax cuts, PAI argues that "Vermont [now has] an opportunity to avoid devastating budget reductions and layoffs of state workers" by increasing Vermont income tax rates to produce $60 million over the next three years.

PAI also observes that the Federal "tax cuts are intended to put money into the hands of people who are likely to spend rather than save it." How can these workers spend their tax cut, when the State of Vermont rushes in and snatches it away from them to cover its deficit?

Ah, now we are at the eureka point of tax analysis.

The taxpayers who get the Obama tax credits to "make work pay" (as if work didn't pay previously) are those with incomes below $75,000 ($150,000 for couples). Almost all of the new tax dollars that the Vermont legislature expects to collect from its tax rate increases will come from taxpayers with incomes above $75,000.

The Obama beneficiaries are not the same taxpayers as the Vermont victims. The former will get to spend their tax cut, while the Vermont legislature raises the tax take from taxpayers who aren't eligible for the Obama tax cut.

This is called wealth redistribution through progressive taxation. It's almost an obsession with modern liberalism, here and in Washington.

The top ten percent of Vermont households (earning above $105,000) are now paying 62% of all income tax collections, an all time high. The bottom 50% of all tax filers contribute less than 2% of income tax collections.

When a liberal majority is seized with the wealth redistribution mania, it will jack up the tax rates on fewer and fewer taxpayers at the top of the heap, and use the revenues to pay for more and more benefits from people who are paying little or no income taxes.

Where does this end? The leaders of such a majority ought to recall that Gov. Howard Dean, later to become the darling of the "Democratic (left) wing of the Democratic Party", never failed to recognize the crippling economic effects of runaway wealth redistribution through progressive taxation. In 1994 and for eight more years in office, he stood as firmly against it as Gov. Jim Douglas is thankfully doing today.