Categories: Business & Economy

Schubart: How much wealth is too much?

A map of properties and their selling prices sold since February in the Manchester-Dorset area.

Bill Schubart, a retired businessman, is a regular columnist for VTDigger. 

The Guardian newspaper reported last week that Jeff Bezos’ wealth increased on the prior day by some $13 billion … twice Vermont’s budget. His net worth now is some $189 billion — more than Exxon Mobil, Nike or McDonald’s. Under the pandemic, his wealth has ballooned, as many people isolating at home have little option but to buy online and most do so with Amazon.

The startling headline reminded me of one of the last conversations I had with a life-long friend, Father Omer Dufault. Father Dufault was our priest at Holy Family Parish in Morrisville, where I served as an altar boy. He was a strict taskmaster and did not absolve our childhood sins without dialogue. Penances were lengthy, but we all knew he cared deeply for us. Our friendship continued throughout his 85-year life, long after I left the church in my late teens.

I would pick him up at his retirement home at St. Joseph’s in Burlington and take him to lunch, where we’d pick up one of our many conversational threads. On our next to last visit, I asked him a question I’d been struggling with for much of my life.

“At what point does the accumulation of wealth change from an ethical imperative to earn one’s living, support one’s family and community and be a positive economic force in society to a mortal sin of greed and excess?”

An enigmatic smile lit up his face and he remained quiet as he thought about my question. I continued, “Is it $50 million, $100 million, $1 billion. Can it be expressed by a number?”

In his soft voice, he finally replied: “An extravagance of wealth must be measured against human pain and one’s capacity to alleviate it with their wealth. Everyone must answer that question honestly for themselves. There’s no absolute number. When does love become jealousy? When does faith become self-serving orthodoxy? When does a war of defense shift to one of aggression?” I had my answer. He blessed our meal and we returned quietly to our food.

The Guardian recently reported the World Food Program’s estimate that 265 million people are now at immediate risk of starvation, largely due to climate disasters like locust invasions, floods, fires, and droughts on top of the coronavirus pandemic.

What does all this have to do with my home state? A lot.

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Major realtors here are reporting a buying spree on Vermont properties around the state. One cited a record 126 closings in an early week of July – some sight unseen. Sadly, these are not all young and entrepreneurial Gen X and Z people whose creativity and energy we need. They typically can’t afford to buy homes, pay for child care, and health insurance, or for higher ed degrees. These new buyers are, by and large, wealthier city dwellers seeking security in an increasingly unsecure world. They want to move their homes or investments from city apartments to country homes in Vermont.

When I flew regularly to New York City on business, I would cab in from JFK to Manhattan on a largely elevated highway. As we approached the East River driving through Queens, I could see people inside their tenements, smoking on their fire escapes, and talking in the streets. When we crossed the 59th Street Bridge, the giant oligarch towers dotting the Manhattan side of the East River lit up like glowing icicles appeared empty.

Major cities have become havens for real estate investment and large swaths of these modern high-rises are unoccupied in a city where the working class cannot afford to live and must commute in from New Jersey, Staten Island or Queens – disdainfully referred to as “ the bridge and tunnel crowd.”

As the pandemic upends our lives, many urban dwellers and real estate investors are shifting their sights to the sparsely populated New England states. According to real estate data, Vermont is number one in their searches.  Interestingly, their most common question is not about taxes but about broadband availability. People relocating from Boston or New York are hardly going to experience tax shock in Vermont.

Is this good news or bad? It remains to be seen. Like all news, it could be either. If all these buyers move here and bring their wealth, initiative, and social capital, we will be the better for it. If they are simply hedging their investments, Vermont’s lack of affordable housing, declining housing stock, and escalating prices will make it even harder for Vermonters to acquire homes and access the services that make community life function.

When I was part of the three-member Blue Ribbon Tax Commission of 2011, two noteworthy items of our research indicated that Vermont was hardly the “highest-taxed state in the nation,” as Gov. Jim Douglas regularly claimed. Depending on the calculus, our ranking was between ninth and 13th.

We also had the second highest per capita polarity of wealth in the nation at that time.

The very idea of government trying to manage extremes of wealth through additional taxation and enforcement of existing regulation, much less render any judgment about how much is enough and how much is too much, runs counter to most Americans’ values. Is this a discussion we can even have in America today?

It has not always been this way. During the economic boom of the post-World War II period, the top income tax rate exceeded 80%. The top marginal rate today is 37% and the current administration has done everything in its power to reduce it even more …  at least for the wealthy.

But as the polarity of wealth expands internationally and right here in Vermont, we may someday decide to ask ourselves the very question I asked my friend Father Dufault.

Bill Schubart

Bill Schubart is a retired businessman and active fiction writer, and was a former chair of the Vermont Journalism Trust, the parent organization for VTDigger.

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