A shrinking state can’t afford to lose its top earners

Dear Editor,

In his recent letter to VTDigger, Alan Turnbull proposes raising taxes on “the rich” to spare up to 90% of Vermonters from income taxes. Like most such proposals, Turnbull’s would hurt Vermont and Vermonters, not help. 

I support raising taxes on the wealthy — on a national level. I think it would be a major mistake to do so in Vermont. Vermont is already among the states with the highest tax burdens in the country. Unlike other very high-tax states, such as California, New York and New Jersey, Vermont simply doesn’t have many high-income individuals. It has the second-lowest population of any state and the smallest GDP. Importantly, rich people are generally much more mobile than the general population. People with the education, skills and traits that earn them a lot of money — think doctors, lawyers, engineers, entrepreneurs — can often choose where they live. And we certainly don’t have an overabundance of these professionals; just try getting a medical appointment in Vermont.

In Turnbull’s opinion, someone making $300,000 a year in Vermont should pay 9% to 13% in state income tax so that most Vermonters pay no income tax at all. 

Let’s take an example. According to Turnbull, there are just under 10,000 such households in Vermont. Despite Vermont doctor salaries being below the national average, a good portion of those 10,000 households are doctors; there are about 3,000 doctors in Vermont, including those in telemedicine. So, let’s say you’re a young doctor thinking about coming to Vermont — or even an established one — and you make $360,000 a year. By my estimates, assuming they were a single filer, this person would pay about $90,000 in federal income tax, another $18,000 in Social Security and Medicare taxes and over $26,000 in Vermont income and child care tax. A doctor would probably live in a nice house in a nice neighborhood, so at a rough guess they would pay another $18,000 a year in property tax.

The remaining $200,000-plus in income is still a lot, right? Sure. But that’s not the point. The point is this person is rational and can make and keep substantially more in another state. Maybe Vermont is so uniquely attractive that they would still choose to live here. But our tax picture certainly doesn’t incentivize it, and our demographic data confirms that people are not choosing Vermont, with consecutive declines in population over the past two years following the pandemic bump. Now apply this same thinking to any variety of high-income professionals and entrepreneurs and business owners. Vermont needs more of all these people, not fewer. Think about what the state will look like in 10 years with even fewer doctors and a more aged population. Will companies like BETA Technologies be able to compete for top talent so they can stay and grow in Vermont?

Vermonters need to stop focusing on zero-sum “tax the rich” thinking and look toward policies that grow the population and the economy.

Ali Jalili
Burlington, Vt.

Read the story on VTDigger here: A shrinking state can’t afford to lose its top earners.