Vermont is No. 1 - in tax burden

Americans enjoy rankings. They enjoy David Letterman's "Top Ten," scan the New York Times Best Seller List, and study the rankings of colleges and universities.

So it was no surprise when Vermonters were interested to discover that their state had reached a national number one ranking. Unfortunately our high ranking was not in job creation, median income, or per capita retirement savings. Vermont climbed the charts to number one in state and local tax burden.

The respected Tax Foundation computed the rankings based on economic data from the standard U.S. Department of Commerce sources. State and local tax burden is the total amount of taxes paid by Vermont individuals and businesses, divided that by the total income earned by Vermont individuals and businesses.

This data is then adjusted to account for states that export their severance, corporate income and tourism taxes throughout the country. The net effect of these adjustments was quite large for oil-rich Alaska, but very small (tenth from the bottom) for Vermont.

The legislative Joint Fiscal Office was quick to point out that Vermont imports tax dollars from many non-Vermonters who pay property taxes on their second homes here, and that non-Vermont corporations pay the state $22 million a year in captive insurance premiums. But even with such adjustments it's hard to see how Vermont could escape being at least one of the top three in the nation in tax burden.

Liberal critics of the report were quick to point out having the highest tax burden in the nation leaves open the question of the distribution of that burden among Vermonters. They argue that Vermont's tax system is very progressive, a point made with much fanfare by Gov. Madeleine Kunin 20 years go.

And they are quite right. The lower income population in Vermont pays almost no income tax, not much property tax on their apartments, and not much sales tax, since food is exempt. If they avoid buying liquor and tobacco, don't eat out much, and don't own a vehicle, they are living as close to tax free as is possible in a modern society.

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