For many, this won't even begin to offset the increase in income and property taxes from this notoriously high-tax state. Individual or business, you're likely to pay more.
>>The income tax has a top rate of 8.95%. This ranks as the sixth-highest in the U.S., although it only applies to taxpayers making over $413,350 per year. Meanwhile, total state and local sales taxes range from 6% to 7%.
>>There are five income brackets. The highest marginal rate is 8.95% on any income over $388,350. That's on top of federal income taxes.
>>Businesses pay an effective property tax rate of 5.27%, the third highest in the country.
>>At 6%, sales taxes are also on the high side. Meanwhile, those businesses that pay corporate taxes get hit with an 8.5% rate for any profit made above $25,000.
Some societies think that it is wise to spend on some things such as education (see https://www.washingtonpost.com/news/local/wp/2015/06/02/the-...). Others think that lowering taxes at whatever cost is better. The former fits with my thinking, which is why I like it here.
And yet the neighboring state of New Hampshire, which has some of the lowest taxes in the country (0% sales tax, 0% state income tax), beats Vermont handily in SAT scores.
What does Vermont have to show for its higher spending? Why do you see higher spending as an automatically good thing if it doesn't have any evidence of having a beneficial effect?
I would be very careful about touting NH's approach. We fund schools entirely on property taxes, so rich towns have good schools and poor towns do not. I'd guess part of the disparity is that in NH's poorer towns kids aren't even taking the SATs.
Not paying taxes is cool but the annual discussion of "Which completely normal public service will we forgo or curtail this year?" isn't so awesome.
First of all, well done NH. As a Vermont resident I am happy when any Northern New England state does well.
The table you link to shows Vermont coming in #12 in SAT scores, and I'll accept that for it is. Other sites (e.g. US News and World Report) typically ranks us in the top ten for our educational system. It is not unheard of for us to be ranked #1:
My point is, I do not understand how you can be so fixated on NH finishing six places ahead of VT and not actually asking the bigger question of "How do two small rural states even begin to compete?" Let alone trying to decipher why New England consistently does so well overall with Massachusetts and Connecticut ranked #1 and #2.
Vermont is a high tax state, fine. I more than get my money's worth. As someone that goes to Town Meeting Day and looks through the budget every year I know that I head home secure that my dollars are being well spent. Meeting my kid's teachers at school I know they are getting a very solid education and heading off to university next year.
Possibly because until recently NH had all high schoolers take the SATs to be used in statewide assessments. It would follow teachers would then spend classroom time preparing their students for it.
> notoriously high-tax state
Some societies think that it is wise to spend on some things such as education (see https://www.washingtonpost.com/news/local/wp/2015/06/02/the-...). Others think that lowering taxes at whatever cost is better. The former fits with my thinking, which is why I like it here.
It's a little more nuanced than that, and not necessarily an either/or as you have described it. More than likely in my experience, the people who think lowering taxes is good think so because they view the government as an inefficient, third-party spender and believe the money could be better spent more wisely elsewhere. While Vermont does rank high in K-12 (4th), it is ranked 36th in higher education. Vermont is also the 2nd least populated state in the country, so it remains to be seen how scale will impact the education system there.
"More than likely in my experience, the people who think lowering taxes is good think so because they view the government as an inefficient, third-party spender and believe the money could be better spent more wisely elsewhere."
People say that, but then they privatize functions of government, and if they're lucky, they end up with the same level of service. And then now there's a middleman involved who needs to get profit, meaning wages and service get cut.
> More than likely in my experience, the people who think lowering taxes is good think so because they view the government as an inefficient [...] spender
The government is made up of people. In my experience, it isn't the funding amount that correlates with inefficiencies, it's the distance from accountability that does.
So one can reduce the taxes all one likes, a 30% wasteful department is still going to waste 30%. I'd rather target the inefficiencies themselves.
It depends heavily on how the money is spent, Illinois spends half the education budget on funding pensions alone [1].
89% of all education budget increases went straight to pension funding, with only 11% to the classroom. They already spend far more than other midwest states, with outcomes that lag behind Montana, Minnesota, and other frugal states.
So while I agree that education spending is critical to our future, money alone is not the magic wand.
Just spending money on education is meaningless unless it is used wisely. This is a common political tactic to talk about how much a politician authorized or increased spending on a program that is important to his or her constituents but it says nothing about the results. President Obama started the military down the path toward "smarter, not more expensive" weapons programs. That thinking should be expanded into everything.
On top of the taxes, housing is pretty bad too. You can be a reclusive hermit in southern / central VT on the cheap, but the closer you get to Burlington / Essex Jct the more expensive it gets. This is in part caused by the size of the University of Vermont - high demand for housing, small area. Many buildings have too many units crammed into them for the same reason. Not nearly as bad as the valley, but another reason not to pick this state for remote work...
This is one of the issues that this plan will run up into.
Normally someone may work remotely in a more rural place for cheap housing, but some of the housing in Vermont isn't that cheap.
Burlington has some of the same housing issues that other cities in the county have. I would imagine the vast majority of people who would consider doing this plan would want to live near Burlington. Well, that means Burlington would need to address housing supply and affordability too.
I’m currently looking for a 3 bedroom apartment or a house to rent in Santa Barbara, and see nothing below $3K/mo. In fact anything decent is $3.5k or more. I work remotely, now looking for a cheaper place to live.
I love living in Vermont. People are friendly, nature is preserved, the mountains are gorgeous, and there are an abundance of small communities/groups you can join based on your interests (produce co-op, hiking, fishing, skiing, meditation, 3D printing, etc). The music scene is colorful and varied if you are into that. In general, things move slower and people are kinder (I come from Boston). Great place to lead a nice quiet introverted life among the trees or immerse yourself in local activities.
As for rent, a nice 3BR goes for around 2-3k/mo in Burlington and gets substantially cheaper the farther south you look. It's not the cheapest nor most expensive state to live in, but the price:quality of life ratio is excellent.
Prices are not quite that high, even in our most expensive place, Burlington, which has great schools, is on a lake and has a great community. You can find places over 3k a month, but they are really nice places. I'd say you can find a decent 3-bedroom for 2k and up. (Most of the rentals for the state can be found on craigslist: https://vermont.craigslist.org/)
But let me tell you about Montpelier, the smallest state capitol in the country and the only one without a McDonald's. I think it is the best small community in the world, however this is coming from someone who has not lived many places. Near Montpelier things are a little cheaper (depending on how near) and if you go out 15 minutes drive or more prices begin dropping drastically. Montpelier has at least one of everything you need: Mexican place, one sushi restaurant, one pharmacy, one grocery store, one co-op, etc. It does not have much for shopping, which is true of all of central Vermont but there is a Walmart in neighboring Berlin.
If you want somewhere close to cool community events but super-cheap look into Barre, which is Montpelier's sister community--but it's that sister who has had a bit of a 'failure to launch' and everyone suspects is doing drugs. Houses are dirt cheap in Barre and it is 15-minutes drive to cool things in Montpelier. And while there are more 'bad elements' in Barre, it also has a ton of really cool people not on drugs, raising families and I believe things are starting to happen there.
Both Montpelier and Burlington are great for liberal-minded, community-oriented persons, Montpelier being a bit more into it. Burlington seems to be mostly made up of out-of-staters and can seem quiet transient as they come and go, where more people seem to stick around longer in Montpelier. If you are like this and live in Barre you will have to seek out your kind, but there are plenty there.
Vermont is great if you love the idea of hiking, snowshoeing, cross country skiing, of owning a few acres with your own woods on them. Vermonters, especially rural Vermonters, pride themselves on minding their own business and letting everyone do whatever they want as long as they aren't bothering anyone else too much. Also we just legalized growing a few pot plants at home for your own recreational use, if you're into that.
Is New England drug epidemic really as bad as the media leads one to believe? I mean, in Santa Barbara, a lot of people smoke weed, but it's rare to hear about anyone doing heroin or meth.
It doesn't seem like it's supposed to offset taxes, but rather to ease the financial burden of moving.
There are more reasons other than taxation to consider moving. When I moved countries, I didn't even consider taxation when I moved. I make enough money that I'm comfortable, a couple of grand here and there isn't going to upset me. When I moved, it was for lifestyle reasons, which I think is the only sensible reason to move. If you're moving to Vermont to work remotely as an attempt at saving/earning more money, you're going to have a miserable time.
High yes but 8.95% is the marginal rate for incomes over 413,350/yr. The median income (according to recent census data) is 57k/yr. On a 100k you would pay something like 5% to Vermont.
I moved to Vermont to work remotely in DC without the $10K incentive. That was some 12 years ago. My quality of life and that of my family is vastly improved. I wouldn't have moved to New Hampshire, though I can see it from where I'm standing in Vermont.
The point isn't to get everyone to move, but to motivate some people who otherwise like what Vermont has to offer but are on the edge. If you are more on the European democratic socialist end of the spectrum of preferences and you plan to live in the US, Vermont will probably suit you. If you're on the right-to-workers end, you'd probably prefer someplace else.
From DC. DC has its advantages: free museums, good mass transit by US standards, lots of federal money being spent locally, a diverse ethnic mix with accompanying cultural and culinary diversity. The cost of real estate is astronomical, though. The schools generally suck unless you can swing something plush like Sidwell Friends.
I've lived in other places as well, always moving for school, employment, or, when I was younger, someone else's school or employment. I found that I could telecommute, though, and so we moved to a place we wanted to be for its own sake.
The things I like about Vermont: the climate, the culture, the natural and built environment. And frankly I like living in a place where I don't have to apologize for the cruel, exploitative history or the short-sighted or selfish political decisions of the populace. It's beautiful. There's a lot of art. My kids' school has great teachers, great facilities, and a lot of options. I have family who moved to the area, so that helps. The food is good. I walk into town to work. I can walk out my back door with my kids and hike to the top of a hill and have a beautiful view. I can take the bus home in the evening if the weather is bad. (I don't telecommute anymore, though I can work from home when I please.) We were living in a basement in DC. Now we have a house beside a brook.
Not to mention, moving all the stuff in my house in 2015 cost a little over $30K. $10K is a nice gesture, but it wouldn't cover a whole household... 1-2 bedroom apartment maybe. That said, it's a beautiful state and if you want to work remotely and do a lot of skiing/hiking/etc then it could be a nice offset.
Under the new federal tax law there is a $10k limit on how much state tax may be deducted from your income for the purpose of calculating federal taxes, and by opting in to this deduction you opt out of your "standard" deduction which is $12k for an individual or $24k for a married couple.
Under some circumstances it may still make sense to take the up-to-$10k deduction, because it may be combined with other deductions which will add up to more than the standard deduction, but for someone paying much less than $10k in state taxes it is probably more advantageous to simply take the standard deduction, and for someone paying much more than $10k the deduction may only represent a small portion of their state taxes.
> It's really weird seeing the US get scared of a 8% tax. Those taxes are services after all.
Not necessarily. Illinois spends roughly half its budget on pensions. In New York, where I don't need a car and can offload much of what I'd hire a lawyer for onto regulators, I get a decent bang for my buck. (Though we still have horrendous waste.)
> The more cynical view is that this was done on purpose to harm blue states that tend to have higher state income taxes
this could very well be true, but it does seem unfair in the first place to be able to deduct state income tax. it's great that some states have decided to increase their income taxes to offer more services to their citizens, but why should tax payers in other states have to subsidize them without receiving any benefit?
In general, wealthy higher-tax states subsidize the poorer, lower-tax states.
The argument for the deduction, which has always existed, is to prevent people from being double taxed. A higher-tax state may tax its citizens to pay for infrastructure or services, whereas a low-tax state relies on the federal government to pay for the same stuff. There are tons of people in poverty in a lot of southern lower-tax states. Who do you think pays for all of the government services these people need?
The tax plan was specifically designed to harm blue states and to make residents of blue states pay and even higher, even less balanced share of tax receipts in the country.
I would say this is triple taxation. Looking at how "double taxation" is used to refer to taxing at both corporate and individual level of public company profits, this is an additional burden on top of a two level system. Imagine getting taxed on the amount of taxes paid by a company you own shares of. State and federal levels are "double" in the first place.
Triple is a little hyperbolic, as you could probably best describe it with a number between 2 and 3 depending on the tax rate.
The cynic would argue that those same states also tend to pay into the federal government disproportionately. "Why should we be subsidising states like Alabama (who can't even be bothered to educate their populations) without receiving any benefit?"
While I benefited from that deduction, it never seemed fair that that the rest of the country had to kick in a tiny bit extra to give upper middle and above taxpayers a break.
Nobody subsidizes many blue states, which in fact subsidize many poorer states (as Texas does as well).
I'm not sure how I feel about the concept, but one rationalization is that if a basic need, like road funding, is suitably taken care of at the state level by high state income taxes, then the state needs less federal funding. It's sort of a usage qualifier I guess.
not exactly, only about 15 states pay more federal tax than they receive back, and they're not all the ones you would expect. [0]
still, this is a valid point. the net flow of cash is certainly an important thing to consider, but i do think it is worth making the distinction between federal and state taxes. i happen to live in a (very blue) state that receives more federal dollars than we pay in taxes. if i lived in a creditor state, i would certainly not be thrilled with the situation, but i would accept that the tax is raised (at least ostensibly) for the national interest and may not be spent evenly among the states. state taxes, on the other hand, are raised exclusively for the benefit of that state. we can argue about how to allocate federal dollars most fairly, but i really feel that state taxes should not be directly subsidized by citizens of other states.
One practical concern is that it's a lot easier for a state to implement something like single-payer health care if they can pay for it through state taxes that are exempt from federal taxes.
Otherwise, they're competing with employer-provided health insurance, which is already tax-exempt. That gives employer-provided insurance a huge artificial advantage and makes single-payer a lot more expensive in comparison.
Why should you pay federal taxes on state taxes? Consider that it's long been a complaint that it's "double taxation" to pay individual taxes on dividends which already got taxed at the corporate level. Imagine if, on top of that, you got taxed on the quantity that was paid in corporate taxes, that you didn't even receive. I imagine quite a lot of outrage if liberals proposed that, because it goes even beyond what is already an intuitively unfair situation to a lot of people.
You can deduct it but that doesn’t reduce federal taxes by that amount. If you’re in the 25% federal tax bracket, being able to deduct that 8% state tax effectively turns it into 6% additional tax which is still a lot if you weren’t paying it before.
Edit: others pointed out that this deduction is now capped, which I didn’t realize.
Vermont legislature is clueless if it thinks this or anything else other than a major overhaul of tax system and modernization of the infrastructure would bring people to Vermont.
I spent a few weeks recently bumming around the state.
1) Contrary to what Vermonters may think, real estate in Vermont is expensive. Not NYC or SF expensive but none the less very expensive unless it is in a totally need to be burned and rebuilt state.
2) Property taxes are ridiculous. Every time I look at a property I compare its property taxes to property taxes of comparable properties in other areas. Vermont loses to New York! It also loses to New Hampshire. Let this sink in - NH makes most of its revenue from property taxes and property taxes there are still smaller.
3) I put about 800 miles on my car in Vermont. One of the things I really pay attention to is overhead cables. Guess what? Outside what Vermont considers "major cities" cable break out and fiber break out boxes are nearly non-existent. Sat dishes everywhere sort of confirm the point. Internet connections in both random AirBNBs and regular BnBs sucked. Not the Amtrak level bad but close ( after I was done with Vermont I went to New Hampshire. Cable fiber boxes where everywhere and every place I was in had a very decent internet connectivity )
4) Going out costs major $$. New York/Philadelphia level $$. For definitely not New York/Philadelphia level of variety or convenience.
To be fair, there's areas in NY with their own city or county property taxes on top of it. Westchester has, last I looked, the highest property taxes in the country.
http://money.cnn.com/gallery/smallbusiness/2012/10/15/state-...
>>The income tax has a top rate of 8.95%. This ranks as the sixth-highest in the U.S., although it only applies to taxpayers making over $413,350 per year. Meanwhile, total state and local sales taxes range from 6% to 7%.
>>There are five income brackets. The highest marginal rate is 8.95% on any income over $388,350. That's on top of federal income taxes.
>>Businesses pay an effective property tax rate of 5.27%, the third highest in the country.
>>At 6%, sales taxes are also on the high side. Meanwhile, those businesses that pay corporate taxes get hit with an 8.5% rate for any profit made above $25,000.