Keelan: My apple pie will now be taxed

by Don Keelan

In early February, the Vermont Tax Structure Commission delivered its final report to the Vermont Legislature. The 184-page report was authored by Deb Brighton, a land use and forestry expert; Stephen Trenholm, a CPA and high-net-worth tax advisor; and Bram Kleppner, a CEO and strong zero fossil fuel advocate.  In late 2018, they were appointed by the Legislature and the Scott Administration to “develop long-term recommendations to help make the State’s overall revenue system more fair, more sustainable and simpler.” 

Don Keelan

As far as long-term recommendations, the Commission was not kidding. Some parts of the report, dealing with climate issues, extend to the year 2070. Now, that is a long way off. 

The report discussed income taxes, estate taxation, property taxes, and sales taxes. For now, I will only cover the report’s recommendations on sales taxes. 

A good part of the report pertains to macroeconomic issues as well as social issues. The authors note that the Vermont economic landscape will change dramatically and that the present tax structure is inadequate in raising sufficient revenue.

According to the report, the Covid-19 pandemic will be overcome but not its economic fall-out. It is forecasted that there will be a devaluation of commercial real estate due to many closing businesses, curtailed retail shopping, and employee remote working. Not to mention, Vermont’s ultimate conversion to electric vehicles (a topic from my previous articles) that will have a significant impact on the State’s revenue source from taxation of gasoline and diesel fuels.

The report authors looked to mitigate the loss by recommending a vast broadening of the sales tax base (an idea suggested in the Blue Ribbon Tax Commission in 2007) to include close to another possible 150 consumer spending areas. 

Not everyone spends money for veterinarian services, legal and accounting services, or even for hiring a plumber or electrician. Still, those who do could be looking at paying a sales tax on such services if the legislature adopts the Commission’s recommendations. 

The Commission contends that broadening the tax base could reduce the sales tax rate from its present amount of 6% to 3.6%. As a long-time student of taxes, I don’t believe the rate of 3.6% will be around long before it is raised to 4% and higher in the not-too-distant future. 

I took the liberty of seeing what impact the change in the sales tax base would have on my household. It was no surprise; there would be a $450 net annual increase if the base were to include haircuts, home heating fuel, lawn and snow services, plumbing and electrical repairs, and even my favorite apple pie. I don’t have a dog anymore, so no vet services. 

The State of Vermont needs to have a tax system that is fair, equitable, and simple. The State requires revenue, and the Commission’s report addresses this. What is not dealt with is how the State works the issue’s other side–spending. Where is the report among the plateau of this year’s published reports that explains how the State can reduce spending?

A classic example that is discussed but lacks action is education. How is it possible that we are approaching two billion dollars to educate a PreK to 12th-grade school population that has decreased by over 30% in the past 10 to 15 years (another 2,600 student decrease this year alone) when the cost was about one half of what it is presently?

Another area of out-of-control spending (and the State doesn’t even know how much is being spent) is the non-state entities that conduct business that the State would customarily do. A good example is Efficiency Vermont. The 350 employee plus nonprofit collects over $90 million from electric users. According to its most recent tax filing, it has an executive team of a dozen or more people, each earning more than $150,000 per year. 

Yes, it is time to take a comprehensive look at our State’s revenue-generating sources, but let’s not ignore the other side–spending.

Don Keelan lives in the Bennington County town of Arlington. His bi-weekly column is published here, the Bennington Banner, the Manchester Journal, and other publications.

6 replies »

  1. As someone who once believed the climate hype, I took a job with an energy-efficiency crew under the auspices of Vermont Works for Women. It didn’t take me long to note that the supervisors and office workers had to be making more than the $12.00/he. that I was being put into some very dicey situations in order to earn, judging by the nice cars in the parking lot and the really nice building in Winooski. My husband and I not-so-affectionately call it “the job that tried to kill me”.
    Climate jobs, laws and other schemes are always about the money. Take a look at who actually stands to gain. Take away the grants and rebates and see if anyone still is all that excited about saving the world. And you wouldn’t believe the wealthy homes I helped “weatherize” – these schemes are disproportionately benefitting the rich. As usual. I’m so disappointed in my state. Too many flatlanders have invaded and then raided VT. There, I said it.

  2. Yes Don, your apple pie is taxed already, depending on where you buy it, In a restaurant or deli, there is the meals tax in place for a long time. These people are never going to change as long as we keep electing them…. that is the problem. We turned out to pasture a few, but many more need to go. There is no limit on spending. Mostly, it is only the conservatives that have this concept right, the liberals do not have a clue about the need to control spending. Look at education costs in VT, we are into the billions of $, with less kids, more staff, and on and on. It makes no sense.
    We are at a point where childbirth is about the only thing that happens without a tax.OHHHHH, maybe I shouldn’t have said that!!

    • How did the schools spend alll the money when the students stayed home???

      You don’t see any decrease in this years $request due to left over funds from no classroom classes.

      • That is because 85% of all school spending goes to salaries and benefits — that almost no one in the private sector gets. The unions control the schools.

  3. The fairest way to tax is to decrease the burden of taxes for we the people is to cut the bloated size of our State government! The largest employer in Vermont is the State of Vermont! We can start with the GWSA 23 member council,then the State teachers union,then stop taxing our Social Security,and limit the time our legislators take to bring up legislation to further tax us!!

  4. vermont the state that keeps spending even when the money to do so is lacking, then decides to add more taxes to make up for the shortfall, Vermont doesn’t know how to balance the budget. we need businessmen in office, not politicians

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