(04/25/06) Visitors have a hard time telling Vermont and New Hampshire apart. The old joke looking at the neighbors on a map is, “one of them is upside down.” The two states are similar it size, terrain and demographic make-up, although New Hampshire’s population is about 2 times Vermont’s. Still, there are distinct differences between the two.

The rest of the country views Vermont as a political rogue state, inhabited by socialists and radicals who take their living from government programs, grants, non-profits or, baring that, selling organic food by the roadside. New Hampshire on the other hand is home to right wing ideologues, ambivalent to the environment, and maniacally pledged to “Live Free or Die.”

Any politician in New Hampshire who dares to utter talk about a state sales or income tax is can kiss a political career good-bye. Vermont, however, has both a sales and an income tax, recently increasing its sales tax to 6 (in some communities 7) percent. There are even serious discussions about increasing the income tax to pay for education. Not surprisingly, Vermont has the highest marginal tax rate in the country. In addition, Vermont is highly dependent on federal hand-outs, receiving $1.14 back for every dollar sent to DC. New Hampshire gets back only $0.64.

So, how does New Hampshire pay for anything? New Hampshire raises 3 times the corporate income tax per capita than Vermont and its property tax collection per capita is 3rd highest in the country. New Hampshire’s fees, charges and interest earned are higher than Vermont and they use toll revenues to pay a large portion of road and bridge upkeep.

Analyzing the budgets is a way to understand the spending patterns in each state. New Hampshire’s total state spending is $4,000 per capita compared to Vermont’s $7,000 per capita.

New Hampshire has about 35 percent fewer state employees and 4 percent fewer local employees per 10,000 residents than Vermont.

Vermont’s per capita spending on education is fifth highest in the country. New Hampshire spends 20 percent less. New Hampshire’s average class size is 25 percent larger than Vermont’s, their schools are bigger, but teacher salaries are about the same.

Spending on welfare per capita in Vermont is about 50 percent higher than in New Hampshire.

Vermont has roughly 25 percent of its population on Medicaid and New Hampshire has a third of that number. However New Hampshire’s Medicaid spending per patient is 50 percent higher than Vermont’s.

When all is said and done, Vermont’s state and local tax burden today, as a percent of personal income, is 50 percent higher than in New Hampshire. New Hampshire’s burden is the lowest in the country whereas Vermont’s is one of the highest.

But, with all that tax money there has to be a payoff for Vermont, right?

Better education? No. SAT scores in the two states are about the same. Health care costs? Not at all. Although both states lead the nation in percentage of population covered, in New Hampshire, less cost shift in government programs contributes to lower health insurance rates for private citizens. But, such generous welfare programs must lead to less poverty? Actually, not. Vermont has a higher poverty rate than New Hampshire. A more content, less desperate population? Vermont’s incarceration rate is higher than New Hampshire, too.

What about jobs and businesses? Even with New Hampshire’s high corporate tax burdens, higher property taxes, higher electric and workers’ compensation rates, an internet access tax and more health mandates, the Small Business Survival Index, published annually, has consistently ranked New Hampshire high while Vermont is mired in the lowest quartile. Vermont’s personal income is below the national average, 20 percent below the New England average and 15 percent lower than New Hampshire’s level, which is 6th highest in the country.

All Vermont is getting for its high tax/massive spending policy is an unsustainable fiscal policy. Despite all this heavy taxing, Vermont Senate Appropriation Committee Chairperson, Susan Bartlett, just candidly admitted, “We don’t have enough revenue to pay the bills.” Long term, Vermont is looking at huge deficits for Medicaid, unsustainable education spending, and, among other things, can’t maintain our roads and bridges. Taxes can’t go any higher. If we don’t change our ways soon, Vermont is heading for a major crash.

The only way to get our government finances back under control is to constrain spending, kick the habit of raising taxes and fees and start returning excess revenues back to taxpayers. As evidenced in New Hampshire, that’s what is required to build a strong and affordable economy. And until we do that, Vermont can be rightly called the state that's “upside down” on the map. And, as such, all our money will continue falling out of our pockets.
 

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.