Dean's budget-balancing act left taxpayers in red

[MKSheppard]

http://www.washtimes.com/national/20030 ... -4135r.htm

Vermont had one of the highest per capita tax burdens in the country when Howard Dean left the governorship in January to run for president.

Mr. Dean, a Democrat who calls himself a "fiscal conservative," says he balanced all his state budgets by cutting spending. And allies and critics alike praise his budget- balancing record.

Vermont enjoyed a budget surplus this year while most states were in the red because of the recession that began three years ago.

What the former governor doesn't say is that he raised hundreds of millions of dollars in higher taxes, including sales taxes, cigarette taxes, property taxes and corporate taxes, to balance the books while paying for his social welfare proposals.

After 11 years under Mr. Dean's governorship, Vermont now ranks in the top tier of high-tax states, a fiscal legacy that President Bush's campaign strategists say they intend to highlight should Mr. Dean become the Democratic presidential nominee next year.

Congressional Quarterly's Governing magazine, based on data from the U.S. Census Bureau, ranks Vermont second highest among the 50 states in the amount of tax revenue collected as a percentage of personal income in 2001 — about 9 percent to 10 percent.

In a separate ranking that measured state tax revenue per capita in 2001, Vermont was in second place with six other high-tax states, including Massachusetts and California.

Another ranking in June by the Government Finance Officers Association put Vermont in 12th place when state and local tax burdens are combined, well ahead of more populous industrial states such as New Jersey, Michigan and Illinois.

Vermont's budget has climbed sharply, too, from $662 million in 1991 to $1.8 billion last year. Between 1997 and last year, inflation and population growth combined totaled 18.1 percent, but spending rose 51.7 percent.

Once known for its Yankee thrift, the state has become a mecca for affluent liberals from neighboring New York. Vermont's sole congressman, independent Rep. Bernard Sanders, is an avowed socialist.

"Roughly 20 percent of the population does not depend upon jobs for income, people who are trust funders or independently wealthy," says Michael Quaid, executive director of Vermonters For Tax Reform.

Tiny, bucolic Vermont, with a population of 610,000 — about the size of Austin, Texas — does not many of the problems of other states.

More than 96 percent of Vermont residents are white; only 3.8 percent are immigrants. The unemployment rate is barely 4 percent.

The birth rate is the lowest in the nation, which means Vermont requires less spending on education and welfare than other states. With a median age of 37.7, the population is the third oldest among the states, and its under-18 population (24.2 percent) ranks as the eighth smallest.

Analysts give a mixed assessment on Mr. Dean's fiscal record. The Cato Institute, a libertarian think tank that rates the fiscal performance of the states, gave him a grade of B from 1994 to 1996. By 2000, his grade had plunged to a D.

"In 1999, he sought and won support for an across-the-board income tax cut to make the state more competitive. He was dead right on that score: Vermont has one of the highest income taxes in the nation and loses jobs and businesses to its income tax-free neighbor, New Hampshire," the Cato report card concluded.

Mr. Dean denies that he overspent as governor or raised taxes unnecessarily. "I balanced more budgets than Bush ever did," he says.

His fiscal policy as president "will be to limit the federal budget's rate of growth to the rate of growth in the economy," he said in an interview with The Washington Times earlier this year. "That's what we did in Vermont. You never let the budget grow faster than the economy."

At the outset of his governorship Mr. Dean did cut spending aggressively, fighting his party's liberals in the General Assembly who wanted to raise income taxes and boost spending.

"He has always made fiscal responsibility one of his baseline issues," said Christopher Barbieri, president of the Vermont Chamber of Congress. "He would rather cut the budget than raise taxes. He believes in the notion that reducing the personal income tax would be an incentive for the economy."

But in the late 1990s, Mr. Dean shifted sharply. In 1997, he signed an education funding bill called Act 60 that raised property taxes in wealthier communities to redistribute money to poorer schools.

"That was probably the biggest tax increase bill the governor signed. It raised taxes for about half of Vermont's homeowners and cut them for the other half. It was a redistribution of wealth toward lower-income property taxpayers," Mr. Barbieri said.

Higher taxes were in part the legacy of Mr. Dean's predecessor, Gov. Richard Snelling, a Republican who died in office in 1991 after substantially raising taxes or implementing new taxes.

In 1994, Mr. Dean allowed income- and sales-tax increases to fall back to their previously lower levels (25 percent of the federal tax rate and 4 percent for sales). But he called the legislature back into session and raised the sales tax to 5 percent, retaining other ncreases, including a 9 percent tax on hotel rooms and restaurant meals.

In 1998, with revenue pouring into the state Treasury, Mr. Dean promised to cut income taxes.

"He had a surplus and the 1999 legislature [cut taxes] over the screams of the liberals. Liberals up here think of him as a Republican in drag because he won't raise the income tax even higher," said John McClaughry, president of the Ethan Allen Institute, a Vermont think tank that tracked the Dean administration.

"But, yes, the state tax burden is undoubtedly higher because of the property tax increases, and during his years, he constantly increased tax rates on virtually everything," Mr. McClaughry said.

And, he added, as taxes rose, so did the size of Vermont's government.

"There's no tendency toward smaller government with Howard Dean," Mr. McClaughry said. "He wanted to expand government, and did."

After losing a legislative battle in 1993 to enact universal health care in Vermont, Mr. Dean agreed to a scaled-down program to provide health insurance for children and lower-income adults through Medicaid that critics say does not cover costs.

"We have a huge state health insurance budget," Mr. Quaid said.

[Howedar]

I'd rather have a state that taxes a lot and provides the services it has to, rather than a fucking basket case like Oregon where everybody gets this nice pretty refund check from the State every year, but the school buildings are falling apart, class size is 40+, the bridges throughout the state are literally in danger of collapse, criminals are put on the street because the state can't afford to keep them in jail, etc etc etc.

[Darth Wong]

There is an optimum size of government. Unfortunately, there are those who think bigger is always better (communists) and those equally dogmatic extremists on the other side who think smaller is always better (neo-cons).

[Howedar]

It should also be pointed out that the optimum size is not necessarily static.

[The Duchess of Zeon]

There is an optimum size of government. Unfortunately, there are those who think bigger is always better (communists) and those equally dogmatic extremists on the other side who think smaller is always better (neo-cons).

Well, this might be fine for Vermont, but the Federal government needs huge cuts to nearly every single problem--and the outright elimination of a large number--to support the corresponding elimination of the income tax at the federal level and its replacement with a more equitable system. What works for one state does not work for the whole country--and that's assuming that this works for Vermont. Maybe it does, maybe it doesn't, but just because I can see Vermont on a clear day doesn't mean I'm qualified to mess with their politics.

[MKSheppard]

I'd rather have a state that taxes a lot and provides the services it has to, rather than a fucking basket case like Oregon where everybody gets this nice pretty refund check from the State every year, but the school buildings are falling apart, class size is 40+, the bridges throughout the state are literally in danger of collapse, criminals are put on the street because the state can't afford to keep them in jail, etc etc etc.

Ever see over 10% of your entire damn paycheck disappear before
you get it due to income taxes to both the State of Maryland and
Montgomery County? It sucks. And then Social Security, then all
the damned deductions...

About 30% of your paycheck gone, and thats Minimum Wage in
a damned Grocery store.

[Howedar]

If it means my car doesn't crash through a fucking bridge, then I'm fine with it.

[MKSheppard]

If it means my car doesn't crash through a fucking bridge, then I'm fine with it.

Yeah Yeah, and you idjits think you're the only ones with problems?

*cough*

Wilson Bridge

*cough*

that thing is taking something like 3 times it's designed load a day...

[Howedar]

350 bridges running at well over design load, at end of useful lives

[Joe]

those equally dogmatic extremists on the other side who think smaller is always better (neo-cons).

No, typically the Big Bad Neo-cons (tm) that you speak of don't advocate making the government smaller (and if they have, they certainly haven't put that advocacy into action).

[Alyrium Denryle]

There is an optimum size of government. Unfortunately, there are those who think bigger is always better (communists) and those equally dogmatic extremists on the other side who think smaller is always better (neo-cons).

Well, this might be fine for Vermont, but the Federal government needs huge cuts to nearly every single problem--and the outright elimination of a large number--to support the corresponding elimination of the income tax at the federal level and its replacement with a more equitable system. What works for one state does not work for the whole country--and that's assuming that this works for Vermont. Maybe it does, maybe it doesn't, but just because I can see Vermont on a clear day doesn't mean I'm qualified to mess with their politics.

And why does the federal income tax ned to be abolished? How is it not equitable. I personally have no problem with it, seeng as how that money goes to basic services the government provides.

[theski]

Alyrium wrote:

How is it not equitable. I personally have no problem with it, seeng as how that money goes to basic services the government provides.

May I ask what tax bracket you are in??

[Joe]

And why does the federal income tax ned to be abolished? How is it not equitable. I personally have no problem with it, seeng as how that money goes to basic services the government provides.

Nearly 50 percent of the people in the workforce have no income tax liability whatsoever (the poorer half, of course). That is not equitable.

[Stravo]

Speaking as someone who sees over 40% of his paycheck VANISH every time I can truly say that ANY tax reform or cuts is a good thing.

[theski]

Damm right.. with gas and vice taxes I am pushing 60% .. That means I work till weds afternoon for the Gov.. and not making a dime for myself..


3 days a week gone to taxes.. If anyone wants to pay more then let them

[Stravo]

It looks like the Vermont Miracle is looking more and more like the Massachusetts miracle where Dukakis' tenure as Governor was at first lauded as this wonderful thing and as we probed deeper and deeper we saw such things as Willy Horton and Boston Harbor.

[Sea Skimmer]

And why does the federal income tax ned to be abolished? How is it not equitable. I personally have no problem with it, seeng as how that money goes to basic services the government provides.

1% of the population pays 50% of the tax while many pay nothing at all. Explain how that is fair. Let me guess, your going to claim that some people are not entitled to there own money?

[Faram]

Blah fucking whiners.

I pay around 40% of my pay in taxes.

And then there is a 25% sales tax on EVERYTING exept food.

You people just don't know how a real tax opression feels like!

[Sea Skimmer]

You people just don't know how a real tax opression feels like!

Well don't just stand there, those barricades in the streets wont get built by themselves.

[Howedar]

1% of the population pays 50% of the tax while many pay nothing at all. Explain how that is fair. Let me guess, your going to claim that some people are not entitled to there own money?

You have support for that?

[Iceberg]

1% of the population pays 50% of the tax while many pay nothing at all. Explain how that is fair. Let me guess, your going to claim that some people are not entitled to there own money?

You have support for that?

What he's leaving out is that 1% of the population also controls 50% of the wealth.

When you've got half the money, you pay half the tax. Fair's fair.

[Joe]

You're all wrong. The top 1 percent controls something like 17 percent of the wealth and pays about a third of the taxes. Still not fair.

[Joe]

Correction: 17 percent of the income.

[The Duchess of Zeon]

What he's leaving out is that 1% of the population also controls 50% of the wealth.

When you've got half the money, you pay half the tax. Fair's fair.

A tax on income is not a tax on wealth, Mark--it's a tax on income. You can easily have tremendous wealth that is not coming in as income, and is thus not taxed by an income tax. In fact, I could be the richest person in the U.S., and, theoretically, receive money back from the IRS under the current system under the right conditions!

[The Duchess of Zeon]

A tax on income is not a tax on wealth, Mark--it's a tax on income. You can easily have tremendous wealth that is not coming in as income, and is thus not taxed by an income tax. In fact, I could be the richest person in the U.S., and, theoretically, receive money back from the IRS under the current system under the right conditions!

Furthermore, that is not due to "loopholes" -- but due to the simple fact that estates are, obviously, not taxed by an income tax! There is nothing equitable about a progressive income tax, nothing at all--some people have to pay bigger percentages than other, which is inherent unfair, while the real disparity of wealth is totally ignored.