by Rob Roper
At his weekly press conference on Thursday, Governor Peter Shumlin got into a bit of a tussle with the State House press corps over the fact that high tax rates in Vermont are driving away wealthy taxpayers, negatively impacting our revenue crisis. The budget shortfall now stands at $176 million.
Shumlin pointed out that there are only about 200 Vermonters left in the state who make $500,000 a year or more — a number low enough to make them an endangered species.
“When we talk about the wealthiest income tax payers in Vermont, you know, I think people think that there are thousands of them out there driving Rolls Royces and living on lake Champlain,” said Shumlin. “All I’m telling you is the evidence – the evidence – doesn’t tell us that.”
The reason is Vermont’s progressive tax structure, which has one of the highest marginal income tax rates in the nation. As the Governor pointed out, “Somewhere around 9%, folks, you loose them. They go other places,” explained Shumlin.
However, this is an idea many on the political left, particularly those who desire to raise taxes on those wealthy Vermonters, are eager to discredit. Progressives in the House and Senate, along with many liberal Democrats, are pushing to raise taxes on the wealthiest 5% of Vermonters (See sponsors of H.401). Their logic is that high taxes don’t affect people’s decisions about where to live, so long as there are pretty mountains to look at.
Some in the press took up this argument. John Margolis, a freelance journalist, seemed angry that Shumlin was taking this line. In one exchange, he barked, “You have data that shows that there were more of them [earners of over $500k], say ten years ago?”
Shumlin replied, “No I don’t. But I can tell you it doesn’t matter. It doesn’t matter -”
Margolis interrupted the Governor, “It matters if you’re saying that’s because of the taxes, as opposed to your one… anecdote [about a personal friend leaving the state].
Shumlin stood his ground. “You can’t convince me that the example I just gave [of a wealthy Vermonter doing six months and a day in Florida to avoid Vermont income taxes] is not a trend. I believe that there are a lot of Vermonters – successful Vermonters and entreprenures – who, as soon as they can, file income taxes in either New Hampshire of Florida or other states that don’t have income taxes, because they don’t have to pay income taxes. And, you know, a lot of them have said to me, ‘I’ll pay something. I’d even pay the rate they have down in Massachusetts – Taxachusetts – five percent. That’s their top rate. But when you get me up to 8 or 9 percent, you know, I’m just not going to do it.'”