“I say to myself what has happened to us…this state used to do the greatest good for the greatest number of people. What has happened to us to let the tax debate devolve to this point... the question is whether we will stand up today?” – Sen. Pollina on floor debate
“In the last three years, our little state of Vermont has cut over $300 million in direct services to people. Why not ask people who have done well during this recession to step up and pay a little more... shame on the Democratic Party.” - independent Rep. Paul Poirier, former Democratic House Majority Leader
The current budget bill for fiscal year 2012 cuts state spending by 3.7 percent over fiscal year 2011, balancing the budget mostly through a combination of spending cuts plus some scattered tax increases. The total General Fund budget spending increased by 7.3 percent because the state had to replace $158 million in federal stimulus funding with General Fund dollars. Agency of Human Services programs for the elderly, the developmentally disabled and the mentally ill face significant reductions. The governor had recommended even more dramatic cuts to human services. Keep in mind this is the same department that bore the brunt of cuts during the last three years of the Douglas administration. The Vermont Employee Ownership Center is zeroed out. In the Senate, only Sen. Pollina, cast a vote against this budget.
Meanwhile, Congress mandated cuts to this year’s 2011 budget -- undermining programs relied upon by thousands of Vermonters -- including community health centers, LIHEAP, high-speed rail projects, Pell grants, weatherization funds and nutrition and housing programs. But that is just the beginning. With the 2012 budget, the Republican House has approved legislation that would cut taxes for the wealthy and the largest corporations, convert Medicare into a voucher program, and decimate dozens of other programs, including education, which are of enormous importance to working families.
As Sen. Cummings warns, “Vermont has more cuts coming, these federal cuts are not going to be temporary, they’re going to be long-term cuts.” She already anticipates a shortfall of $60 million in the budget for the 2013 fiscal year.
Nationally, we face a resurgent, militant neo-liberalism: a bi-partisan consensus on cutting social spending, demanding budgets balanced on the backs of working and poor people, social service and public education austerity, and attacks on public sector unions. This, despite surveys showing that Congress is way out of touch with the American people on how to reduce deficits - with strong majorities supporting raising taxes on incomes over $250,000.
According to Public Assets Institute director Paul Cillo, "The kind of devastating cuts that are being contemplated right now will cause long-term harm to our state and to its people. We now have a choice: Abandon the values that have shaped and sustained our state, or require that every- one, including the wealthiest, make an extra effort so that the burdens of this recession and Vermont’s recovery are not borne primarily by poor and middle- class Vermonters.”
Anne Galloway writes in VtDigger: “The debate on tax policy was the culmination of an entire session’s worth of philosophical arguments regarding the state’s tax code and business climate, the nature of economic development (a la the trickle=down theory writ large), and the moral dilemma of cutting programs to the needy and vulnerable versus increasing taxes on Vermont’s wealthy.”
Today, party-line Democratic legislators are supporting Governor Shumlin’s center-right take on taxes, and have refused even to borrow from the state’s reserve fund, which currently holds about $55 million. The legislature last session actually cut taxes for the top end of the bracket, at the expense of poor, elderly and disabled Vermonters.
The governor continues to warn of an exodus of rich people if Vermont imposes a higher rate on the wealthy, using anecdotal evidence to support his thesis. Yet, as the Times Argus notes, “there is no empirical data to indicate Vermont has suffered a net loss of high-income earners as a result of its high marginal tax rates”. In fact a study released by the Public Assets Institute and the Political Economy Research Institute finds, “that taxes have no measurable impact on people’s decisions to leave a state…People are not going to leave a state because of some modest change in taxes, but they will leave if public safety deteriorates and if there are no jobs.” Higher tax rates, spent on better public services, can actually attract people to a state -- the diametric opposite of the governor's go-to narrative on state taxes. State spending funded by tax increases on upper-income households can have a stimulus effect because it puts money into the economy that otherwise would go into savings.
Advocating and organizing for a return to truly progressive taxation as an alternative to huge budget cuts that hurt the most vulnerable must be made the defining political issue. As “tribunes of the people,” Progressives must aggressively give voice to this moral imperative.
Vermont’s tax code, while more progressive than other states’, disproportionately burdens low and middle-income people. For example, state tax liability for individuals with an income of $1 million has declined by 64% since 1968. The current mix of sales, property, and income taxes in Vermont increases inequity with the top 5% wealthiest families paying an average of 7.5% of their income in state and local taxes, while the poorest 20% pay 8.2%. Middle-income families pay the most taxes: an average of 9.4% of their income. We're subsidizing the cuts that wealthier people have enjoyed. Sacrifice needs to start at the top, not with the 90 percent of the population who have not benefited from the failed economic policies of the past 30 years.
In a year when those tax filers are reaping $190 million in tax breaks as a result of the extension of the Bush era tax cuts, Progressive legislators initiated several amendments for modest tax increases on the state’s wealthiest residents. The Senate voted 21-7 against Sen. Pollina’s amendment, and 117–23 to defeat Reps. Pearson’s (P-Burlington) and Poirier’s (I-Barre) amendment. Nevertheless, there is every indication that a sustained grassroots movement could change what is politically possible. A poll by UVM's Center for Rural Studies showed that 78% of Vermonters support more progressive tax policies.
We must also address our long-term revenue shortfall, by rapidly implementing a single payer health care system, and cutting our corrections costs (it’s no coincidence that the U.S. ranks ninth worst in social spending in the developed world while having the highest incarceration rate, more than five times the OECD average), raising taxes on investment income, and eliminating wasteful corporate welfare.
In a promising development, the Vermont Workers’ Center has initiated a “Put People First! People’s Budget Campaign” which takes aim at current policies which responding to the state’s revenue crisis by cutting necessary public services instead of restoring revenues. The Workers' Center is inviting Vermonters to join them in the same kind of grassroots organizing effort that has been so successful in the struggle for universal healthcare. Read their People's Budget Report at: www.workerscenter.org/budgetreport
Progressives and our allies in labor and the social movements need to be giving a progressive and class direction to the growing anger over unemployment and falling living standards, to mobilize working people in support of our own agenda: organizing for single-payer health care, the defense and expansion of public education and public services - for a peoples’ budget, so that our government puts human rights and the fundamental needs of Vermonters and our communities first.
