Editor’s note: This commentary is by Don Keelan, a certified public accountant and resident of Arlington. The piece first appeared in the Bennington Banner.
[I]n the final days of the 2016 Vermont legislative session, Senate Bill 55 was taken up for consideration. Any discussion of it did not garner a great deal of press coverage. You see, S.55 has to do with tweaking the Vermont estate tax regulations. For Vermont, estate taxes do not amount to a consistent source of revenue. The tax, a flat 16 percent, goes into effect on estates over $2,750,000 in net value. The federal level is $5,450,000. Over the last 5â years the annualized amount collected was $20.7 million.
The legislators, if they wanted to stem the out-migration of Vermont’s wealthier residents, would have elected to remove the estate tax provisions entirely. What a positive message this would have sent to those residents who are contemplating leaving the state for locales that don’t have estate taxes, such as New Hampshire, Florida and Texas. It might even bring back former Vermont residents, who have left the state – not for warmer climes, but for the excessive estate tax Vermont imposes.
I don’t expect the legislators to have too much empathy toward the wealthiest of Vermont’s citizenry. They have been “brainwashed” by the state’s junior U. S. Sen. Bernie Sanders. And that is truly unfortunate. Vermont’s wealthiest provide an enormous contribution to the state and their efforts go unrecognized.
State labor reports do not note the number of Vermonters who work for the state’s wealthiest. But for many Vermonters, their livelihood is dependent on being engaged by this group – namely, landscapers, caretakers, housekeepers, trades such as electricians, plumbers, HVAC contractors, and other construction employees.
But it goes well beyond the employment of scores of its citizens that the state receives from having a financially well-off population reside in our state. Most of these folks retired to Vermont and they make invaluable contributions of their time, talent and treasure to our state’s significant number of nonprofit organizations. Here in southwestern Vermont, I am aware of a dozen or so nonprofit organizations involved in the arts, historic homes, educational and social missions that owe their very existence to our state’s wealthiest citizens.
Vermont’s wealthiest provide an enormous contribution to the state and their efforts go unrecognized.
What is often forgotten is that these wealthy citizens also spend money at many of Vermont’s stores and attractions. They also, although difficult to calculate, bring out-of-state guests to their residences, which in turn helps to enhance the local Vermont economy.
In recent years, Vermont has seen the out-migration of its youth and also of long-established companies. What it can’t ignore is that a similar trend is taking place among the state’s wealthiest. And Vermont is not alone when it comes to this situation.
A recent article in the New York Times by Robert Frank noted that California, New York, New Jersey and Connecticut are taking notice of the loss of their wealthy citizens (taxpayers). Frank had this to say, “… since the rich are the most mobile, states are devising new ways to monitor their top taxpayers and keep them from leaving.”
And you can’t blame them. In the above-mentioned states, plus Maryland, Frank reported that the top 1 percent of all taxpayers make up one third of the states’ income tax collections. The loss of just a few of these taxpayers can skew a state’s income and estate tax collections.
Sen. Sanders has “poisoned the well” when it comes to the so-called rich, and by doing so, has created a legion of followers – some of whom reside in the state Legislature. But maybe they can look beyond his vitriolic statements and recognize the valuable contributions that our state’s wealthiest top 1 percent provide to the Vermont experience. We will all pay a huge price in having them leave for a state where a person’s financial success is not suspect.
