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Does Obama's "Buffet Rule" put Shumlin in a bind?

by: odum

Tue Jan 24, 2012 at 23:10:05 PM EST


Here is Governor Shumlin's complete reaction to the President's State of the Union address, as sent out in a press release:

"I am proud to stand by a President who fights for the middle class. In tonight's State of the Union address, President Obama made it clear that jobs are his top priority and he is committed to strengthening an economy where everyone plays by the same rules and everyone gets a fair shot. President Obama has worked hard to put Americans back to work and we are already seeing signs of growth, with 3.2 million private sector jobs added over the past 22 months. We have work left to do, but I am confident that President Obama understands what we know here in Vermont, that if we focus on education, lead through innovation and work together, we can accomplish great things."

That's all well and good, but it completely ignores the part of the State of the Union that is receiving all the attention. You know, the part where the President said this (by way of TPM):

"When Americans talk about folks like me paying my fair share of taxes, it's not because they envy the rich, It's because they understand that when I get tax breaks I don't need and the country can't afford, it either adds to the deficit, or somebody else has to make up the difference - like a senior on a fixed income; or a student trying to get through school; or a family trying to make ends meet."

[...] "If you make more than $1 million a year, you should not pay less than 30 percent in taxes."

Given that many of the super-wealthy paying far less that 30% (such as Mitt Romney), Obama is now calling for them to pay more.

Yeah, that Obama. The economic moderate-to-right one. And he's using a clear-spoken, straightforward statement of Democratic values to make his case.

Contrast this with Shumlin's State of the State:

we require our wealthiest citizens to pay their fair share of income tax. But, we cannot correct the tax failures of Washington from the State House in Montpelier, and we must be always mindful that every day, we compete with our neighboring states for jobs. Therefore, I remain determined not to increase broad-based taxes on Vermonters as we begin to see signs of modest economic growth.

Yeah, it's no mystery as to why the Governor is trying to change the subject. His determination not to even discuss raising taxes on wealthy Vermonters before cutting many social services is rapidly becoming a peculiar Democratic anachronism.

Suddenly, he's left standing with no one but the likes of Ben Nelson at his side, as even his moderate President has abandoned such nonsense.

odum :: Does Obama's "Buffet Rule" put Shumlin in a bind?
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Raise Your Voice!

Well said, Odum! (4.00 / 1)
Exactly.

Striking that. (4.00 / 1)
Shumlin is bold enough to tackle health care from the State House level but goes knee-wobbly when the talk turns to his  sacred wealthy Vermonters club paying their fair share of taxes.
But,we cannot correct the tax failures of Washington from the State House in Montpelier,...
Got to wait for those wealthy Vermonters to part with their fair share until after
we begin to see signs of modest economic growth
so for now it's budgets cuts and economic tough medicine for everyone else.



Shumlin Supports a Tax Change at the Federal Level (0.00 / 0)
The contrast is fitting and appropriate. Governor Shumlin understands that if the Vermont tax structure is wildly uncompetitive with our neighboring states wealthy individuals will move, so he favors a correction at the federal level. President Obama is on exactly the same page in seeking responsible tax rates that flow across all state line.

On the health care issue: Governor Shumlin has argued that an aggressive fix at the state level will help contain costs and reduce long term uncertainty about the escalating expenses for healthcare, and that will benefit individuals, businesses, and government entities. Such a change, if it successfully stabilizes one of the fastest growing budget items, would make Vermont more competitive with its neighbors.


If so... (0.00 / 0)
...his reasoning is completely inconsistent, as we're all in the same economic downturn.

Nullius perfectus est

[ Parent ]
oops (0.00 / 0)
Didn't know what my left hand was doing here. THAT reasoning. It's been pretty well debunked, but the Governor clings to it as an article of faith... or a lifeboat, perhaps. In either case, it's thin.

And the end result is the same - Democrats everywhere are looking at asking the rich to give more - Shumlin is standing closer and closer to alone in this era of the occupy movement.

Nullius perfectus est


[ Parent ]
It's been pretty well debunked (0.00 / 0)
It only ever was a far-right wing lie to begin with.

I don't understand why Shumlin and Shapleigh are so dead against raising taxes, and are taking it out on the poor and middle class instead.  


[ Parent ]
My sense of Shap is... (0.00 / 0)
...that he's nothing if not pragmatic. He may be reticent to raise taxes (any politician should be), but if it was demonstrably a rational, sustainable means to policy ends, I have no doubt that he'd do it.

But it's really not even on the table because Shumlin has made his pronouncement - and I don't doubt that, in an election year, he'd relish the opportunity to veto a tax-raising budget. He'd make a big show of it - happily.

He didn't have the opportunity to last year, so he had to fabricate one with his weird veto of the groundwater testing bill.

Nullius perfectus est


[ Parent ]
No evidence for Shumlin's assertion (4.00 / 1)
Shumlin keeps saying that rich Vermonters will vamoose if we impose a modest increase on their state income taxes. But to my knowledge, there's absolutely no proof that this is true. And really, it makes no sense to assert that a person will go to all the trouble and expense of moving (selling a home, buying a new one, transporting all their possessions, and most of all, leaving a home and community that they presumably enjoy) because their state taxes go up by a fraction.

And if you're going to blow the New Hampshire dog-whistle -- "wildly uncompetitive with our neighboring states," by which you certainly don't mean New York or Massachusetts -- then you'll have to explain why we haven't already seen a mass exodus of the wealthy. Our current tax system is "wildly uncompetitive" with New Hampshire's, and a small increase in the top rate won't make a significant difference.

Finally, Shumlin's budget would cut state aid for public education, which either means cuts in school funding or higher (gasp!) property taxes. Aren't you afraid the wealthy will dump their ridgeline homes or Killington condos if they face uncertainty about property tax rates?  

"Without deviation from the norm, progress is not possible."  --Frank Zappa


[ Parent ]
The rate differential is already high enough for people to leave (0.00 / 0)
I have moved to NH for at least a year, and a major part of the justification for my wife taking a lower salary is that we're not paying VT income tax.  However, there are fees galore here, and, for the idle rich (think Romney) a steep tax on interest and dividends.  The difference is real but not enough to overcome the nightmare of moving. People who leave generally do so for personal reasons, not for the tax issues.

So, the question comes down to a basic principal of addition and subtraction. If you have a person with a $1M income, they are paying about $50,000 in Vermont income tax on average. If you raise the rate to make them pay $60,000, it seems inconceivable that many would move if they haven't done so already. Even if you double it, you can afford to have half of them move (really?) and still be in the same place. Unless, of course, you need campaign contributions from them.  


[ Parent ]
Campaign contributions (0.00 / 0)
"Unless, of course, you need campaign contributions from them."

Well, there's your problem, right there...


[ Parent ]
healthcare (0.00 / 0)
the health care issue is less about individuals and more about the expense business is carrying.   It is a good thing, on all levels, but to look at it as a PeopleFirst issue, like the workers center theme, is ignoring that the Administration tends to look at business benefits up front and center a lot of the time.   No negative implied, just a broader lens.

[ Parent ]
You're right, of course (4.00 / 1)
The ONLY possible reason for ANYONE to ever want to live in VT is the tax rate! If the tax rate EVER changed, everyone would move away.

I mean, just look what happened when Ira Allen got the legislature to institute the state's first tax - the British ended up leaving!

And then there was that property transfer tax in 1971. Yeesh! Remember all the wealthy Vermonters moving to NH, and all those ski area denizens abandoning their vacation condos, to become derelict wastelands? Seriously, Stowe and Manchester became ghost towns, scrambling for decades to regain ... oh, wait, no they didn't. Ski condos didn't even exist, yet. Heck most of the buildings in most ski areas didn't exist yet.

Or how about the "Great Williston Clear-out." Remember that one? No one else does, either, because it didn't happen. Not even when Governor Snelling implemented the largest tax hike in state history.

People live in VT for many reasons, most of which have nothing to do with taxes - yes, even wealthy people. It's a NICE place to live. Part of the reason it's a nice place to live is the history of fairly progressive and sensible taxation. Taxes are how we build the things that make the state better and more enjoyable for everyone who lives here.

Frankly, anyone selfish enough to leave the state because they're going to be taxed a bit more on money they won't even live long enough to see, never mind spend, is someone we are probably all better off without. They can take their self-centered avarice with them to join forces with their fellow misanthropes - perhaps to Peter Thiel's proposed libertarian island. I mean, what's not to like about looser building codes and bigger piles of guns?


[ Parent ]
30% would help (A Lot!) (0.00 / 0)
Yeah.  It's good to see a candidate putting out a number (a 'graduated' number) on what the Rich, and, hopefully, corporations should pay in taxes.  "Imagine"--John Lennon.

"Imagine" (0.00 / 0)
"Imagine the Rich paid more taxes
an amount they could well afford to do
Imagine all that money
coming from Corporations too

Imagine all the people
living in hope, not fear

You may say I'm a socialist
but I'm not the only one

I hope some day it'll happen
before the country comes undone

Imagine Gates, Trump and Halliburton
saying we've got money to burn
And we don't know what to do with it
it's more than all the rest of you earn

So we're gonna stop being bastards
cause the country is going to hell

We...eeee hope this will make you love us
oops...there goes another oil well
(We'll adjust for that next year)


Gates DID. (0.00 / 0)
http://www.bbc.co.uk/news/worl...

GATES: Well the United States has a huge budget deficit, so taxes are going to have to go up. And I certainly agree that they should go up more on the rich than everyone else. That's just justice.

BBC HOST: Is that a message you think that works with other people as wealthy as yourself, or is it just a small circle of friends - yourself, Warren Buffet, a few others.

GATES: Well, I hope we can solve that deficit problem with a sense of shared sacrifice - where everybody would feel like they're doing their part. And right now, I don't feel like people like myself are paying as much as we should.



[ Parent ]
Stanford U study shows raising taxes on obscenely wealthy does NOT cause migration (4.00 / 1)
A report from Stanford University studied the migration patterns of the obscenely wealthy class in the state of New Jersey when that state increased their top tax rate by 2.6%.

Result: The insanely rich do NOT move just because they are having to pay a tiny fraction more of their incalculable wealth to the state.  

To Gov Shumlin, John Campbell and  Shapleigh Smith, Jr.: Raise the insultingly wealhty's taxes NOW!!!  There is NO reason not to!

National Tax Journal, June 2011, 64 (2, Part 1), 255-284
MILLIONAIRE MIGRATION AND STATE TAXATION OF TOP INCOMES: EVIDENCE FROM A NATURAL EXPERIMENT
Cristobal Young and Charles Varner
http://www.stanford.edu/%7Ecy1...

"Our empirical strategy is based on identifying the migration patterns of high-income earners, and then observing how these patterns change in response to a new million- aire tax. The new bracket was introduced in 2004, and raised the marginal rate by 2.6 percentage points on income above $500,000.8 The legislation was passed mid-year and applied retroactively, so taxpayers had little ability to migrate in advance of the tax increase (Office of the Governor, 2004). We treat the 2004 policy change as a natural experiment, and test whether it caused an observable shift in migration patterns."

"Drawing on a comprehensive set of microdata on individual income taxes in New Jersey - a near census of top income earners - this study examines the impact of a new progressive state income tax."

"Using a difference-in-differences estimator, we find a minimal effect of the new tax on the migration of millionaires. Using the 95th-99th percentiles of the income dis- tribution as a "non-taxed" control group, we find that the 99th percentile (those subject to the new tax) show much the same trends in migration patterns after enactment of the millionaire tax. There are small subsets of the millionaire population that are more sensitive to state taxation. Nonetheless, the broad conclusion holds even when looking at the richest 0.1 percent of households."

"While in principle it is easier for tax avoiders to migrate out of state than out of country, the reluctance of people to do so gives states significant room to tax top incomes. Indeed, we estimate that New Jersey's new tax raises nearly $1 billion per year and tangibly reduces income inequality, with little cost in terms of tax flight."



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