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Vermont's growing wealth gap

Based on anecdotal evidence, you might conclude that Vermont has experienced an enlargement of its own internal Wealth Gap-measured as the percent of total income, including capital gains-going to the top 1 percent of earners.

Some of us critics trace this result to specific long-running state government policies regarding job creation, an oppressive regulatory climate, Big Brother planning and zoning, and so on, but you must also note that enlargement of the Wealth Gap is not only unique to Vermont-it's a nationwide phenomenon.

Historically, the charts show, the share of total income now going to the top 1 percent is at 23 (as of 2006) which is just about where it was at its pre-Great Depression peak in 1926. It bottomed out at 8 percent in 1975. This 1 percent of the population pays 35 percent of all income taxes.

If you'd rather measure such things in terms of net worth rather than net income, the statistics for that are roughly parallel: I located a little chart on the Internet that shows net household worth peaking at 44 percent of the total owned by the top 1 percent in 1929, dropping to 19 percent in 1976, and rising to 40 percent by 1997.

The 1 percent don't pay taxes as the income wealthy do, because just about the only tax, on what you might call stagnant wealth, is the property tax as well as the relatively small intangible assets tax in Florida.

If you're a mortgage-free retiree or a trust-funder (with a house bought by your doting parents), it's easy to show a comfortably low taxable income flow while sitting on quite a generous nest egg of real value.

The underlying reason, based on anecdotal evidence, as to why Vermont is first in the nation for total tax burden, but with high progressivity rates built in (for example, a clear majority of homeowners enjoys property taxes capped at 2 percent of income), is that it's quite possible to enjoy wealth in asset form while avoiding taxes on it in income form.

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