Sen. Anthony Pollina’s Op-Ed In The Dec. 20 Times Argus

While calling for more state budget cuts, the Shumlin administration claimed it can’t figure out why income tax revenues are coming in lower than hoped for and said low tax revenue is evidence that even more budget cuts are needed.

But, let’s face it, income tax revenues are down because income is down. And low income tax revenue is evidence that we need new policies that raise income and strengthen the middle class.

So I appreciate the editor’s perspective that, “We have to rethink what we are doing as a state, and how we are doing it” (“Rethinking the process,” Times Argus, Dec. 14).

To have a thriving economy and healthy state budget, local businesses need demand for their products and customers with money to spend. When incomes go down, people have less money to spend, demand drops, jobs are lost, and businesses — and tax revenues — suffer.

That’s the case now. Most Vermonters are earning less today in real dollars than they earned 10 years ago. Yet, the impact of declining incomes is largely ignored in debates over the budget, education funding and the economy.

We don’t expect our plumber or coffee shop to charge less today than 10 years ago. We expect to pay more as the cost of doing business goes up. But we should also expect our income to rise along with costs. And that’s not happening.

Lower incomes make it harder for families to pay the bills, including taxes, and mean lower tax revenues causing budget deficits. But just cutting services is painful and largely unsuccessful if our goal is fixing the economy. Whether a healthy budget, renewable energy, affordable housing, higher education, recycling or restoring Lake Champlain, we are forever setting goals we cannot reach without first strengthening our middle class.

The governor’s own Council on Pathways from Poverty, says, “Poor Vermont families with children are in crisis.” And the Capstone Community Action annual report finds “a decline in income, an increase in poverty and a substantial increase in reliance on public assistance.”

So, the budget debate can’t be limited to our “spending problem.” We need to talk about declining incomes, increased inequality and the middle class as key to economic recovery.

And we need to remember that while most of us experienced stagnant or declining incomes, our wealthiest 1 percent more than tripled its share of Vermont’s income. Between 2009 and 2012 alone, the wealthiest Vermonters saw income increases of 51 percent to 73 percent. Did you? Nationally income inequality is greater than at any time since the Depression. And inequality hurts.

Nobel Prize-winning economist Joseph Stieglitz says, “Inequality is squelching our recovery,” because “our middle class is too weak to support consumer spending that has historically driven economic growth.” And “the weakness of the middle class is holding back tax receipts so government cannot make vital investments crucial for restoring economic strength and lower tax receipts force cutbacks in services. With inequality at its highest level since before the Depression,” he says, “economic recovery will be difficult.”

In other words, a stronger economy starts with restoring the incomes of working families, so they can pay their bills, care for their families, rely less on public programs and support local businesses.

And it’s about policy choices. The Public Assets Institute says, “Vermonters lost ground, because of policies that favor the wealthy.” The Congressional Budget Office says federal policy has encouraged inequality, in part with tax policies that benefit the wealthy, like the so-called Bush tax cuts that have been a huge windfall for Vermont’s wealthiest 5 percent.

Policy choices can be changed. But our governor and Legislature have chosen not to ask these folks, who can well afford it, to pay a bit more in Vermont taxes to avoid budget cuts — another choice that helps the wealthiest. Spending $4.4 million to subsidize profitable corporations instead of investing in jobs weatherizing Vermonters’ homes is another, as is directing $5 million to fund energy savings for ski areas while Vermonters struggle to pay utility bills. There are others.

Instead, we should choose to encourage good jobs and make local investments that work for all Vermonters and strengthen our budget and our middle class. Making taxes fairer, ending corporate welfare, lowering health care costs and moving away from property taxes to fund schools are examples of better choices.