Gov. Shumlin Flip-flops on Taxes?!?

( – promoted by JulieWaters)

Or, why it’s OK to tax those who can afford it sometimes, but not others?

Updated with transcript

I was listening to the Mark Johnson show (http://www.markjohnsonshow.net/) yesterday when he was interviewing the Governor and they started talking about the budget bill. The Governor said that he hoped that the Senate would reinstate the tax on non-Medicare and Medicaid dental services and not raise the cigarette tax. Mark noted that it was surprising to hear a politician not supporting an increased tax on tobacco. Since the podcast is not available yet, I don’t have the Governor’s exact quote, but here is the gist of what he replied – because of the demographics of who smokes and who doesn’t, the tobacco tax falls most heavily on lower income Vermonters who can’t afford it. People are addicted to cigarettes, and we shouldn’t penalize them more. However, the people who are getting these dental services done can afford to pay the little bit extra for the tax on these services.

Here is the transcript from the show’s podcast found at http://blog.markjohnsonshow.net. The quote starts at 27:10. Emphasis is mine.

Mark – Do you want the Senate to put back in the tax you proposed on dentists?

Governor – The answer is yes and I’ll tell you why. Right now, as you know hospitals and most healthcare providers have an assessment on their bills that allows us to draw down Federal dollars and we then reimburse them for their share. Dentists in Vermont, many provide services to Medicaid and Medicare, low income VTers who need their teeth fixed too. Many of the dentists don’t. Under my plan, which is assessing that same assessment on dentists. Those who provide care for the poor will come out better financially than they are right now. Those who refuse, will pay the 3% assessment, and I think that’s fair. Now what the House’s proposal is instead is to ask the hard-working guy, man or woman in VT, who’s going to work – 9, 10, 11 bucks an hour perhaps – they’re going to stop at the store for a pack of cigarettes. They’re going to pay 20, 30 cents more for that pack of cigarettes and it’s going to come out of a working person’s pocket. I would rather – and this assessment on the dentists – I think it’s fair, and I don’t understand why the House didn’t support that particular provision. I think it makes a lot of sense.

Mark – I’m a little surprised to hear any politician advocating against a cigarette tax increase.

Governor – Let me tell you about the cigarette tax. People who smoke cigarettes have an addiction. We all know that as we make progress in reducing cigarette consumption, there tends to be more low income people who are smoking than higher income people. That’s just the way the numbers are. So, in my judgement, if you’re going to assess a tax, I think it should be assessed on people who can most afford it and I do not believe that the person who is struggling to make ends meet, who’s going to pick up their pack or carton of cigarettes on the way to work, who’s trying to make ends meet in a real tough economy, should be asked to pay more because they have an addiction. Let’s get them off their addiction, but I don’t think a cigarette tax is going to drive that.

Am I the only one who sees this logic as totally opposite the thinking that allows the Governor to say this about raising taxes on the wealthiest Vermonters with a straight face: (http://www.vpr.net/news_detail/90215/#)

“The state of Vermont does not have the flexibility to do that because we all know New Hampshire is to our east and Florida is not far away and frankly my job is to take the 435 high income tax payers in Vermont and grow that base grow our customer base so that we have more revenue.”

Isn’t this the same lame excuse we got from Governor Douglas? We can’t tax the rich, because they’ll move out of Vermont. Plus, Florida – even northern Florida is 14 hours away by car, but I digress.

I thought the Blue Ribbon Tax Commission – setup by then Senator Shumlin – found that there was no evidence of this. Here is what was in the Executive Summary of their report: (http://www.vermonttaxreform.org/wp-content/uploads/2011/01/WEB-REPORT-2.pdf)

There is Insufficient Data to Claim that Vermonters are Migrating Due to High Taxes – Current Statistics Demonstrate an In-Migration of Income.  

Available data suggests that those entering Vermont earn more than those leaving.  Also, Vermont’s top tax bracket is populated by high-income events, not high-income earners.  While the data cannot determine something as subjective as why people are moving, it does demonstrate that definitive claims that the wealthy are moving out and about the effect of this migration are more complicated than currently assumed.  

On the other side of the argument, the Shumlin administration is willing to cut needed services to lower- and middle-income Vermonters, the elderly, persons with disabilities and other vulnerable populations in order to balance the budget. Here is Secretary of Human Services Doug Racine with the rationale: (http://vtdigger.org/2011/03/17/racine-proposes-competition-for-designated-agencies/)

“We have a problem,” Racine said. “How do we get through these difficult times, without hurting Vermonters. There’s nothing left we can do except cut services.”

The person who posted this on Green Mountain Daily (http://www.greenmountaindaily.com/diary/7536/shumlin-sits-on-a-tax) put it succinctly – “it makes your head hurt, doesn’t it?” Where are Lewis Carroll and Franz Kafka when we need them?

The Progressive Party legislators proposed an amendment to the tax bill to raise income taxes on the top two tiers of filers in Vermont in order to stave off some of the budget cuts in human services. It was defeated. (http://www.progressiveparty.org/blog/2011/tax-amendment-fails) There were legislators who agreed with this position, but not now or in this particular bill.

So, back to the top and the sub-title to this post – Can we get the Governor to explain why it’s OK to tax those who can afford it when they get a crown at the dentist, but not those Vermonters who have high incomes and pay little or no state income tax? (http://www.forbes.com/feeds/ap/2011/03/23/business-vt-tax-bill_8370716.html)

Sen. Tim Ashe of Chittenden County said that when the miscellaneous tax bill makes its way to the Senate, he will seek to amend it to get the state to do a better job collecting taxes from the seven Vermonters who reported incomes higher than $1 million in the 2009 tax year and paid nothing in state income taxes. Data from the state Tax Department also show that more than 1,000 tax filers reported incomes higher than $100,000 but paid less than $1,000 in state income tax in 2009.

Or can we get the Governor to explain why we shouldn’t add a hardship to those who smoke cigarettes, but it’s OK to add hardships to those needing services and support because of disability, age or mental health issues?

I hope someone asks these questions.

Also posted here – http://joelgvt.wordpress.com/2…

9 thoughts on “Gov. Shumlin Flip-flops on Taxes?!?

  1. I still can’t figure this out.

    He institutes new taxes on health services

    Services that increase by what? 1 million a day?

    Maybe he hit the jackpot with this one.

    But he doesn’t want to increase taxes on the addicted and the wealthy.

    Seems like he is hitting the middle class hard.  

  2. Worried that a few hundred people will leave because they’ll have to live up to constitutional responsibilities to pay their proportion for the good of the community?  While we make it harder for regular Vermonters to survive?

    Snelling’s spinning in his grave.

  3. …frankly my job is to take the 435 high income tax payers in Vermont and grow that base grow our customer base so that we have more revenue.

    I fail to see how one would gain income out of growing a population of people who pay a disproportionately small amount of taxes… by the logic above, we should be adding poor, even unemployed impoverished people to our tax-roll: according to jim Peter taxing wealthy people drives them away and loses jobs and tax revenue.

    The trickle-down, Reaganomic notation of taxation/economics has been proven horrifically wrong everywhere in the world, in everyone’s mind- except for the most conservative of American commentators, and for Shumlin, Smith and Campell.  

  4. is that those 435 wealthy folks are so selfish that they will act in their own self-interest rather than accepting some responsibility for solving a serious problem that affects everyone in their home state.  

    I find this interesting. Many politicians talk often about the special character of Vermonters. But here they would have us believe that rich Vermonters are not so neighborly after all. Clearly, there ARE some wealthy Vermonters who don’t want to pay more and publicly threaten to leave, while others have said they are willing to pitch in.

    But let’s keep this in perspective. Here is an example of how overblown this discussion has become.

    The average income for those earning more than $1 million in 2009 was $2.8 million. The average tax liability was $181,000.

    On average therefore, a 10% surcharge would mean paying an additional $18,000. That’s a lot of money to you and me, but it represents only six tenths of 1% of annual income for this group (or $0.64 for every $100 of income).

    Is that sufficiently burdensome for someone earning $2.8 million to change their residency, especially if it’s just temporary?

    In any case (back to my point), rather than assuming the worst of our wealthy neighbors, wouldn’t it be nice if our leaders spoke to their (our) better instincts instead?  

  5. Many of the individuals affected by service and budget cuts(AKA strong medicine)take the time,when asked to testify before the legislature.

    Maybe it’s time the legislature invites some of the high income 435 to testify in regard to the governor’s suggestion that as a block they oppose a slight tax increase.

     

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