Where’s the cash flight?

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Bob Kinzel had a very interesting story on VPR the other day about Vermont's tax revenues and how they have recovered since the depths of the recession.

We've known for some time that Vermont's tax revenues have come back from the lows of a couple of years ago, but Kinzel's story explains why that is, and where the money is coming from:

(Kinzel) Between 2007 and 2009, state income tax revenues declined by roughly $72 million. 70 percent of the decline or $50 million, came from Vermonters who make more than $300,000 a year largely due to a big decline in revenue from their capital gains.

Now that the stock market is higher, state revenues are benefiting from a resurgence of investment gains from people in Vermont's top three tax brackets.

What's interesting here is the observation made by Jack Hoffman from the Public Assets Institute: 

(Kinzel) Hoffman says the revenue figures show that wealthy people aren't leaving the state because of Vermont's progressive income tax system.

What we've been hearing from everyone, and especially Governor Peter Shumlin, is that Vermont can't afford to raise taxes on the super-rich because they'll just take their money and leave, go to Florida or someplace.

The experience, though, shows that this isn't the case. Looking at the 3,000 Vermonters at the very top of income distribution, people who have plenty of money, and the smarts and resources to vote with their feet if they are so inclined, and they are telling us with their actions that they value the benefits of living in Vermont so much that they're willing to pay Vermont's taxes even on significantly increasing income.

Maybe the rich Vermonters who have been saying the state should raise their taxes are the ones who have it right.

11 thoughts on “Where’s the cash flight?”

  1. …proving what we already knew.  Maybe Shummy and Shap will listen.

    I’d really love to see if there’s any data from the Snelling era when the top marginal rate was raised.  Bet we’d still see no flight–came out of that recession with revenues and social services intact.

  2. We need to wait out the next legislative session beginning in January 2012.  Recently, I have heard a lot of this from legislators, “We had to hold off on tax increases for a year so as to have more room for increases starting in 2012 as we implement health care reform.”  So Shummy and Shap, the two Democrats most like Jim Douglas, have another year to demonstrate that they truly believe in “progressive” taxation.

  3. I believe that the primary, if not the entire reason for not raising taxes is to not rattle the cages of the wealthy. Maintaining the status quo while not actually giving them anything, lets face it, is a smart political decision.

    I do not believe they would leave. VT’s somewhat tough environmental statutes is part of what makes & keeps VT a great place to live. Most do not want to trade this for the high-crime, sprawl-laden, ugly hell-holes the alternatives would be. Many came to VT to escape that.

    Many if not most who have the means are judging quality of life by access to pure water, air quality & access to uncontaminated food sources.

    Raising taxes would give the right a heavy hammer in its arsenal.

  4. “Vermont can’t afford to raise taxes on the super-rich because they’ll just take their money and leave”

    This does not happen, it is a lie.  Numerous studies have shown that the rich don’t leave just because they have to pay taxes.  New Jersey even increased super-wealthy residents at the same time they increased the tax rates for the wealthy.

    The obscenely rich MUST pay their fair share for the cost of having America be a First-World nation.  I believe we should go back to the tax rates we had when America was at it’s most wealthy: 90% on those making more than $1M.

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