Art Woolf: NH is just VT with lower taxes

Art Woolf’s latest tax rant was in the Freeps 11/04/15. I keep seeing it posted and shared on Facebook. It’s great fodder for those who want to grouse about taxes, but don’t actually read the article to draw their own conclusions. I read Mr. Woolf’s analysis of Vermont’s per capita tax collections and came to different conclusions than he did.

Let’s assume his data is right. A population of 626,000 Vermonters were taxed (in 2013) $3.4B, meaning $5,423 for every man woman and child. National average per capita is 10.4% of income and Vermont taxes 12.1% of income. So, the state of Vermont collects 1.7% more tax than the national average. I’ll accept that much, even if the chart Mr. Woolf included has a chopped Y-axis to make the difference in Vermont collections appear to be higher than the national average. Taking a page from the Fox News Graphics Dept. are we?

1) Vermonters Don’t Pay It All

Mr. Woolf rightly points out a major flaw in his own methodology. Many of Vermont’s taxes are paid by folks who visit our state and pay sales tax, rooms and meals, and gas tax. Out of state residents own homes and pay property taxes.

2) What About Fees?

When I was at a National Council of State Legislatures meeting a couple of years ago a politician from NH joked that their state motto was “Live Fee or Die”. NH is able to collect tolls on Interstates because of higher traffic volumes and their fees (see DMV schedules) are higher than Vermont’s.

3) State and Local School Taxes

Vermont has a pretty novel statewide property tax system to fund public education. It levels the playing field so poor towns don’t have dramatically lower investments in education for their students. According to the NEA for the 2014-2015 school year 95.3% of Vermont’s school spending was collected by the state and only 33% came from the state in New Hampshire. We do spend more per pupil, no doubt and there are ways we could cut school costs (see my post on Act 46). We also have world-class public schools across the state. If Mr. Woolf compared apples to apples I bet he’d find that property taxes, when State and Local were summed would not be as disparate as his methods would have you believe.

4) Published versus Effective Tax Rates

Are we talking about the effective rates that Vermonters actually pay, say after we get homestead property tax adjustments? Or is Mr. Woolf using the raw dollars collected by the state to do his math, regardless of whether or not some of those dollars are returned to towns and taxpayers? I can’t tell.

These are just the things I could think of off the top of my head. I think the bigger problem than having state taxes being 1.7% higher than the national average is that lower and middle income Vermonters are paying a bigger share than they should be. That’s really why the “affordability crisis” and these anti-tax rants appeal to people so much. If we had a truly progressive tax structure then Vermont would be in much better shape. We think of Vermont as being a progressive state, but our tax structure isn’t really all that progressive according to the Public Assets Institute.

Art Woolf blithely asserts that if Vermont just lowered its revenues by a billion dollars, things would keep going on the way they have been. I’d love to hear a list of the cuts he’d make in our state budget. Would he close schools, lower the number of insured Vermonters, or maybe let our roads and bridges crumble like they do in New Hampshire? It would hit Vermonters pretty hard to cut that much out of the budget.

For the most part I think New Hampshire just makes up the difference in their low state taxes with higher local taxes and fees. I’d be happy to live in Vermont, even if I really did have to pay 1.7 pennies per dollars more to the state. In reality though, I don’t think I pay that much more. Mr. Woolf is just counting on people to accept his methodology and join him in lamenting about taxes. It will always get you a few votes, but it doesn’t solve a darn thing.

 

About Mike McCarthy

I'm a guitar-playing Democrat living in Saint Albans, VT with my wife Steph and my daughter Molly. I represented Saint Albans in the VT House in 2013-2014. I care about good government, and a safe, healthier world for all of us. I work for an awesome solar company and love helping Vermonters re-power our communities.

4 thoughts on “Art Woolf: NH is just VT with lower taxes

  1. Ah, yes, the King of Fuzzy Math has struck again. Since I cancelled my Freeps subscription, I have been spared the routine annoyance of Mr. Woolf’s ivory tower fantasies.

    That misleading chart business is his signature move.

  2. I really geeked out and found this 2014 study with effective tax rates listed. Burlington VT’s effective tax rate is actually lower than Manchester, NH for comparable home values- which supports my assertion that Art Woolf’s ignoring what people actually pay in taxes in favor of comparing rates apples to oranges.

    http://www.lincolninst.edu/subcenters/significant-features-property-tax/upload/sources/ContentPages/documents/Pay_2013_PT_Report_National_FINAL.pdf

  3. “We think of Vermont as being a progressive state, but our tax structure isn’t really all that progressive according to the Public Assets Institute.”

    You go from this statement to a graph, which I take it is from the Public Assets Institute.

    A number of points in no particular order:

    1) You do NOT include the corresponding figures for NH. They’re far LESS progressive than VT’s. Indeed, virtually ever other state is. So it is absolutely correct (and scandalous, in my view) to conclude that Vermont’s overall tax system doesn’t AT LEAST tax all comers at the same rate. Even the “conservatives” who support flat taxes believe in that form of tax fairness, and Vermont doesn’t achieve it.

    2) The 2nd line of the graph label reads: “Projected 2015 taxes as a percentage of 2012 income….” Why would you use data from 2 tax years separated by two other tax years? Why not as a % of 2014 income or 2013 taxes (which would include the tax on 2012 incomes for most taxpayers)?

    3) Actually, the exact SAME figures appear on page 123 of the Institute on Taxation and Public Policy report: “Who Pays?,” 5th edition: http://www.itep.org/pdf/whopaysreport.pdf. That report uses the correct, corresponding year data, so the answer to #2 above may be a misprint either by you or by the Public Assets Institute.

    4) The corresponding chart for New Hampshire tells the real story. It appears on page 91 of the pdf of above. The figures going from right to left are: 8.3%, 7.4%, 6.6%, 6.2%, 5.1%, 4.1%, 2.6%. So New Hampshire is even FURTHER from proportional fairness and it is the very model of anti-progressivity: the poorer you are, the more you pay. And unlike Vermont, where at least the spreads are fractional, in NH, the highest poorest 20% pays more than 3 TIMES as much of their income as the highest-earning 1%.

    That’s Art Woolf’s idea of paradise! For those who are making it, I suppose it is!

    One final point, which is cynical, but needs to be articulated. NH politicians are smart enough to realize who votes. Their VT counterparts could at least take a partial lesson: middle class taxes (those in the 2nd through 4th quintiles) are MUCH lower in NH than they are in Vermont. If Vermont were to lower taxes on these folks while raising them on the top quintile, they’d get a LOT of populist cred, while making the system fairer than it is now. In fact, I keep wondering why they don’t do precisely that for cynical, if not for moral reasons.

  4. I’ve just read the Art Woolf column in the Free Press. First, a small point, than a large one:

    1) Woolf writes: “Vermont is far from a rich state. We’re not poor, but our incomes are about average.” Actually, Vermont’s per capita income is 18th in the US, putting us just below the top 1/3.

    Our per capita income is $29,167. The per capita income of the 25th state (ME) is $26,824. All data from https://en.wikipedia.org/wiki/List_of_U.S._states_by_income#States_ranked_by_per_capita_incomeb

    Woolf could have written – more accurately: “Vermont is far from a poor sate. We’re not rich, but our incomes are about 10% above average.”

    But had he done so, then his attempt to belittle Vermont’s overall spending would have sounded a bit more like Ebenezer Scrooge than it already does.

    2) One more key point in addition to those already raised in the article. Woolf simply ignores the differences between states which might “naturally” result in higher (or lower) than average spending.

    Consider transportation. The budget to maintain state roads and highways is presumably at least partially dependent on their number. But the total length or highways maintained by a state is NOT well correlated with physical size (Alaska maintains less highway than every state EXCEPT VT, RI, DE and HI).

    Nor is the length of highways to maintain correlated at all to population density: RI is the 2nd most densely populated state and has the 3rd from the last number of highway miles to maintain. Conversely, KS ranks 3rd in the length of state highways and 41st in population density.

    So would it make rational sense to expect that KS and RI spend the same amount, per capita, on highway maintenance?

    I suspect similar analysis of all aspect of state budgets would reveal why Woolf’s core premise – appealing if you don’t give it any thought – actually makes no sense whatsoever. States spend differently because they ARE different. Squeezing them into one arbitrarily chosen yardstick really doesn’t make much sense at all, even if the analysis were far better done than Woolf’s.

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