vt.Buzz ~ a political blog

Political notes from Free Press staff writers Terri Hallenbeck, Sam Hemingway and Nancy Remsen

1.17.2007

What numbers don't tell

Gov. Jim Douglas, today in his news conference, referred to a Vermont business owner who told him about losing out on hiring a new employee after the prospective employee weighed property taxes in Vermont vs. wherever else he or she had job prospects.

We all know that property taxes are the number one concern of just about everybody in Vermont, and I'm not trying to downplay that. I know people take property taxes in consideration when making decisions about where to live and where to build businesses, and with good reason.

The comment did, however, prompt me to picture this prospective employee, who apparently chose to live in another state. How many states were in the running we do not know. This person must have researched the average property tax payment in each state in question, looked down at the figures scratched on a piece of paper and announced to the spouse and kids, that this was how they were going to shape their lives - based on the property tax bill.

I can't help but think that's some kind of nerd we're talking about.

Those of us who are lucky enough to live here know that the nerd is missing out on something that can't quite be summed up by numbers on a page. Have you seen the mountains on a clear, sunny day like today, just to name one of the unquantifiables?

Not that we shouldn't also worry about the numbers on the page.

- Terri Hallenbeck

posted by vt.Buzz | 3:29 PM |

Comments:

Real estate listings typically specify property taxes. Add that value to the mortgage, look at what you're getting for that money, and most people are going to move on. It's not some obscure piece of information that you factor into a complicated equation when you're looking to move, it's right in your face. There are a lot of beautiful places to live in this country.

# Posted by:

Anonymous | 4:25 PM, January 17, 2007

I don't mind if people like that don't come to Vermont.

They can go to Texas ... where the smog is so thick that you can hardly breath, the schools suck, there are no social services, and 95% of the elected officials are crooks.

# Posted by:

Anonymous | 4:30 PM, January 17, 2007

I think what we're specifically talking about here are people who would potentially be buying in the mid- to high-end range of housing. Property taxes have much less of an impact at the low end, and there's no lack of demand there.

Someone who had job prospects in multiple states is probably not looking at moving into a dump; they may even (God forbid) be outside the cozy protection of "income sensitivity" that most Vermonters enjoy. Couple that with professional salaries that struggle to compete with most of the country and you've got a VERY hard sell.

# Posted by:

Anonymous | 5:03 PM, January 17, 2007

It's foolish for a policy maker to make decisions based on what one person told him.

We here lots of anticdotal information like this ... but it means very little without cold, hard numbers.

# Posted by:

Anonymous | 5:31 PM, January 17, 2007

From where do you think statistics like this should be gathered? Maybe we can employ a mindreader who will tabulate the number of people who have a fleeting thought about moving to Vermont at some point.

# Posted by:

Anonymous | 5:53 PM, January 17, 2007

I call baloney.

Who would conclude "Its property tax. Yep, just property taxes" and not "cost of living relative to salary". I doubt its a nerd, as they are good at math. Its probably the business owner's story and not the potential employee's. We need the whole story.

I do get a kick out of the "they may even (God forbid) be outside the cozy protection of "income sensitivity" that most Vermonters enjoy".

If we got rid of income sensitivity, property taxes for the people outside of "income sensitivity" would go down by 1/3.

Wonder how much school budget hacking we'll have to do in order to drop it 1/3?

# Posted by:

Anonymous | 6:02 PM, January 17, 2007

"Wonder how much school budget hacking we'll have to do in order to drop it 1/3?"

None. The total tax burden will remain the same, but everyone will be taxed relative to the value of their home. In other words, look at your tax bill, forget about prebates/rebates, and that's what you're going to pay.

It's unfortunate that that warm snuggly clause lulled so many Vermonters into blithely passing school budgets without any scrutiny, but anyone who thought (thinks) it would last forever is a fool.

# Posted by:

Anonymous | 6:10 PM, January 17, 2007

additionally, I bet what's going to happen is

1) non redident property tax stays about the same
2) residents will see a drop in property tax and middle-upper middle class and beyond will get hit with a new income based tax
3) a cap will be put on education spending

And the net effect is that even more money will be taken from what are really middle class earners for education funding. Income sensitivity takes on a new angle as low to middle income earners will be paying less property taxes while avoiding the new income tax.

# Posted by:

Anonymous | 6:13 PM, January 17, 2007

"None. The total tax burden will remain the same, but everyone will be taxed relative to the value of their home. In other words, look at your tax bill, forget about prebates/rebates, and that's what you're going to pay."

Understood. I was just making the point that the 1/3 number is significant and there would need to be massive changes at the education funding level to provide a 1/3 drop in tax.

# Posted by:

Anonymous | 6:17 PM, January 17, 2007

"...there would need to be massive changes at the education funding level to provide a 1/3 drop in tax."

Again, there will not be any drop in overall tax revenues, and no changes to education funding. The unions won't allow it. Those who are currently protected by income sensitivity simply won't be any more. Some sort of cap based on income will probably be put in place to keep people from losing their homes, but it will be more like ten or fifteen percent, not two percent. Implementation of a straight income tax to replace the property tax will have the same net effect. Most Vermonters have no idea how good they have it right now.

"someone making $50k and living in a $300k house, pays less in propoerty tax in Burlington then in Pheonix."

...and someone making $1M in Phoenix pays less property tax on that $300K house than someone making $95K in Burlington. Not to mention the fact that any house in Phoenix is going to appreciate at a dramatically higher rate than its Burlington equivalent. I'm guessing that the son of a Governor might actually have ambitions to break above the IS barrier.

# Posted by:

Anonymous | 7:08 PM, January 17, 2007

"Income sensitivity takes on a new angle as low to middle income earners will be paying less property taxes while avoiding the new income tax."

Low to middle income earners ultimately don't pay property tax for education, they pay an income tax. If you think any change to education funding in Vermont will involve an additional burden to those whose taxes are already artificially inflated by income sensitivity, I've got a bridge to sell you.

# Posted by:

Anonymous | 7:14 PM, January 17, 2007

I like bubble gum.

# Posted by:

Anonymous | 9:47 PM, January 17, 2007

Terri - did you ask the governor if he knows this name of the business he's using as an example? You all should follow up and see if this is even true. Most leaders use specific examples, but Douglas uses vague "I met a guy" examples that make me wonder if they're even real. It seems like the press should check the background a bit if they aren't already.

# Posted by:

Anonymous | 8:45 AM, January 18, 2007

"Low to middle income earners ultimately don't pay property tax for education, they pay an income tax. If you think any change to education funding in Vermont will involve an additional burden to those whose taxes are already artificially inflated by income sensitivity, I've got a bridge to sell you."

For some reason I have a really hard time believing the legislature is going to do anything but place more burden on the middle and above middle class earners.

I think we agree that what should be done is get rid of income sensitivity. I'm only looking in my crystal ball and stating what I think the legislature will do, not what I would do. And what I think will happen is a cap on education spending which will really be just political hot air and not have any effect. This will be followed by no change in the prebate/rebate program and a reduction in overall property taxes compensated by a new income tax targetting middle and above earners. This is an income tax that does not touch those who are "income sensitive" and therefore my prediction is that the people who are not "income sensitive" will have more burden placed upon them.

# Posted by:

Anonymous | 9:51 AM, January 18, 2007

""...there would need to be massive changes at the education funding level to provide a 1/3 drop in tax."

Again, there will not be any drop in overall tax revenues, and no changes to education funding. The unions won't allow it."

Who are you debating? The point I'm making is that the change would so massive that it could not happen. It is not possible to cut the education budget by by 1/3. That's my point.

# Posted by:

Anonymous | 9:53 AM, January 18, 2007

"my prediction is that the people who are not 'income sensitive' will have more burden placed upon them."

Highly unlikely, because that's where most of the burden is now. The prebate/rebate system ensures that only about 5% of the people voting for school budgets are actually impacted by those decisions. That system is so broken that it cannot continue. Any substantial property tax woes suffered by low income earners have nothing to do with education costs.

"The point I'm making is that the change would so massive that it could not happen. It is not possible to cut the education budget by by 1/3."

One more time, read slowly this time. The education budget would not be cut. The "massive change" will be that the protection afforded by income sensitivity will be rolled back. Some sort of true "income sensitivity" provision will probably be put in place, capping everyone's tax liability at a percentage of their income, probably on a sliding scale. Maybe they'll freeze assessments for residents. Anything would make more sense than the system that's currently in place.

Yes, some people's property taxes will double or worse; but only because they will be paying the actual property tax generated by their school budget votes. It's a bill they handed themselves. Don't think it can happen? Ask the residents of Atlanta or parts of South Carolina.

# Posted by:

Anonymous | 11:34 AM, January 18, 2007

Don't understand ... please type slower.

# Posted by:

Anonymous | 11:48 AM, January 18, 2007

"If you think any change to education funding in Vermont will involve an additional burden to those whose taxes are already artificially inflated by income sensitivity, I've got a bridge to sell you."

And I have an Act 60 authoring democratic controlled legislature to fund your bridge.

We're taking about Vermont here, right?

But seriously, I'm of the opinion, that abolutely nothing will happen. Douglas and Symington will not touch the issue because its a political quagmire. Douglas has already back-burnered property taxes for e-state and post-election Symington has never really acknowledged there is a problem.

# Posted by:

Anonymous | 12:56 PM, January 18, 2007

I suggest you look at the Vermont Fairness Alliance:

The Vermont Fairness Alliance is a broad coalition of human service, religious, civic, labor, business, low-income, political, environmental, and other groups which has been organized to promote fairer budget and tax priorities for Vermont in '06. Specifically, the Vermont Fairness Alliance calls for raising taxes--but only on the top 5% of Vermonters earning over $115,000/yr--to raise revenue to help balance the budget, while maintaining or even increasing funding for essential public services such as health care, housing, education and child care, public safety, and environmental protection. Rep. Bob Kiss has proposed H. 428 which proposes to raise state revenue through a similar tax option to the one the Alliance proposes. VLWC supports the Vermont Fairness Alliance.

..there is a letter in the 1/18 FreePress regarding this and there have been others in both the freepress and the Rutland Herald. So, an income tax hitting above average income earners is potentially "on the plate".

Let's hope this is just hot air and they will reduce income sensitivity and not increase it.

# Posted by:

Anonymous | 1:27 PM, January 18, 2007

For some reason, these nut jobs think that a person or family making $125000 has "received large federal tax cuts over the past five years" and "it's only fair that the highest-income taxpayers be asked to give back a portion of their windfall"

http://www.vfeep.org/VermontFairnessAlliance.html

# Posted by:

Anonymous | 1:36 PM, January 18, 2007

Well, no one ever accused Progs of being great economists. Thanks for the link, that site is hilarious. I especially like this:

"by eliminating the deductibility of state and local taxes from federal tax liability."

I'm sure the IRS will get right on that.

# Posted by:

Anonymous | 5:40 PM, January 18, 2007

"Well, no one ever accused Progs of being great economists."

Yeah, because Dems and Repubs have done such a miraculous job at the helm....

# Posted by:

Anonymous | 9:42 PM, January 18, 2007

I've never heard a Vermont D or R touting a "financial asset tax." Ooh yeah, GREAT idea.

# Posted by:

Anonymous | 11:19 PM, January 18, 2007

According to Martha Abbot's opinion in the FreePress, it looks like the legislature took option two from

http://www.leg.state.vt.us/Temp/CMTE_DOCS/Committee_Report_on_House_Study_on_Income-Based.htm

Lowering property tax bills by forwarding rebate/prebate checks directly to the town so the town can send out adjusted tax bills rather than the individual taxpayers.

how funny.

And cripes, with $106,000 houshold income you can still get a rebate check? What gives?

I suppose this means, those with adjusted (reduced) property tax bills will end up paying a bit more to the feds since they won't be able to deduct as much property tax from fed taxable income.

# Posted by:

Anonymous | 9:25 AM, January 23, 2007