The left thinks this is a very good thing. They like it that nearly 70 percent of Vermont households pay around two percent of their household income instead of a larger education property tax based on their residential property's fair market value. For those households the Act 60 residential property tax increases have little effect.
The left especially likes it that the top five percent of Vermont income tax payers pay around 50 percent of all income tax collections. And of course, they love it that the couple hundred thousand Vermonters who pay almost nothing in taxes consume lots of free (to them) tax-financed benefits. Politically, these minimal taxpayers can't be mobilized to vote against tax rate increases, because they pay so little of any increase, and they can easily be persuaded to vote for politicians who promise to use the increased tax proceeds to distribute more benefits.
From the standpoint of Vermont's future economy, this is a pernicious situation.
Compare Vermont and New Hampshire. Vermont's per capita income (estimated for 2007) is $38,306. New Hampshire's per capita income is $43,745, 14 percent higher. The same Tax Foundation, in an October 2006 report, found Vermont to have the 46th best business tax climate in the nation. New Hampshire's was seventh best.
And now, for both 2006 and 2007, Vermont's tax burden is Number One in the nation. For both years New Hampshire comes in 49th.
So why would a rational business decision maker choose Vermont over New Hampshire (or Tennessee or Delaware)? Does Vermont have enough of an edge in environmental quality, educational quality, personal security, beautiful views, recreation, small town amenities and personal security to win such a competition? Almost certainly not, and when it comes to business opportunity, regulatory cost and risk, transportation and telecommunications, and mandates and taxes, New Hampshire is a clear winner.