During the gubernatorial campaign Phil Scott set a goal to expand Vermont’s population from 625,000 to 700,000 over the next ten years or so. This is a pretty tall order (maybe unattainable), but the governor-elect’s call does raise an important issue. Our state’s population is stagnant, and if we want to be able to continue paying for government services we need to find a way to increase the number of citizens paying taxes into the treasury.
Here are three policies the Scott administration should push to start moving the population and tax receipt numbers in the right direction: end the death tax, expand school choice, and reform employment regulations to meet the needs of the 21st Century sharing economy.
End the Death Tax. One of the biggest reasons high-income people leave Vermont or decide against retiring here full time is our policy of taxing the estates of those who pass away. (Kiplinger’s rated Vermont the worst state in the union for retirees in 2016.) The death tax is notoriously unreliable in terms of raising revenue – you never know who’s going to die or when – and baring unusual windfalls due to poor financial planning, it doesn’t usually bring in all that much money.
But for that, we forgo all the income tax revenue, sales tax revenue, rooms & meals, charitable contributions, etc. of citizens who currently spend six months and a day somewhere else because their estate planner tells them to. By eliminating the death tax, Vermont could make a much more compelling case to high income tax payers at or approaching retirement age to make Vermont their permanent residence. According to the US Census, there are 43,106 second homes in Vermont (14.6 percent of the total number of households). That’s a huge percentage. Convincing even a fraction of those folks to make Vermont their legal residency could have a positive impact on the governor-elect’s goal.
Expand School Choice. Ending the death tax will attract an older, wealthier demographic, but Vermont needs young workers and young families. Since passage of Act 60 in 1997, Vermont has lost about 30,000 K-12 students and, presumably, their parents. However, as we have seen through all the backlash over Act 46, the 90-ish “school choice towns” that have existed in Vermont for the past century-and-a-half are a powerful attractor for parents of school age kids.
As the Bernier family of Elmore explained in testimony regarding the Elmore/Morrisville merger, they are a couple working in jobs that can be done from anywhere in the world. They moved from Rhode Island to Elmore in great part because the town offered school choice. Their story is not unique. In fact, after East Haven closed its public schools in 2011 due to declining enrolment and became a choice town, the number of students in the district nearly doubled in just three years from 11-20 at the elementary level and from 11-21 at the secondary levels. (VPR, March 2, 2015)
Statewide school choice would create a powerful selling point Vermont could use to entice entrepreneurial, education-oriented parents to move into Vermont, bringing their kids, their jobs, and their economic energy with them.
Reform Employment Regulations to Fit “Sharing” Economy. Vermont needs to bring millennials into our workforce and keep them here. Millennials want flexibility. This is a generation used to a technologically driven world where near-infinite choices are a hassle-free fingertip away. They are a more interested in finding work that fits their desired lifestyle as opposed to building a life around a desired job. This dynamic is a perfect fit for an appeal based on Vermont’s unique lifestyle brand – but we must raise the level of work opportunity, flexibility and creativity to that of skiing, hiking and mountain biking.
Vermont has a reputation for being a hard place to make a living. It only makes sense that we make it easy for recent graduates to, for example, ski during the day, work a part time job in the evenings, supplement their incomes driving for Uber, and rent out the spare room over the garage through Air BnB. It makes sense to allow start up companies to hire part time independent contractors to set up their tech infrastructure, help with short term marketing campaigns, handle accounting and other specialized work that does not require a full time, long term employee.
The myriad regulations standing in the way of this kind of economic flexibility for both employers and employees need to be scrapped, and Vermont should lead the way into the 21st Century with a clarion call for millennials to come help us do it.
Will these three initiative bring in 70,000 new full time residents? Maybe not. But they are first steps that will certainly get Vermont moving in the right direction.
Rob Roper is president of the Ethan Allen Institute. He lives in Stowe.