Gov. Phil Scott had already told agency heads to propose budgets with spending cuts of 2 percent to 4 percent. And now some legislators have quickly begun considering budget cuts as the only response to lower-than-expected revenues.
Sound familiar? It should. We’ve been down this road before and we are bound to end up in the same place, yet again.
Focusing only on budget cuts is a mistake. We can look for efficiencies but there are some basic problems with the cuts-only approach; our state budget already underfunds needed services and the tax system that raises the money that funds the budget is unfair.
Like it or not, we need more investment in everything from social workers and early education to clean water and infrastructure. Otherwise our problems will only get worse.
Budget cuts clearly don’t help. And, our current tax system puts too much pressure on, and expects too much from, middle-income families.
So instead of yet another round of budget cuts, we should put down the scissors, make our tax system more fair and deliver tax relief to middle-class families.
Middle- and lower-income people already pay a larger share of their income to fund state government than wealthier folks do. They pay about 10 percent of their income in state and local taxes while the wealthiest contribute 7.7 percent (Public Assets Institute/Institute on Taxation and Economic Policy). For school funding, they pay about 3 percent of their income while those with higher incomes pay less (Vermont Department of Taxes).
To add to the inequity, between 2008 and 2014, incomes doubled for the wealthiest Vermonters, while those earning under $100,000 saw minimal gains or actual drops in income (Vermont Department of Taxes).
So the same people who struggle hardest to pay for child care and college, to pay the rent or afford a home, the same people with stagnant or declining incomes make the biggest sacrifice when it comes to paying taxes.
No wonder they are fed up with politics as usual. It’s not fair. And, it’s the part of the so-called affordability problem the governor and others choose to ignore.
You may or may not like paying taxes, but let’s agree they should be fair.
Fortunately, we can make taxes more fair while also generating more revenue. But it means those who have been benefiting from the current unfair system will pay their fair share.
It’s not about new broad-based taxes or about soaking the rich. It’s about restoring fairness. And, standing up for hard-pressed middle- and lower-income families. The same folks, by the way, who will bear the brunt of budget cuts.
Sen. Chris Pearson and I have introduced a plan to make education funding more fair by moving school funding more toward income, extending the income-sensitivity policy that most Vermonters already use to pay school taxes. Higher-income Vermonters would pay based on the greater of their income or property values. According to the Joint Fiscal Office, it would generate $80 million in new revenue to invest in education or reduce property taxes for middle- and lower-income families.
We could also eliminate tax deductions that favor the wealthy. We are one of only seven states that allow the widest range of tax deductions and exemptions by basing state income taxes on federal taxable income. By changing to adjusted gross income, we could lower rates for everyone and recapture tens of millions of dollars in deductions that now generally benefit wealthy taxpayers.
Tax reforms like this deserve serious consideration, more than yet another round of budget cuts. But they are largely ignored. Instead we keep chipping away at the budget, cutting important services and environmental protections, protecting the wealthy and making life harder for already hard-pressed, middle-class Vermonters. It’s not working. And, it’s not fair.
It’s time to change course and give the middle class a break.
Anthony Pollina, a Washington County state senator who lives Middlesex, is the interim chair of the Vermont Progressive Party. Email letters to email@example.com.