When Burlington resident Perri Freeman ran for city councilor a little more than a year ago, she pledged to address structural wealth inequality issues and give more power to working people.
Last week, the Progressive made good on that promise with a sweeping “Just Economy” charter change resolution that would raise taxes on well-heeled Queen City residents, mandate a new participatory budget process and impose just-cause eviction rules on landlords. The resolution would also place restrictions on businesses including a new city minimum wage, standards for workers’ schedules and a prohibition on firings without just cause.
The proposals are based on “principle,” Freeman says. “I mostly feel very strongly about the idea of progressive taxation,” she said in an interview. “We’ve seen in the U.S. a complete and total failure of our tax system to make sure that people who can pay in are paying their fair share.”
The resolution includes an income tax on residents who earn more than $125,000 a year and a “luxury” property transfer tax on homes that sell for $500,000 or more. About 12% of Burlingtonians make $125,000 or more, Freeman says.
The “Just Economy” charter change resolution is expected to be endorsed by seven out of 12 city councilors (six Progressives and one independent) Monday night. The proposals will then be taken up by a council committee that will begin the years-long process of changing the city’s charter. The changes must be approved by the council, voters and ultimately, the state Legislature, before the city can propose ordinances, which would also be publicly vetted. The process can take one to three years.
Cities cannot impose taxes without authorization from the Legislature. While many cities have levied sales taxes, no municipality in Vermont has imposed separate income and property transfer taxes.
Freeman hasn’t said what the city tax rates would be, but she estimates the income tax would generate “at least $1 million” a year for the city and the transfer tax would bring in about $350,000.
“You know, no, there’s no set rates, is the short answer,” Freeman said in an interview. “I think what I really want to focus on at this stage in the game, which I think is where, especially when you’re just sort of initiating a charter change … is starting to look at the principle of it. So I think for me, it was about the principle of, we have people who are able to pay into a system so that we can all collectively benefit. You also have decades of wealth inequality, and how do you sort of tackle that structural issue and start to even that out and build equity into our system.”
It’s unclear what the money would be used for. Freeman says the tax receipts could go to support “essential goods and services.” While the resolution cites Covid-19 as the precipitating factor, and the city faces $15 million in revenue losses over the next two years as a result of the pandemic, Freeman says the proposal is more about principle than meeting a concrete need.
“There are probably dozens and dozens of initiatives that people have been interested in over the years like a housing first model, what if we just provided housing for everyone automatically?” she said. “What if we built out climate-forward policies to address the climate crisis? What if we had a fully, you know, a bus system or transit system worked, you know, super effectively what if we helped incentivize local businesses in a stronger regional economy? I think they are, you know, tons of things that we could use for public money.”
The “Just Economy” proposal is a grab bag of progressive initiatives, based in part on Green New Deal and the Red Deal political platforms, that have been tried around the country, according to Freeman. The Economic Policy Institute reports that 46 cities across the United States have set minimum wage rates. (Freeman doesn’t suggest a rate in her proposal, she simply wants the city to have the authority to regulate the wage.) The income tax idea comes from Portland, Oregon, where voters just passed a 1% tax on individuals earning $125,000 or more and couples making $200,000 or more. The money will support programs for homeless residents. The just cause firing provision is from an ordinance setting restrictions on Philadelphia parking garage owners. Participatory budgeting was first tried in Chicago and has spread to several cities in the South.
Freeman says she doesn’t want to “burden anyone who can’t really afford it,” but she is curious to see “what would progress taxation look like.”
Her goal is to set priorities for “a just transition around how do we create an economy that is sustainable for working people who are working and producing them, and also the things that they’re producing or not causing pollution, and sort of destroying the planet.”
“And, you know, I’m just excited by the idea of really being able to lead the way and talking about that, as other cities are doing right now,” Freeman said. “And a lot of these issues that are being proposed in this charter change.”
If the resolution is referred to the charter change committee, there will be a process that includes public hearings. If the committee adopts changes by Aug. 10, there is time to get the proposals on the general election ballot Nov. 3. The next deadline for a ballot proposal would be December for the March Town Meeting Day election.
Fellow Progressive City Councilor Brian Pine says Burlington has the ability to handle urgent matters, including Covid-19 and the city’s budget crisis, while also at least getting these issues on the table.
But he said the resolution needs to be debated on the merits. “The pros and cons need to be fleshed out,” he said. And in his view, only two of the proposals could be taken on in the short-term — the luxury tax on homes sold for $500,000 or more and just cause evictions.
He estimates the city could generate $225,000 a year from a 1% tax on the 26-28 homes in that price range sold annually.
Affordable housing is the city’s biggest issue, he said, and revenues from a property transfer tax would nearly double the money the city could use annually to leverage financing from the private sector and state and federal governments for more housing projects. As the economy sours, more tenants will be subject to evictions, and the city needs to do something to protect people from losing their homes.
“There is so much instability for people,” Pine said.
Even if the two proposals are supported in November, Pine says he anticipates resistance in the Statehouse. “These issues, while urgent in the city, will be a challenge to get through the Legislature,” he said.
Pine also worries that new tax levies could drive wealthy people out of the city. “That is a challenge,” he said.
A higher minimum wage could lead to an exodus of downtown businesses, he said.
Joan Shannon, chair of the charter committee, and a local realtor and longtime Democrat on the council, said the “luxury” tax could hit middle class residents who have used their homes as a piggy bank for retirement. Because real estate values have climbed in Burlington, homes in the $500,000 price range are often modest. She said a 1,400-square-foot home owned by two teachers in the South End recently sold for $496,000.
“The issue I have with it is it’s really a regressive tax,” Shannon said. People are often under water on their mortgages and may owe more than what they sell a home for. Or they use their homes as a savings account.
As for the income tax proposal, Shannon said, “I don’t think we want to do anything that would discourage people from moving to Burlington.”
Shannon said it’s likely that the state would be loath to give up its taxing authority to the city for a new income and property transfer taxes.
“We could spend a lot of time on this and is it even something that has potential?” Shannon said. “I haven’t heard a lot of differences along party lines around state taxing authority.”
The city has a lot of problems to solve with Covid-19 and the city’s budget woes, she said. “What problem is this solving?” she asked.
