Traditionally our Legislature estimates what tax revenues might be and then devises a budget. If a household operated like that, here’s what it would look like: Mom and Dad would take over 90% of the income off the table before deciding how to keep the family afloat.
The final state budget might be $14 billion. Let’s add in the cost for a universal health care plan for all Vermonters, $6 billion. Vermont tax rates run from 3.6% to 9.5%. State data (line 28) shows the total Vermont Adjusted Gross Income for 2011 (in-state returns only) is $16.35 trillion.
However, 3.6% of $16.35 trillion is $588.6 billion, 29 times our hypothetical state budget and 1,000 times greater than the 2011 net tax revenue of $538 million.
Assuming that a $20 billion budget would cover everything, do the math: $20 billion is twelve-hundredths of one percent of $16.35 trillion.
So, why are we paying a tax rate almost 3,000 times greater, yet stiffing the needs of Vermonters (e.g., the day care/Earned Income Credit shell game)?
Rather than planning budget via Blind Man’s Bluff, the governor and the Legislature should aim for the stars and identify what it takes to keep Vermont the best state in the nation, figure out the price, and then devise an equitable tax system to make it happen.
This is at the heart of what our Vermont Workers Center “Put People First” campaign is all about.