Blunt Instrument or Functional Tool?

During testimony before the Blue Ribbon Tax Structure Commission this week, Ken Perine, Chair of the Roundtable’s Tax & Fiscal Task Force was asked the question, should the state’s economic system be used to incent social policy, or put another way, should Vermont’s tax system be used as a “blunt instrument or a functional tool?” Actually, the question perhaps should have been asked, “should the state’s economic system continue to be used…”, because that is indeed how we operate today.

Over the past 218 years, Vermont has designed its revenues structure, regulatory environment, and spending priorities to achieve certain social ends in the educational, environmental, health care, and human service arenas. And in doing so has achieved national accolades in some cases. But, unfortunately, the escalation in costs has become unsustainable and events of a year ago have forever changed our ability to support the status quo.

As the Roundtable responded, we believe that it is possible to support both economic and social priorities in the same tax structure and that what’s needed now is a rebalancing. Vermont’s business markets are not in-state, they’re out of state. Their competitors are not across the street, they’re across the dateline. Efforts to modernize Vermont’s tax structure should incent business and consumer activity much more than it has before. The Commission gets it, but will lawmakers and the public?