Prosper Vermont is now live on the web!
This Vermont Tax Reform Initiative is now in draft for the purpose of obtaining feedback from all Vermonters. We are constructing a wiki, a site on which concerned citizens can comment, give feedback & ideas, and even collaborate on writing the new legislation. Vermont is unique in that we are all legislators,
When approved by the Vermont Legislature, this measure will eliminate most taxes which discourage productive enterprise and commerce in Vermont. The following taxes will be abolished: the sales tax, the existing property tax on both real and personal property and the corporations tax. The first $150,000 of annual personal income will also be exempt from the state income tax and the maximum income tax rate will be reduced to 8%.
Public revenue for state and local government will primarily be provided by a tax which economists agree does not penalize productive activity — a tax on the rental value of Vermont’s enormously valuable land and natural resources: the Vermont Commons.
Improvements to land, including all buildings, will not be taxed. Vermont’s public assessors already value land and improvements separately for each parcel of real property, so the new tax system simply builds upon a valuation system which has long been in place.
Key advantages which this tax reform initiative provides:
- A prosperous state economy with many new, productive jobs
- Lower taxes for the large majority of households in Vermont
- Ample public revenue to benefit all Vermonters
- A new life for Vermont Farms
The University of Vermont’s Gund Institute estimate that new taxes on natural resource extraction and use will generate revenues of $1.2 billion annually. Taxing unimproved land values produces $1.07 billion annually (based on 2007 land valuations).
However, this is a conservative estimate based only on existing resource valuations. It does not take into account the large increase in land rental value which will certainly occur as demand for land in Vermont rises sharply in response to the elimination of existing taxes which now fall largely on those individuals and businesses who produce the goods and services that constitute the economic output of our state.
As producers respond with increased investment and new enterprise to the elimination of taxes which currently reduce productive activity and commerce, Vermont’s economy will surge forward and many new job opportunities for unemployed Vermonters will be created.
Because the ownership of our state’s most valuable land is heavily concentrated into the hands of a relatively small number of Vermonters and non-residents (often corporations such as AIG and Entergy whose owners mostly reside outside of Vermont), the large majority of Vermonters will pay substantially less in taxes under the proposed new system than they do now. Vermonters who rent will benefit hugely under this reform as will a high percentage of working homeowners, especially those households with two wage-earners.
Farms will benefit immediately, as they will not be taxed on improvements such as buildings, capital equipment and income. This tax reform will remove price and development pressure from the small family farm. The decline of Vermont’s small family farm will be reversed.
Suburban sprawl will be halted and reversed. Development will concentrate residential development in the cores of towns and villages because with a land tax, land owners have no more incentive to hold urban land vacant or underutilised.
Senior homeowners aged 60 or older will be able to defer until July 1, 2020 all land taxes in excess of the property taxes they paid in the year preceding the July 1, 2011 effective date of the reform. The legislature will have the power to extend that payment deadline even further into the future. But all senior citizens, homeowners and renters alike, will enjoy the same reduction in state income taxes and sales taxes as will all other Vermonters.