Vermonters for Economic Health

I have read how certain legislators do not like the budget that Governor Douglas put forth for the coming state fiscal year. Apparently they don't like the reductions in social service spending, among other things. And as we now know, many are also picking apart the Challenge for Change initiative and the $38 million in spending reductions that was supposed to deliver - almost half of which was from the Social Service delivery system.

None of us like cuts that hurt people, but when you don't have enough tax revenue to pay the bills you have to cut something. And when the majority of your spending is in social services and education, something in those spending line items is going to have to give.

That is of course unless the legislature decides to further damage our future by layering yet more burden on the shrinking tax base. Many employers are getting hurt this year with increasing unemployment insurance taxes and the potential for the loss of the passthrough of the increase in the domestic production deduction on their Vermont income tax. And you can bet the national health care bill will generate significant increases in health care expenses.

In my opinion the legislature has the responsibility of making the difficult decision to put the state on a SUSTAINABLE path forward. Continuing to drive up costs for businesses (for profit employers) in this state is not the sustainable path. The state has to INVEST in the economy and the support of for profit (non-taxpayer funded) employers if we want to have enough of an economic engine to sustain social services in the future.

Now is NOT the time to be further undermining for-profit employers or it will result in a more rapid deterioration of the tax base. In my opinion the hit to the tax base that will result gradually over time from the elimination of the 40% capital gains exemption last year is much larger than most legislators understand. It is going to take time but this policy move is going to have significant measurable negative consequences on the tax base over the medium and long haul.

The saddest part of all this is that the more damage done to businesses (emmployers) the more heart wrenching stories there are going to be as more people lose their jobs and become reliant on the government for survival. It's a viscious cycle of unsustainability. In my opinion the best thing you can give someone in need that is capable of working is a good job with a livable wage. However, without healthy employers who are investing and expanding we are not going to have as many good jobs available for people so they can get themselves back on their feet.

I wish the legislature would look at things through the lens of “what can we do to help employers invest here and employ more people” rather than through the “what can we incrementally take away from the employers this year to help us close our budget gap”.

We have a spending problem more than we have a revenue shortfall. We have too much employment in the tax payer funded sector (health care, education, government, non-profits) and not enough in the for profit sector. This ratio is getting worse, not better. Eventually the tax base will become so weak and this thing will topple over. In my opinion we should trim benefits where they are on the high side (unemployment insurance benefits for instance) to help reduce the impact of the higher taxes (of all types) on employers. Sharing the pain will help business survive and invest. If you place all the burden on the business it will have to lay off more people to compensate, invest elsewhere, or potentially relocate. The higher benefit may help the unemployed in the short term but it hurts in the long term with MORE people unemployed. It can become a vicious cycle.

I wish more of our state legislature agreed that we need to incent our for profit economy rather than punish it if we want to have a successful state economy and healthy tax base.