Fact checker: Brock’s claim that Vermont has the highest tax rate is “udder bull”

With the 2012 campaign season in full swing, Seven Days has teamed up with VTDigger.org to create a fact-checker feature to test the “truthiness” of claims made by the candidates who want your vote this November. This week’s Fact Checker was written by Anne Galloway.

CLAIM: “Pete Shumlin’s Vermont: highest tax rate in the country.”
— Television commercial for Republican gubernatorial candidate Randy Brock, titled “Who’s He Fooling?”

FACTS: The Vermont GOP has long contended that Democrats have made the Green Mountain State into a high-tax, antibusiness enclave. So it wasn’t surprising when Republican gubernatorial candidate Randy Brock claimed, in an attack ad against Gov. Peter Shumlin, that Vermont has the highest tax rate in the country.

According to Brock campaign aide Darcie Johnston, Brock based his assertion on a 2012 Kiplinger analysis of the five most tax-unfriendly states for retirees, using figures from the Tax Foundation, a Washington, D.C., think tank. Though several other sources supplied by Johnston tar Vermont as “retiree hell,” only one actually lists the state as having the highest tax rate in the nation — a 2009 Forbes report. That was published, of course, when Republican Jim Douglas was governor — well before Shumlin took office in January 2011. According to Kiplinger and the Tax Foundation, in 2012 the highest-taxed state is Hawaii. Oregon is next in line, followed by California, Iowa and New Jersey. Vermont is No. 6, based on the criteria established by Kiplinger.

Vermont’s tax rate for high-income earners is 8.95 percent, but those individuals pay on a graduated scale. Vermonters are charged 3.55 percent for the first $34,500 of taxable income regardless of how much they earn. The top rate is applied to taxable income starting at $379,150 and above. In 30 other states, taxpayers pay the top rate on all adjusted gross income.

Another local benefit: Well-heeled Vermonters can itemize all the deductions they want — mortgages on first, second and third homes, college tuition, charitable donations, etc. — before they pay a dime to Montpelier.

If you look at Vermont’s actual income-tax collections for individuals, the state’s tax burden is closer to average. The Tax Foundation ranks Vermont as 20th highest, or $782 per person, based on 2010 tax data. In case you’re wondering, Vermont’s property taxes rank sixth nationally, according to the Tax Foundation.

SCORE: Sen. Randy Brock’s claim that Vermont has the highest tax rate in the country during Shumlin’s first term is not true. Vermont has the sixth-highest income-tax rates in the nation, according to his own sources. Moreover, the Tax Foundation’s more nuanced look at Vermonters’ actual tax burden ranks Vermont 20th. Brock’s assertion is wrong, based on his own data for 2012. For that reason, we rate his claim “Udder Bull.”

Follow Anne on Twitter @GallowayVTD

Anne GallowayAnne Galloway

Comments

  1. Jeff Zweber :

    Sorry, just a quick correction to your story.

    You have to account that Vermont has an income tax, a property tax, and a sales tax. There are several states that don’t have all three. In your article, when you just compare state rankings of income tax or state rankings of property tax, you are not accounting for some of those higher ranked states are not getting tax revenue from other forms of tax so they rank higher in just one form of tax.

    In order to refute his claim, you would need to add up the total statewide tax collected for property, sales and income and divide by the number of residents and then divide by the median income.

    • Mike Curtis :

      An honest politician would not wait for someone to ‘refute the claim’. He would provide the data to support his “facts”. Brock has not done that.

    • Steve Raphael :

      A correction to “the correction”–the story states that the Kiplinger/Tax Foundation data rates 6th in amount of taxation. This data reflects all the forms of taxation in the state (income, property, sales, excise, etc.).

      The story then goes on to mention that Vermont incomes is 20th most taxed. Evidently you did not read or understand the whole story.

      A larger point I would make the never gets made these days is not how much you pay but what you get. There are a lot of things that could be improved in Vermont and if they are I would be happy to pay more taxes (Raphael 2014 — “More Taxes!”). Currently, I think a lot of cities and towns could do better but overall I am pretty happy.

  2. Mike Kerin :

    Lying is okay according to the law. You can lie about whether you served in the armed forces and any awards you may have gotten or not. It is fine to lie to the voters. So I check the things that I hear from any of the politicians.

  3. Doug Hoffer :

    Thank you Fact Checker.

    Mr. Brock is also guilty of one other thing. Any effort to characterize Vermont as having one tax “rate” or “burden” is inherently false.

    As you noted, the marginal rates don’t really tell the story for a variety of reasons. Therefore, analysts will always look to the effective rates instead (amount actually paid as a percent of income). And these rates will vary enormously based on your income class (from 1% up to 6%).

    For this reason, we should avoid using measures that ignore the complexity of the system. The Tax Foundation’s per capita measure is not irrelevant but it ignores the distribution of the so-called burden. This is also true for property taxes because Vermont is the only state that has income sensitivity so per capita comparisons are not apples to apples.

  4. Paula Schramm :

    Thank you Doug Hoffer,for that further clarification. Comparison statements about tax rates turn out to be nuanced indeed.

    Still, I find it a particularly delicious reflection on Brock’s research that only the 2009 Forbes report actually listed Vermont’s as the highest tax rate in the nation…when Republican Jim Douglas was governor !

  5. Willem post :

    Some of the taxes are hidden in higher electric rates and electric bill surcharges, such as for Efficiency Vermont, due to Shumlin and others pushing for more and more subsidized wind and solar energy that do not reduce CO2 emissions anywhere near what is claimed by promoters.

  6. Mike Curtis :

    kWh per capita in Vermont = 8,892 (among the lowest in the nation)

    kWh per capita in all of USA = 12,146

    Efficiency Vermont helps lower the overall cost of living for Vermonters by reducing overall energy consumption.

    • Lance Hagen :

      Mr. Curtis, don’t get carried away with claiming “Efficiency Vermont helps lower the overall cost of living for Vermonters”. Though a Vermont person uses 27% less electrical energy than an average US person, he also pays 39% more for his power than an average US person. So for his lower usage, the Vermont person ends up paying 2% more.

      Second thing to consider is that, not many households in the Northeast heat with electricity. They mainly use heating oil. Whereas states in the southern regions mainly use heat pumps, run by electrical power. So one would expect the average US person would show higher usage. If you note from your data source, that it is mostly Northern and New England states that have lower electrical power usage (matter of fact, from your data source, Vermont has the highest usage of all the New England states)

      • Doug Hoffer :

        You said, “Though a Vermont person uses 27% less electrical energy than an average US person, he also pays 39% more for his power than an average US person. So for his lower usage, the Vermont person ends up paying 2% more.”

        That is incorrect. According to the Energy Information Admonistration (U.S. Dept. of Energy), the average monthly cost of electricity for a residential customer in 2011 was $110.14 while the cost in Vermont was $93.19.

        In adition, Vermont’s average residential usage (kWh) was the second lowest in New England in 2011 and the average monthly cost was right in the middle (lower than CT and NH, higher than ME and RI, and nearly identical to MA; also much lower than NY).

        • Lance Hagen :

          Mr. Hoffer, note in my response I referenced the data source quoted by Mr. Curtis, which appears to be from

          http://energyalmanac.ca.gov/electricity/us_per_capita_electricity-2010.html

          In Mr. Curtis’s data source, Vermont is ranked 42nd in usage. All the other New England states ranked at lower usage.

          As for price, I also used data from Energy Information Administration (U.S. Dept. of Energy), found at

          http://www.eia.gov/electricity/data/state/

          under Average Price by State by Provider (EIA-861) and released on 10/1/12

          So doing the math, using Mr. Curtis’s stated data and the EIA average price it shows that the Vermont cost for 8,892 kWh is 1.6 to 2% more than the 12,146 kWh used by the average USA, whether one uses ‘Residential Price’ or ‘Total Price’

          • Mike Curtis :

            Electric rates in Vermont are lower than or equal to all other North Eastern states, with the exception of Massachusetts.

            The Northeast has higher electricity cost than the rest of the nation. Can’t blame Efficiency Vermont for that.

          • Avram Patt :

            The northeast has historically had higher energy costs tham most of the rest of the nation for reasons having to do with geography and transportation of fuels. This is true for energy sources generally, whether electric generation, pipeline, or bulk fuels. And by “historically” i mean a really, really long time, predating any of the debates in this thread about energy efficiency or recent state energy policy.

  7. Alan Sexton :

    “one actually lists the state as having the highest tax rate in the nation — a 2009 Forbes report. That was published, of course, when Republican Jim Douglas was governor …”

    Come on Digger, you well know (or damn well should)that Jim Douglas’ common sense proposals were constantly rejected by a veto-proof Democrat majority.

  8. walter carpenter :

    “Jim Douglas’ common sense proposals were constantly rejected by a veto-proof Democrat majority.”

    thank god that they were too.

  9. Karen McCauliffe :

    I guess the earlier VTDigger report that readership of the Burlington Free Press (BFP) is down is correct. No one mentioned Nancy Remsen’s BFP piece that referenced a 2011 article that claimed Vermont to have the highest taxes of all the states. From her piece “Highest taxes: Vermont won top honors as the most taxed state in the country from a blog called Liberal Orange County, which describes itself as challenging Orange County, California’s right-wing noise machine. Dan Chmielewski made the list in July 2011. “We’ve crunched the numbers, divided each state’s population by the corresponding state taxes collected in 2009, and come up with a ranking of the most taxed states. Vermont’s tax burden: $3,861 per capita.” This reference doesn’t appear to have been included the the fact checker analysis.
    http://www.theliberaloc.com/2011/07/26/what-are-the-top-ten-most-taxe-states-in-america/
    One can argue the accuracy of any analysis on taxes. It is complicated and why different reports draw different conclusions. Nonetheless there is a basis for the claim of Vermont being the highest taxed state and thus it appears the “udder bull” claim should have been somewhere between “mostly false” and “debatable”.
    http://blogs.burlingtonfreepress.com/politics/2012/10/02/shumlin-and-brock-rely-on-different-stats-and-rankings-to-evaluate-vermonts-economic-health/

    • The Liberal OC data is based on the 2009 Forbes information cited in the Fact Checker article.

    • Doug Hoffer :

      Ms. McCauliffe

      The blogger made a fatal error. He used a per capita figure. As I’ve mentioned before, that approach ignores the fact that people at different income levels pay very different effective rates (both income and statewide property tax). Therefore, there is no one state tax rate or “burden” and anyone who says so is either uninformed or trying to mislead.

  10. MJ Farmer :

    The property tax rebate was passed in 1998, almost 15 years ago. My property taxes have doubled since then and my HOUSEHOLD INCOME (I properly count all household members income as specified in the law) is a little bit over the income sensitivity amount ($90K). I find it unfair that I am paying for my neighbors property tax bills because they have a small business and can manipulate the costs/cash revenues, are over 65 and have only ss, dividend/interest income but have many other assets including 2nd homes, or do not count all family members’ incomes. Many of the seniors do not understand property tax rebate and will continue to vote “yes” on education spending because their property tax keeps going down or remains the same. At some point, our legislature will have to deal with Act 60 and its unfair property tax redistribution. I heard a proposal for next year of reducing RR from $8000 to $3000. Can anyone comment on this?

    • Cheryl Pariseau :

      MJ Farmer: I too have issues with income sensitivity regarding property taxes. My Mother has a much nicer and larger home on 5 times the land than I do, substantially more in investments/savings and a higher monthly income. She is retired with a pension and a large majority of her property tax is paid for via income sensitivity. While I work and take home a modest income have very little investment/savings and receive a pittance via income sensitivity. So that fact that people pay property taxes based on their wealth is BS. As I have said before. When you take away the financial ramifications of a vote (i.e. local and school budgets), many vote differently than if they truly had “skin in the game”.

      • Doug Hoffer :

        Actually, no one that I know has said that people pay property taxes on their wealth. The law is clear. People pay based on income. If you want to change that, ask your representatives.

        BTW – This “skin in the game” thing is misleading. All homeowners pay the statewide education property tax (as well as the regular municipal property tax, which has no income sensitivity). Some may pay less than others but is not the same as having no skin in the game.

  11. According to StateMaster.com, Vermont has the highest tax burden per GDP in the nation. http://www.statemaster.com/graph/eco_tol_tax_bur_pergdp-total-tax-burden-per-gdp

  12. Randy Brock :

    I hate to say it, but Digger’s and Seven Days’ Fact Checker analysis is Bovine Balderdash. We gave Digger several citations to back our claim and they chose to ignore them. Here are a few:

    http://www.forbes.com/2009/03/30/highest-state-taxes-lifestyle-real-estate-state-taxes.html

    http://www.mainstreet.com/slideshow/moneyinvesting/taxes/most-taxed-states-us

    http://www.advisorone.com/2011/06/23/top-10-worst-tax-states-for-retirees?page=2

    http://www.wcax.com/story/14982110/vt-ranked-as-tax-hell-for-retirees

    You can agree or disagree with the conclusion, methodology, dates or time period used by any publication. Vermont is a high tax state and we’ve been one for years. It is abundantly clear that these and other commentators have described Vermont as the “highest tax state.” The point is this: whether we are first, second or sixth highest, even Governor Shumlin agrees that our taxes are too high and that we’ve reached our taxing capacity. He and I have different visions about how best to deal with this problem. That’s what this campaign is all about.

  13. John Howard :

    Greetings– While it is good to point out Brock’s exaggerated claims about Vermont having the “highest” tax rate; not surprising for a polician,Brock is not far from the truth. According to the U.S. Census Bureau’s annual update of State and Local Government Finances, providng national data for Fiscal Year 2010, Vermont was ranked 5th in the nation when “measuring taxes as a share of total personal income. That is a meaningful comparison among states — and nothing to be proud of. Not far from “udder” nonsense to raise the issue of high taxes in Vermont. John Howard, Greensboro, VT

    • John Greenberg :

      As Doug Hoffer has repeatedly pointed out, taxes as a share of total personal income is NOT a very meaningful comparison between states. Why? Because there is no “average” individual.

      When Bill Gates walks into a room, the “average” income and wealth in that room rise precipitously. If that were unusual, and if the distribution of income and wealth were otherwise grouped around some “average,” we might be able to ignore the anomaly.

      But in our society, that’s not the case. The top .1% of income earners count for a disproportionate share of income, meaning that most of the income goes to them and the remainder of those constituting the “average” get far less.

      It is therefore essential, when examining tax policies, to specify WHICH income earners or WHICH wealth we’re talking about. Average statistics have very little meaning in a society which distributes its income and wealth as unevenly as we do.

  14. kevin lawrence :

    I must add , my son purchases Catamount health care at a reduced (tax subsidized) rate, thanks to our tax structure. That’s just one of many advantages that I see to higher taxes: subsidies for the working poor who would otherwise use emergency rooms for health care and pass on the expenses to the rest of us.

    • krister adams :

      Finally, some sense. Yes we may pay higher than average taxes but we have invaluable programs like Doctor Dinasour, Catamount Health, Efficiency VT,great State Parks, above agverage education. My wife and I are not wealthy, living basically paycheck to paycheck, but I will pay higher tax rates if they are justified by such expenditures.

      • Stuart Lindberg :

        Above average education? 50 percent of 11th graders in Vermont public schools do not meet the minimum standard for math and science in 2011-12

  15. John Howard :

    Not to consider the overall impact of combined taxes(i.e., property tax, plus income tax, plus sales tax) is ignoring reality. Yes, some higher income people will be better off under different circumstances and some lower income people will benefit from more “subsidies,” but the impact of the overall tax rate combined is a relevant measure of our tax burden. Dismissing the fact that VT is among the top 5 states for combined property, income and sales taxes as a share of overall personal income is ignoring the reality of our tax burden compared to other states.

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