Use url to see charts and statistics. ITEP is a good progressive organization.
ITEP - Institute on Taxation and Economic Policy
http://www.itepnet.org/wp2000/vt%20pr.pdf1311 L Street, NW • Washington, D.C. 20005 • (202) 737-4315
EMBARGOED FOR RELEASE ON
TUESDAY, JANUARY 7, 2003 AT 10 AM
CONTACT: Bob McIntyre, 202/737-4315
Vermont Taxes Poor and Middle-Income
Families More than the Wealthy
Low- and middle-income families in Vermont pay more of their income in state and local
taxes than do the richest families in Vermont, according to a new study by the Institute on
Taxation & Economic Policy.
“State and local governments are being called upon to take on more and more
responsibilities,” said Robert S. McIntyre, ITEP’s tax policy director and lead author of the study,
titled Who Pays? A Distributional Analysis of the Tax Systems in All 50 States. “When it comes to
paying for services, Vermont has a moderately fair tax system.”
Vermont’s Tax Code: No Breaks for the Poor and Middle Class
When all Vermont taxes are totaled up, the study found that:
# The richest Vermont taxpayers—with average incomes of $686,000—pay 9.7% of their
income in Vermont state and local taxes before accounting for the tax savings from
federal itemized deductions. After the federal offset, they pay only 7.1%.
# Middle-income taxpayers in Vermont—those earning between $27,000 and
$44,000—pay 9.8% of their income in Vermont state and local taxes before the federal
deduction offset and 9.5% after the offset—much more than what the rich pay.
# Vermont families earning less than $16,000—the poorest fifth of Vermont non-elderly
taxpayers—pay 10% of their income in Vermont state and local taxes, one and half
times the share the wealthiest Vermonters pay.
“Vermont’s income tax is not progressive enough to offset the regressivity of its sales and
excise taxes,” McIntyre said. “Taxes ought to be based on people’s ability to pay them, which
means that the share of income paid in taxes should rise as income grows, not fall as is the case
in Vermont.”
MORE . . .
Who Pays? examines the tax systems of all 50 states and the District of Columbia, using the Institute on Taxation
& Economic Policy Microsimulation Tax Model. The ITEP Model is similar in methodology and data sources to
the elaborate computer models used by the U.S. Treasury and the congressional Joint Committee on Taxation,
except that the ITEP Model adds state-by-state estimating capabilities.
The findings published in the study detail state and local taxes paid by non-elderly couples and individuals. The
study includes all major state and local taxes: personal and corporate income taxes, property taxes, and sales
and excise taxes.
Page 2 of 4
Tax Regressivity Has Grown Since 1989
The study also examined the impact of changes in the regressivity of Vermont taxes since
1989, when the last cycle of state government shortfalls began. The study’s findings include:
# Taxes rose in Vermont as shares of income, but by far the largest tax hikes fell on the
poorest fifth of Vermont’s families.
# Vermont’s adoption of a refundable earned-income tax credit was laudable, but failed
to offset rising consumption taxes and property taxes on poor Vermonters.
“While Vermont lawmakers did well to adopt an Earned Income Tax Credit, this change
wasn’t enough to prevent the overall tax system from becoming even more regressive,” said
McIntyre. “As lawmakers consider budget-balancing strategies in 2003, they should remember
that their past actions have served to shift a greater share of the tax burden onto low-income
taxpayers.”
Two pages of tables detailing the Vermont findings of the study follow
The Institute on Taxation and Economic Policy is a nonpartisan Washington-based research
group. The full Who Pays? report is available in PDF format at www.itepnet.org. Printed copies
can be ordered by calling ITEP at 202-737-4315.
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