One of the most popular myths surrounding Vermont politics is that our tax policies push wealthy taxpayers out of state. Contrary to the rhetoric, we now know the opposite is true.
A new analysis by the legislature’s Joint Fiscal Office finds more wealthy people, especially young people, moving into Vermont, while lower- and moderate-income Vermonters move out. Taxpayer migration by age and income evidence from the Internal Revenue Service, Aug. 26, finds that, between 2011 and 2016, Vermont had a net gain of wealthy taxpayers and a net loss of low- and moderate-income taxpayers.
Even though economists have long said people moving into Vermont are wealthier than those moving out, policymakers have often been swayed by anecdotal stories of some millionaire moving to Florida. This study confirms it is actually middle- and lower-income Vermonters who are moving away. The study doesn’t say why, but we can conclude lower-income Vermonters are moving in search of higher-paying jobs and lower costs of living.
One result of this trend is greater income inequality. It tells us we need policies that support and keep middle-class families here. These policies should include higher minimum wages, tuition-free college to end student debt and changes to our school funding system to reduce the pressure on these families.
In an average year, 8,000–10,000 taxpayers move in and out of Vermont. During the years studied, Vermont had a net loss of 4,167 taxpayers. According to the JFO: “the vast majority of these lost taxpayers appear to be lower- and middle-income taxpayers.” A majority 4,099 had incomes below $100,000, most between $25,000 and $75,000, most were aged 45-64.
During the same time, Vermont had a net increase of 126 wealthier taxpayers, with incomes of $200,000 or more, 100 of them were younger people aged 26 to 44.
This study follows another recent JFO analysis that showed increasing income inequality in Vermont, with the wealthiest Vermonters seeing incomes increase 105 percent between 2010 and 2017, while those making $75,000 or less saw small gains or actual declines in income. The number of Vermont millionaires also rose from 360 to 581.
The increase in wealthy taxpayers is not a bad thing. But, increasing inequality is. We want the wealthier to pay their fair share and we don’t want Vermont to become a playground for the rich.
These studies tell policymakers to pay less attention to stories about millionaires leaving and focus more on policies that keep working families here in Vermont.
Anthony Pollina, Progressive/Democrat, is Washington County state senator and Vermont Progressive Party chairman.