Open letter to Vermont's Legislature, Public Assets Institute, et.al. 
By Tom Licata

It is long past time to put up or shut up.

If the public services you so frequently advocate for are of such social value, why is it that you only (for all practical purposes) go after the rich when seeking to fund these common public goods?  And when these people object to their seemingly confiscatory taxation they are – as in Glen Wright’s case – ridiculed. Among other things, they are accused of being "whiners."

The implication of your continued "soak the rich" policy-assault only reinforces the view that taxes are a "bad thing," rather than the public common good that you profess them to be; as Justice Oliver Wendell Holmes said: "Taxes are the price we pay for a civilized society."

Greater taxation into the middle class would broaden the tax base and provide greater diversity and less reliance on the more volatile incomes of these few.  For example, lowering the property tax income sensitivity level from its current level of roughly $90,000 to $75,000 would accomplish this goal.  Increasing the marginal tax rates on the lower end of the income ladder would also accomplish this goal.

Nobody in their right mind would argue that Vermont has anything but a progressive tax system.  In fact, the Public Assets Institute has touted the fact that those on the lower and middle income levels pay relatively few taxes when compared to other states - hence - there seems to be plenty of 'slack' available to raise revenues.  On the other hand, Vermont's wealthiest earners are among the most heavily taxed in our nation.

It is difficult to see how Vermont can continue its long-held public spending spree without dipping into the middle class ranks.

Vermont's continued calls for such progressive goals as the creation of a universal health care system; subsidized early childhood education; unfettered K-12 school spending;  the multitude of ever increasing environmental programs and land-use regulations (along with their economic roadblocks and opportunity costs); and other social service programs (Vermont is home to the most generous entitlements in our nation) all seem to point to the fact that just "soaking the rich" will not produce the necessary tax revenues to fund these lofty goals.  The multi-billion dollar unfunded liabilities in transportation infrastructure, teacher and state-employee pension and health care funds only adds salt to our gaping wounds.

Of the over 300,000 Vermont income tax filers, roughly 14,000 - or about 5% of households - pay about 50% of all Vermont income taxes.  It is dangerous to rely on such a small minority to fund your budget.  Just ask New York City Mayor Michael Bloomberg, who is quoted as saying:  "Look, we got eight million people that live here, there are 40 or 50,000 taxpayers — families, what have you — that pay so much in tax that they essentially support the city — and if they start to leave, we’ve got a big problem."

The Financial Times reported that in the United States, 45% of its income tax revenues come from the top 10% of earners.  This is substantially above the 32% average in other developed nations.  Yes, we all realize that - in part - these households earn a large share of the economic pie. But a continued "soak the rich" only policy seems to encourage and even count on this ever-increasing inequality as the instrument to finance Vermont's insatiable spending appetite.

Former Federal Reserve Chairman Alan Greenspan is quoted as saying:  "Over time, tax revenues are determined by economic and productivity growth."  Al From, founder of the Democratic Leadership Council is quoted as saying:  "Growing the economy and creating jobs remain the best ways to fight poverty, and neither is possible with a cocoon around our economy."

Short of enacting the kind of pro-growth economic policies that would produce the necessary tax revenues to fund these common public goods, Vermont's legislature and policy analysts like those at the Public Assets institute should begin to defend their calls for increased government spending through greater - and broader - taxation into the middle class.

It is time for these folks to defend the merits of their spending, rather than enable the idea that taxes are "bad things" that only the rich should pay.

If their supposed government programs are so invaluable, it is time for these advocates to put up or shut up, and defend the position that their programs are worth paying for.

Tom Licata is the founder of Vermonters for Economic Health