(08/12/06) Vermont state government spending of $12,300 per tax filer is $7,000 more than it was in 1997. Education and human services spending account for almost 75 percent of this increase.

Vermont Senate Appropriation Committee Chairperson, Susan Bartlett, admitted "We don’t have enough revenue to pay the bills." This is a huge problem in Vermont since our tax burden is one of the highest in the country.

When legislators see Administrations take no action to control spending, they see a green light to spend and spend. Furthermore, Vermont fiscal policy is built on a pyramid scheme using federal money to leverage $2 to $3 for every $1 state match. Vermont has become more dependent on federal money than most states which has increased our spending base resulting in an excessive state tax burden.

Vermont must note the danger signs and address its tax climate. The following table should alarm everyone.
 

ITEM	STATUS	STATE RANKING
State & Local Tax Burden	Hi	5th
Income Tax Rate (9.5%)	Hi	2nd
Property Tax per capita	Hi	8th
Business Tax Climate	Low	46th
Small Bus. Ranking of D.C.Delegation	Low	49th

Now let’s look at what other states are doing to improve their economic climate.

• Rhode Island is offering the choice of a flat tax that cuts the top income tax rate to 5.5 percent from 9.9 percent.
• Arizona passed a 10 percent cut on income tax rates.
• Oklahoma passed a budget that will cut rates 20 percent to 5.25 percent and abolish the state estate tax.
• New Mexico cut the state’s top income tax rate to 4.9 percent and cut the capital gains tax rate in half.
• A successful petition drive in Michigan to repeal its main business tax will force a legislative vote.
• Maine, Nebraska, Montana, Nevada and Oregon have spending-cap referendums to cap state spending and taxes.

BUT

• Vermont finished the year with a $36 million surplus and it’s already spent.

Governor Richardson (D) of New Mexico has it right when he said that cutting taxes is a way to tell the world they’re open for business. "After all, businesses move to states where taxes are falling, not rising."

A report by the American Legislative Exchange Council found that, in the 1980’s and 1990’s, states that directed budget surpluses into new spending had the deepest deficits when recession hit. States that cut tax rates were better able to ride out the storm, and their economies performed better.

Vermont’s economic momentum, that looks at employment, personal income and population and relates each state’s performance to the national average, ranks Vermont 36th. The cost of taxation exceeds our benefits and that results in lower economic growth, reduced job formation and affordability. Regarding the poor rating of our Congressional delegation’s ranking by small business, we get what we accept.

When people keep more of what they earn they produce more in terms if jobs, economic growth and tax revenue. It’s just good common sense that reduced taxes will improve our competitiveness and economy. Rather than be known as the state of redistribution we should strive to be a state of affordability.

Frank Mazur
South Burlington

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Frank Mazur, a small business owner and former state representative, is chair of the advisory board of Vermont FreedomWorks.