Religious alliance presses pols to tax wealthy Vermonters

Secretary of Administration Jeb Spaulding. VTD/Josh Larkin

The number of Vermonters living in poverty has changed little in the last 40 years, moving from 12.1 percent in 1969 to 11.5 percent two years ago. State government has failed to effectively address this and other economic disparities, according to a report from Vermont Interfaith Action presented Monday to four lawmakers and Secretary of Administration Jeb Spaulding.

The authors of the report claim that the issue of poverty appears to have been “held hostage to a shortage of funds created in part by the refusal to ask wealthy Vermonters to do more.” They also accuse leaders to succumbing to fear “by some who claim that raising taxes on the wealthy will result in capital flight.”

Asked if they would avoid cuts in social programs by raising taxes on the wealthiest Vermonters, State Sens. Tim Ashe, D/P-Chittenden, Sally Fox, D-Chittenden, and Anthony Pollina, P/D/W-Washingon, said that they were on board. But Rep. Martha Heath, D-Westford, chair of the House Appropriations Committee, argued that it would depend on balancing various needs and urged the audience gathered at Ohavi Zedek Synagogue in Burlington to make their case at upcoming legislative hearings in Montpelier.

“The governor believes in raising taxes on the wealthy,” Spaulding said, but Gov. Peter Shumlin is not ready to do so at the state level. “We need to take care of needy Vermonters but we also need to remain competitive with other states,” Spaulding explained. Instead, he said Shumlin wants to see taxes on the wealthy increase nationally.

Pollina pointed to a drop in median family income for Vermonters and said that inequality is greater than at any time since the 1930s Depression. Beyond tax changes, his prescriptions include an improved process for setting the state budget and the development of a state bank, a proposal that was part of the Liberty Union Party’s platform four decades ago.

Ashe said some state funding is currently being misallocated, pointing specifically at the Vermont Training Program, a Department of Economic Development initiative that subsidizes wages and trains employees in new and existing businesses. Although the emphasis is supposed to be on enterprises that cannot afford to fund training, Ashe noted, profitable enterprises like Green Mountain Coffee Roasters and General Electric Aviation in Rutland have received more than $400,000.

The comments from Spaulding and the legislators came near the end of what was billed as an “economic action” event that attracted more than 125 people from a wide variety of faith communities on Sunday afternoon. VIA is part of a nationwide faith-based organizing group that looks for solutions to “systemic issues that prevent our most vulnerable citizens from enjoying the quality of life God intends for us all.”

The report calls for Vermont to lead the struggle “to break the cycle where wealth fuels power and power fuels more wealth.” It noted, for example, that the Northeast Kingdom and tyhe Rutland area, “the poorest parts of the state, suffer from higher unemployment, poorer health, fewer physicians, and greater numbers of children living in poverty. On the other hand, Chittenden County, which fares best on these indicators, nonetheless must deal more seriously with violent crime and the lack of affordable housing.”

Looking at criminal justice, the report points out that Vermont’s prison population doubled between 1996 and 2006 to reach 2,123. This is four times the national average, and led to a 129 percent increase in spending on corrections. Compounding the problem, Vermont’s 50 percent recidivism rate is one of the highest in the nation.

Shumlin calls the growth of Vermont’s prison population “unsustainable,” yet budget pressures tend to shift the burden to short-term cuts elsewhere, the report argues. “Growing expenditures for Corrections means fewer resources that are available for addressing at-risk conditions that contribute to crime.” Unless priorities change, it says that the situation is likely to get worse as services are cut.

The study also deals with housing, education and health care. On housing, it calls federal Section 8 assistance “largely an income transfer to people who own real estate,” and suggests rent-to-own programs, inclusionary zoning, and “linkage” – a policy to encourage the connection between “commercial development that creates jobs, housing for the employees who take those jobs, and transportation to move those employees to their jobs.”

Many businesses who benefit from early childhood education and childcare contribute little or nothing to its cost, the report argues. To address this, “an innovative approach would be to treat it like Workers Comp, with every employer paying a few cents an hour per employee into a statewide fund to subsidize child care.”

Praising Shumlin’s efforts to implement a single-payer health care system, VIA is urging “the same kind of thinking” to handle other problems. The report echoes Pollina’s call for a state bank, along with investing state employee pension funds in Vermont and incentives for in-state businesses to bid on public projects. “We cannot afford to continue doing what we have been doing,” the report concludes.

Before the officials provided their responses to questions submitted to them in advance, testimonials about the struggles facing families and the need for new economic priorities were offered by UVM grad Corrie Wilcox, Burlington parent Kathy Chasan and Don Horenstein, who challenged notions about debt, supply side economics and whether rich people will leave the state if their taxes go up.

“Debt is a phony excuse” not to address pressing problems, he said. Among Horenstein’s alternatives were a return to Snelling-era progressive income tax rates and floating bonds to pay for “vital functions.”

The state has “quite a bit to be proud of,” Spaulding said, including a high minimum wage rate that increases automatically, rising school achievement and a “favorable” studio-teacher ratio, as well as Shumlin’s pledge to make Vermont the first state to implement single-payer health care.

“Health care is a universal right,” Spaulding said, “but we have to make sure the public is with us.” Vermont already has one of the most progressive tax systems, he added, but there is little public support for raising taxes at the moment.

Although Shumlin agrees that taxes on the wealthy should go up to address the nation’s economic problems and inequities,according to Spaulding, he thinks it should happen nationally. He cited competition with other states as a prime concern.

The interfaith group argues that Vermont should lead on progressive tax and budget initiatives in the same way it has on single-payer health care and legalizing same-sex marriage. “The budget is a moral document,” argued Rabbi Joshua Chasen as the evening came to an end.

“We need leadership from the governor and Legislature. The situation is getting worse,” Chasen told the officials. “The voters will come around if they see leadership.”