"He reminded me that the legislature was an equal partner in protecting the state’s most vulnerable during the 1991 recession…"
History Lesson #91
Speaking of Ralph Wright, I received an email from the former Vermont House speaker about last week’s column.
He reminded me that the legislature was an equal partner in protecting the state’s most vulnerable during the 1991 recession, even though history often credits Republican Gov. Richard Snelling.
“My recollection is, the Democratic legislature had more than a little to do with that act of fairness back in 1991,” Wright wrote from his Florida home. “If someone had asked what was the first thing Gov. Snelling and I agreed upon it was: ‘This deficit will not be placed on the backs of the poor, the elderly, or the children.’ And then we raised taxes.” Graduated, he added parenthetically.
Snelling’s stance was risky, Wright noted, but he was “a man willing to risk his political future for doing what he thought was right.”
And what was “doing right,” according to Wright? In 1991, the top marginal tax rate was around 9.6 percent. The “Snelling plan” raised it to 13.5 percent in 1993 for people earning more than $250,000. There were also budget cuts and layoffs.
Fast forward to today. In 2008, the top marginal rate of 9.5 percent kicked in around $350,000.
Rather than raise taxes last year, legislators closed a capital gains tax exemption, recouping an estimated $35 million of wealth earned from stock investments. But they didn’t put that money into social services; they lowered income-tax rates across the board, making the whole effort revenue neutral.
That means folks earning more than $375,000 saw their top marginal rate drop to 9.4 percent in 2009. This year it’ll drop to 8.95 percent.
Let’s hope they spend it all in one place: here.