Editor’s note: This op-ed is by Steven Farnham, a resident of Plainfield.
I’ve been watching the news on the Vermont “Blue Ribbon” Tax Structure Commission with apprehension. It’s not that I disapprove of the concept of reviewing and improving the tax code — it’s just that when the affluent assemble with the stated goal of “simplifying” the tax code, I instinctively grab for my wallet. Usually what they want to “simplify” are ways for others to pay.
First, why was it named Blue Ribbon Tax Structure Commission, except to possibly make us think it’s something it isn’t? For example, why wasn’t the seminal work of the Vermont Livable Wage Campaign called the “Blue Ribbon Vermont Job Gap Study”? Why don’t we call it “Blue Ribbon Aid to Needy Families with Children,” or the “Blue Ribbon Vermont Health Access Program”? Who determined that this particular research trio was of Cordon Bleu calibre? If you think this is petty, can you think of anything more inappropriately named than a beer called “Pabst Blue Ribbon”?
One of the three members of the Commission is a long-time, high-ranking government employee, another is wealthy (by my standards) and the third has political views somewhere to the right of Rush Limbaugh — and is also wealthy.
In a recent commentary regarding his work on the commission, Bill Schubart argues in support of taxing services, explaining that services now occupy a much greater portion of the economy than they once did.
I think this argument has some merit. However, consider the teenager who borrows the family lawn mower to earn college tuition money mowing lawns for the neighbors. Or the farmer who brush hogs his neighbor’s field, whose tractor is running on three cylinders, his bush hog looks as if it’s been to war, and we’re going to tax this service?
Aren’t these people already being taxed for their income — or have I missed something here?
The only sensible answer requires the law to make special considerations: No tax on certain types or classes of services; no tax on services costing less than some arbitrary amount; no tax on any service provider with an AGI (Adjusted Gross Income) of less than some amount; and/or no tax on any individual or business for whom providing the service is not a primary source of income — or something along these lines. Gee, these sound an awful lot like exemptions. Hmmm.
On the BRTSC “Personal Income Tax Reform” page, under “2nd round of deliberations,” several different options are listed which feature different combinations of “deductions.” Yet, the much-ballyhooed motive to shift to the AGI is to “simplify” the tax code and to get rid of such complications as deductions and exemptions.
When taxes are applied to your adjusted gross income instead of your taxable income, you may end up paying more. The only reason to convert to the AGI-based tax is to shift the tax burden down the income scale onto the backs of those who can least afford it. Doug Hoffer seems to confirm my suspicions in his response to VtDigger’s article on the BRTSC report. He said he believes they are seeking to reduce progressivity.
Just so you know from how far away they’re watching, in Deliberating Tax Reform In Vermont, Billy Hamilton, a private consultant in Texas discusses the BRTSC’s work. He cites Kevin Owens, owner of a “Winooski marketing company,” kvetching about how “…the state’s income tax system has alienated successful entrepreneurs.”
In an interview with the UVM alumni magazine, Owens brags about his 60-employee, $10 million business. My heart goes out to him — I wish I had his problem — hell, I wish I had the problem of a self-employed $10 thousand business.
I am inclined to agree that taxing services, (with certain exemptions and exclusions) is a good idea, but I’m really skeptical of the push toward the AGI-based system.
I would feel a lot less like the fox was in the chicken coop if the “Blue Ribbon” Tax Structure Commission was a bit more diverse — i.e. more deserving of its moniker: If the “Blue Ribbon” Tax Structure Commission membership included representatives for small farmers, from labor unions, and from various Community Action Councils, my anxiety meter might begin to cool off, and back out of the red zone. But as usual, it’s the wealthy and affluent (or someone working for them) who have the lock on our legislators’ ears. So I’m sticking with the axiom that you can never relax while the legislature is in session. As Lilly Tomlin said, “No matter how cynical you get, it’s hard to keep up.”