Editor’s note: This commentary is by David Roth, a Burlington resident and entrepreneur.
The JetBlue flight to Newark from Palm Beach airport was fairly empty (and this was before the current pandemic!). The time of year meant we were swimming against the tide, heading from Palm Beach to Burlington in February — heading from 87 degrees to 9 degrees to begin a new life in a state that promised so much for our family. I’ll never forget the flight attendant who almost flubbed his safety briefing due to his peels of laughter as he announced that the family in row 12 (two adults, two girls and a bunny) were moving from Florida to Vermont in the middle of winter and that someone should appeal to what clearly were our failing senses! The joke was not lost on anyone on board, but we were convinced that the life that awaited us would bring us joy, adventure and opportunity — and we were right.
Fast forward to today — and the same state that welcomed us now needs us to participate in a recovery that is sure to eclipse anything Vermont has ever experienced. The pandemic has decimated (and is decimating!) personal, municipal, state and national economies in ways that won’t fully be evident for years, but that require clear and immediate strategies that will allow communities and infrastructures to recover and rebuild. A vital component of that strategy must include the re-creation of a progressive taxation architecture that has not been evident in the United States (or Vermont) for many decades, and truly not since the years following the last global pandemic of 100 years ago, when marginal tax rates approached 90%.
The irony of my policy position should be clear — I am an entrepreneur who moved from a state (Florida) with no personal income tax to a state with one of the highest marginal rates in the country. As an entrepreneur with no inherited wealth (both my parents were public school teachers), I am keenly aware of the value of money (especially my money!) and am careful to guard and protect it and do everything I can to encourage its growth to ensure my family’s future — but I am also keenly aware that the single greatest economic threat to my (and every) family’s future relates to the vast and growing economic inequality that undermines the very fabric of our societies. Significant economic inequality creates significantly unstable societies. This is a reality and historical fact, and the creation and implementation of progressive taxation systems has always been one of the most potent and rational strategies that states and nations can implement to assist in recoveries that often take years or decades.
Between 1932 and 1980, top marginal tax rates in the U.S. averaged 81%, and during that same time, economic inequality decreased substantially while growth increased. It was only in the 1980s, during the Reagan administration, that tax rates began to fall at the same time that our nation’s investment in education began its own precipitous decline, resulting in an increasing level of inequality along with a lack of national competitiveness and growth that has persisted until today. It is patently false to argue that high tax rates destroy capitalism or hinder entrepreneurship (the years of 1932-1980 serve as prime examples!) — but the mythology carefully crafted by those who seek to inflame passions and increase their own wealth at the expense of others has seeped into the very fabric of society.
Let’s look at indisputable facts; per capita national income (growth) increased at the same time top tax rates increased until the 1980s, at which time both began to fall. Growth is not hindered by progressive taxation — quite the opposite is true. The current pandemic has and will require that so much of our lives and infrastructure and policies be rethought, and we would be wise to begin with a mutual understanding that rebuilding will require higher taxes on top incomes. It costs money to remake lives and to reconstruct what decades of neglect and the pandemic has destroyed, and while we all must contribute to the process of rebuilding, the financial responsibilities must be progressively allocated based on income. The realities of the pandemic are not yet clear, but at least one of the solutions is crystal clear — and I look forward to our state’s leadership (and those vying for state office in November) embracing and discussing why the time is now to enact a progrsssive taxation architecture that will ensure that generations of families continue to benefit from all that this State has to offer. We are all in this together has been an oft-repeated phrase these past few months — it now must become a fiscal reality.
As our JetBlue flight lifted off from Palm Beach that February day, I remember vividly imagining our life in a place that valued all its people and communities and was committed to the success of every individual. The devastating effects of the pandemic now requires that what may have been my idealistic vision become reality through sound economic policy and steely political willpower. Vermont must take the lead as it has so many times before.
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August 20, 2020 at 06:10AM
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David Roth: Time to rethink taxes - vtdigger.org
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