This commentary is by Andrew Perchlik of Montpelier, a second-term state senator representing the 18 towns and two cities of Washington County. He is a member of the Senate Committees of Transportation and Education.
Our governor and lieutenant governor say we should exempt all military retirement income from state taxes. There are three reasons why we should reject their proposal.
First, it sets a bad precedent.
Tax giveaways like this reduce revenue without regard to the state’s other obligations to Vermonters. For example, we need to support and secure our state workers’ and teachers’ retirement. Our fellow Vermonters are asking for assurances that they will receive the retirement benefits promised. To turn a cold shoulder to these requests while offering others retirement tax breaks, regardless of their total income, sends a message to our state workers and teachers that they are not a priority.
Second, it doesn’t work.
The governor argues that exempting military retirement income from taxes will recruit citizens to Vermont. The evidence says otherwise. A dispassionate examination shows that taxes are a small factor for those deciding where to retire. For example, look at the number of retirees who move to Florida from New Hampshire and Vermont. It’s about the same percentage, even though New Hampshire has no income tax.
We should focus on making improvements to our unifying quality of life for current Vermonters, and not engage in a tax-break competition with other states that shows no sign of success.
Third, it is not equitable.
We all want to honor and respect those who served in the military. Making military retirement income tax-free, regardless of the amount of a person’s income, is regressive taxation that will make Vermont less affordable for middle- and lower-income Vermonters and will work against our efforts to increase equity.
Furthermore, it is not equitable to the police, firefighters and other Vermonters who have led difficult and life-threatening public service careers here in Vermont.
We can honor those who served in the military by strengthening our commitment to unity and equality with equitable taxes, which could include exemptions for some military income.
However, a tax break that benefits the advantaged more than the disadvantaged should not be part of our work to lift up those among us who need it, or to attract new Vermonters.
