Did Dean make taxes less progressive in Vermont?

[dsc]

and if so how? A closer look at a study about Vermont and taxes. First the link.

www.itepnet.org/wp2000/vt%20pr.pdf

# 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.

The above are the claims made by the report. Their actual numbers come from a chart on page 3.

In that chart it is claimed that 2% of the lowest quintiles income is spent on general sales taxes. It is agreed that the general sales tax is 5% which means that a family would have to spend 40% of its total income on items that are taxed by the general sales tax. The following link provides a list of exempted items.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=108&topic_id=101371&mesg_id=101421&page=

It can be summed up as shelter, clothing (items up to $110), food (consumed at home), medical care and other services, utilities, and drugs. To be blunt I find it utterly impossible to believe that people with incomes below $16,000 spend 40% of their income on items not covered on that list. That would be $6,400 of disposable income for those at $16,000. This is fully one fifth of the 10% figure they use. If we assume 30% then we are at 1.5% and they now pay the least not the most.

They also have an item labeled "sales and excise taxes on businesses" which accounts for another 1.2% of income. This is offered with no explanation. I would like to see some explanation of the reasoning or at least a list of businesses they mean. This is a pretty hefty amount of their total and offered with no discernable explanation. Even a minor error here would be quite substantial.

Finally, the credit no federal offset if given. If the person involved is single and makes over $10,500 then he or she does pay federal income taxes and does get an offset. I am not claiming it was huge but it is existent. To leave it out is more error.

All of these errors and possible errors work against the progressivity of Vermont's tax code. Given the very small margins that we are talking about 10% vs over 9.5% these add up.

Finally on page 4 of this same study lists "Trends in Vermont Taxes" and on that chart only one regressive item is listed. An increase in cigarette taxes. Now that is regressive, anyone would admit that. But it also discourages child smoking and was used for health care for children. I don't have a problem with that. I can understand some people might.

[RUMMYisFROSTED]

1. You're gonna have to go to work for H&R Block after this primary.

Too much effort for a N**_J response, though.

[tsipple]

2. Very nice work, dsc

I'm always impressed with the skills of Dean supporters in uncovering facts to counter spin.

[AP]

3. Again:

1) business taxes -- many small businesses make money in this range of income (incorporated, unincorporated, or in partnerships). Perhaps this 1.2% is business taxes paid by small business people making less than 16K

2) There's no federal offset because the people in the bottom quintile are getting a tax refund (that's what the -.5% indicates), and the people in the second lowest quintile must be on both sides of the threshold for receiving the offset. I don't know what the threshold is, but, the total state tax burden for the second lowest quintile is only 1%, so their federal tax burden has got to be tiny. The EIC would have helped a lot of people to get tax refunds. But the EIC is by no means the only tax break for people in that range. Having kids, I suspect is going to get your taxes down in that low range of income (and most people have kids when they're making the least they'll make in their career).

3) That people who make about 10K spend 4K per year on consumer goods is no surprise. How much are your credit card bills every month? 1300? How much of that is food? 400? 4000 per year is 300 bucks a month on consumer good that is taxes. That's 75 bucks a week. You really don't think poor people spend 75 bucks a week on things that incur sales tax?

Some other noteworthy things:

- why the hell do the rich carry such a tiny property tax burden? Is it that property is relatively cheap in VT at the high end? Is there some special rule that gives rich people a break on property tax? Are the valuations based on sale price?

- notice the sales tax burden for the top and bottom quntiles. The bottom quintile's sales tax burden is 8X greater than the top quintiles. So the rich have 24X more income, but 1/8th the tax burden. That sucks.

- notice also that from '89 to '02, the bottom quintile's tax burden increase 7X more than the rate the top 1%'s burden increased (4.3% vs .7%).

The tax burden didn't go down on anyone, but the rich didn't really see that much change. Considering how much wealthier the top quintile got during that time (I've seen a national stat of 150%) I'd say they got off pretty easy.

[dsc]

4. Responses

1) business taxes -- many small businesses make money in this range of income (incorporated, unincorporated, or in partnerships). Perhaps this 1.2% is business taxes paid by small business people making less than 16K

This can't be entirely correct. Sales taxes are also mentioned here and those wouldn't be accounted for by your theory. You may be accounting for some of this though with the often dubious writeoffs businesses are allowed I won't be crying rivers

2) There's no federal offset because the people in the bottom quintile are getting a tax refund (that's what the -.5% indicates), and the people in the second lowest quintile must be on both sides of the threshold for receiving the offset. I don't know what the threshold is, but, the total state tax burden for the second lowest quintile is only 1%, so their federal tax burden has got to be tiny. The EIC would have helped a lot of people to get tax refunds. But the EIC is by no means the only tax break for people in that range. Having kids, I suspect is going to get your taxes down in that low range of income (and most people have kids when they're making the least they'll make in their career).

That is clearly labeled as being a state tax rebate. And again, not everyone in both that quintile and the onle above it would be getting the EIC. I fall barely in the second quintile and I paid federal taxes as does any single person making 11k or more. We would be getting offsets. They don't count them.

3) That people who make about 10K spend 4K per year on consumer goods is no surprise. How much are your credit card bills every month? 1300? How much of that is food? 400? 4000 per year is 300 bucks a month on consumer good that is taxes. That's 75 bucks a week. You really don't think poor people spend 75 bucks a week on things that incur sales tax?

No. First people in that income bracket don't have many credit cards as their credit often stinks. I don't have any. I probably could get one now but haven't done so. In your example, the person would have to spend only 6k on all of the following: rent, food, clothing, services of all sorts, and utilities. That would be $500 a month. Sorry I don't buy that. On edit I forgot the 8% of income they claim is spent on other taxes. That would leave $5200 not $6000 and that is less than $450 a month. Rent of $300 and utilities of $100 would leave $50 for food, clothing, and all services (including insurance) I don't buy that.

Some other noteworthy things:

- why the hell do the rich carry such a tiny property tax burden? Is it that property is relatively cheap in VT at the high end? Is there some special rule that gives rich people a break on property tax? Are the valuations based on sale price?

- notice the sales tax burden for the top and bottom quntiles. The bottom quintile's sales tax burden is 8X greater than the top quintiles. So the rich have 24X more income, but 1/8th the tax burden. That sucks.

- notice also that from '89 to '02, the bottom quintile's tax burden increase 7X more than the rate the top 1%'s burden increased (4.3% vs .7%).

The tax burden didn't go down on anyone, but the rich didn't really see that much change. Considering how much wealthier the top quintile got during that time (I've seen a national stat of 150%) I'd say they got off pretty easy.

Property if probably cheap in Vermont that isn't too surprising. Valuations aren't done on sale prices they are done by evaluation like anywhere. No one would do it by sales prices as those are too easily manipulated.

Your second and third paragraphs only are correct if the figures in the study are. Since I don't think they are I obviously dispute the accuracy of those paragraphs.

The last paragraph is irrelevent given that the figures are percent of income. Thus the increase in income is covered here.

[AP]

5. points

1) certain businesses charge taxes that aren't sales tax. If you do stuff with lumber, you have to pay a tax in some states which isn't a sales tax. A medium size business might have income of less than 16k and would pay these taxes, and this is where that amount paid in taxes would be noted.

2) if you're getting a state tax rebate, are you surprised that you wouldn't be paying fed taxes? that's the point I was making. I thought VT tied its state rates to fed rates, but did it in three brackets rather than five?

3) All I can say, is I think it's hard to live a normal life without spending about 800 bucks a month on consumer goods (and that is an averege including unusual expenses, gifts, emergencies, etc). that's $9600 a year. that's 75-80% of a person's income at the top end of that bracket. The less you have, the higher a percentate that's going to be. And the less you have, the less likely you're paying full rent and cable. (If you're lucky, you're living with someone else -- a roomate -- and splitting those costs.

4) CA does property tax according to sale prices -- so big businesses never sell property. They lease it. Sometimes, huge businesses pay property taxes on 10 million dollar business properties that are lower than the taxes a middle class family pays on their entry level home. How does VT assess property tax? It looks like it might be a major source of regressivity.

5) Even if the numbers in the study are off (which I don't think you've sufficiently alleged) they're not off by a factor which warrants regressivty that's measured by factors of 7 or 8.

6) my last paragraph addresses rates of increase. it's not irrelevent.

[dsc]

6. responses

1) the chart calls them business sales and excise taxes. That is why your theory doesn't account for all of it.

2) Depends on how the rebate is structured. I do pay fed taxes. If they give rebates based on an income being below say 20k I would get the state rebate. But my point was you were giving credit for the rebate to the wrong entity. Also it is very possible that some people in that class did get a state rebate while others didn't. Thus the class as a whole could get a rebate while some members still had to pay federal taxes and thus got the deduction. That is the senario which I figure is most likely.

3) It is crystal clear you have never been poor my friend. $800 bucks a month on consumer goods? If I spent $800 bucks a month on consumer goods I would be living on the street or at the very least not have any utilities at all. In a good month I am lucky to have a couple hundred after I pay everything that Vermont doesn't tax. I sure as hell don't have anything like $800 and my income would be in the fourth quintile not the fifth. Trust me you learn to do without when you are in this level of income. I haven't seen a movie at the theater in over a year. I eat out rarely. When I go out it is to friends places where we rent a movie or play cards or do some other cheap activity. And I am at the top end of that bracket. People in the heart of that bracket often don't go out at all. Again, if you honestly think that people in that bracket spend $800 a month on the things Vermont taxes you are so out of touch with people in that income bracket as to be clueless. They make due.

4) CA is insane to do that. I have lived in three states and none of them do that. Those states are IL, MS, and OH. I also know PA doesn't either. The auditor ascesses the property every so many years and that is what your tax is based on. I think I remember reading VT uses assesment as part of Act 60. I know the link in my tax thread discusses it. You are welcome to look when the archives open back up.

5) see part 3.

6) it address increases in rates not taxation itself. So yes it is irrelevant.

[AP]

7. replies

1) We must not be understanding each other. My point is merely this: sales tax is charged by the retailer on sales to the public. Some states charge taxes on business to business sales. This chart breaks down taxpayers by income level. Businesses earning money in the lowest brackets would be included in the breakdowns in those brackets.

2) ?

3) People who are poor living on 16K aren't saving money year over year. It's going somewhere. It's no surprise to me if 40 pc is going to taxable consumer goods.

Over one year, that's a TV, a DVD player, a telephone, a few DVDs, a few items of furniture (?), a new muffler, a present for your mom and your girlfriend, fast food, and few more things. I'm not talking about spending 800 every month. I'm talking about averaging 800. That's 9600 bucks a year.

4) I'm curious. Property tax is dramatically regressive in VT, so it'd be interesting to know if that's the norm, or if there's some explanaion (eg, like in CA).

6) There's nothing irrelevent in talking about rate of increas in tax burden. If you were comparing the interest rate on your savings account, you'd wonder why there's a huge disparity.

[dsc]

8. Only part 3 and part 2

The money goes to rent, utilities, food, clothing, and services. Since you seem to have such a problem with this lets break it down real, real, real easy. Lets use 10k (that is slightly above average in the fifth quintile). Now, according to their chart 8% of that 10k goes to taxes that aren't the sales tax and can't be spent on items. That leaves $9,200. We are saying that a person is spending 40% of 10k or $4000 on things other than rent, food, clothes, utilities, and services. That leaves $5,200 a year for rent, food, clothes, utilities and services. $5,200/12 is $433.34 (I rounded up) First assume the person lives alone. $250 a month for a one bedroom is reasonable (I pay slightly more). That leaves $183.34. We are talking Vermont here I will assume $100 for all utilities (phone, electricity, cable, and heat if not electric heat, and water). Again this is emminently reasonable (I haven't even one month paid less than that for all my utilities) That leaves $83.34. Now one of two things is true about this family either a the person owns a car or b the person relies on public transportation. Given Vermont it is likely a. That means insurance which is at least $30 a month. We are now at $53.34. If it is b that means at least $10.00 a week which would leave $43.34. So far we haven't bought a nibble of food, one item of clothing, commisioned one repair of said car (labor untaxed) seen one doctor, dentist, or other health car professional, or taken one drug. This is with low ball figures on every single item. This is also assuming no loans, fines, or fees of any kind none of which is taxed. And it assumes no taxes at all paid to any other entity for any reason. No car tags, no SS taxes, no local income tax nothing. Thus I don't believe their figure. I just don't. Unlike you, I have lived this life for the past few years. And I don't spend anything like 40% of my income on things Vermont doesn't tax. I also don't have money saved.

A roommate would help the situtation but it is not precisely half of those expenses and in some cases would be no help at all. Insurance would be the same price, food the same price etc. In a roommate situation I conceed the 40% figure becomes possible but I by no means conceed that the majority of people in that income bracket are in roommate situations.

As to point 2. First, you were giving credit for a Vermont tax break to the feds. Second, I believe that some people in this bracket pay federal taxes and some don't. I know a single person making 11k or more pays federal taxes and thus would get the federal offset. They are claiming that there is no offset at all for the bottom two quintiles (up to some 20k). That can't be correct. It just can't. It may be a small amount but it can't be nothing. I know I am not the sole single person in those income brackets. Some people who live in Vermont and earn 20k or less must be single and childless. I refuse to believe that there are no single childless people in Vermont making less than 20k. And that is the only way their table can be accurate. Thus that figure must be wrong.

[dsc]

9. kick

:kick:

[AP]

10. dsc, I just figured it out. If you make 10K a year, you're probably...

...borrowing a lot of money from other people, or on credit cards, or you're selling things that get you money that isn't declared as income.

So, you're right, these people aren't spending 40% of 10K in income on sales tax items.

They're spending 40% of maybe 15K in income, but they have legitimate income of 10K, and the balance, the 5K, is made up of credit card debt and maybe money from selling things illegitimately, whehter it's stuff at a loss (and therefore not declared as income -- like a car they bought when they had more money), or illegitimately (like stolen goods, drugs, or sex).

So they're spending two percent of their legitimate income on sales taxed consumer goods, but it's more like 1.5% of their total expenditures.

So, you're going to have to deal with the fact that it's very likely true that VT taxes people regressively. And prop tax and sales tax are the biggest problems, and they're not using income tax to level out the disparities.

[AP]

11. kick. This study is right. Dean did make taxes more regressive.

I'll reitierate. These people aren't spending only 10K per year. They're getting money that isn't appearing as income -- credit card debt, second or third mortgages (for recently unemployed with some equity in their homes), their EIC from federal taxes, gifts from family members, charity, selling depreciated possessions, and (for a few) selling drugs and prostituting themselves.

As I said originally, these people are poor BECAUSE they spend more money than they make. However, the percentages they give are percentages of the money delcared as income on their federal taxes.

Of course all those sources of money that isn't reported as income, which I've listed above, doesn't add up to much, but it adds up to enough which is spent on sales taxed items that it would result in the percentages you have such a hard time understanding.

Now, you must understand, right?

[dsc]

13. Gifts are income

and have always been such. So then their income isn't 10k. And BTW poor people often have both shitty credit (no loans), rent (no mortgage), and have poor families (no loans).

[AP]

14. Not all states make you declare gifts as income. Does VT?

And would a poor person report gifts as income? Probably not. And gifts weren't the only thing I listed?

Anybody can get a credit card today. Many people who are poor this year, had a job last year, and a credit card, and a mortgage, and equity. (Have you seen the unemployment figures?)

Dsc, you're going to have to deal with this. This study isn't totally wrong because you can't figure out how people in the bottom quintile pay 2% of their declared income in sales tax.

VT DOES have a regressive tax structure. Look at those numbers for the property tax!!!! Look at the overreliance on sales tax to patch holes created by lowering income taxes across the board (giving big breaks to the wealthy which they didn't really need).

A Dean was governor during this time. Which is when he also went to the Cato Institute and told them that he wasn't interested in tax policy like other Democrats were (ie, he didn't care that much about progressivity).

[AP]

16. The fed gov't, by the way, does not consider gifts income.

And I only know of one state that makes you declare gift income, and I believe that is only for the calculation of the homstead credit.

[dsc]

12. Just where do you think these people come from?

It is astounding you call me out of touch. Newsflash people in that income level have shittly credit and don't get loans. Other than family, and if they don't pay that back it is income, no one is going to loan people making 10k a year money in any substantial way.

And you opinion of poor people is sure pretty shitty. I have been with low income for the last three years. I haven't sold sex, drugs, or stolen goods. And am offended at the very idea that I would. And I am the one who is out of touch here?

Also they have to spend 40% not 2% of their income. No wonder you think they are if you think it is 2%. I would agree they spend much more than 2% of their income on consumer goods.

But, I do have to say, that I think any more lectures from you about poor people are going to have to be taken as the crap they are. After all you think they are hos, drug dealers and theives. Pathetic.

[AP]

15. Recently unemployed people have credit cards and mortgages and no income.

Young people have student loans which they use to buy things which incur sales tax.

Low income people get money that isn't delcared as income on their state tax returns, and they use it to buy things which incur sales tax.

Poor people get loans and gifts from family members and friends, and they spend the money.

Many get income that is outside legitimate channels. How many contractors do you know who get paid in cash and then don't declare that income on their taxes?

dsc, I just have to say to you, DUH!

[AP]

17. Incidentally, even your Dean thinks that the problem with

black incarceration rates has to do only with drugs. He thinks that the majority of black men in jail could have their problems solved with drug rehab. If you think that I was going overboard saying "some" poor people engage in illegitimate activities to get money, then you're going to have to have a talk with Dean, who thinks that the largest imprisoned demographic in the country with the highest rate of incarceration in the world is in there because of drub use.

I didn't go so far as Howard Dean. I only said that "a very few" get money from illegitimate means.

If you claim to know poor people but you don't know anyone who gets income from sources which aren't legitimate (or get income which they don't declare) then I'm wondering how in touch you are with people who are really struggling. I'm not talking any more than 1 in 100, but my path has definitely crossed the path of people who have to do that.

And, by the way, I've been ignoring your bitter nastiness in this thread, but I'm just going to say now that you are going to have to get your temper under control. You do yourself no favors with that anger and that nastiness.

[Chryslin]

18. Wow....

or illegitimately (like stolen goods, drugs, or sex).

So the poor are now hos, druggies and thieves???

Way to hate the poor, AP.

[AP]

19. I'm describing people I know...and I said "for a few" (see post 11)

If you don't know a person who makes between 10k and 20K and DOESN"T get income from a source which isn't declared as income, such as the list I gave you which included gifts, charity, selling their possessions (and which listed those three things LAST, after saying "for a few") then you don't live in the America I live in.

[dsc]

20. Show me the word few in the paragraph

They're spending 40% of maybe 15K in income, but they have legitimate income of 10K, and the balance, the 5K, is made up of credit card debt and maybe money from selling things illegitimately, whehter it's stuff at a loss (and therefore not declared as income -- like a car they bought when they had more money), or illegitimately (like stolen goods, drugs, or sex).

No where. You stated they referring to the poor. they stays the subject throughout. You called the poor hos, drug dealers and theives. And as a poor person I am offended.

[AP]

22. It's in post 11, which I probably posted 5 minutes after the first one

before any of you started to salivate over it.

Anyway, back to Dean...

By the way. Do the math. 5K in undeclared income for a person making 10K means the spend 4/15ths of their income on taxed items. What's that? A TV, a new muffler, and a BigMac a day for a year?

[AP]

21. I'm going to reiterate: you really don't know ANYONE who, in college,

or when times were tough, didn't ever sell drugs to get some money?

I can think of 30 people (many children of working class parents) from my high school class who did this.

I went to a very expensive college (on financial aid) and I know two students there (who went to prestigious highschools) who prostituted themselves for extra money -- it was a lot of money, but they did it.

I know people who have stolen things.

I know poor people who stuck with wealthier boyfriends partly for the cash gifts.

And again, I said this was "a few" people, because that's what my life has revealed: there are A FEW people who do this.

That's why I listed these things last. It's much more common to get support from family members, charity, to do handy work and not declare the income, and to sell your car (and, today, to take out the fifth mortgage and go into heavy credit card debt), which is why I listed those things first.

But there's nothing like latching on to a tiny point to avoid dealing with the fact that this study is right and Dean kind of sucks when it comes to taxing the poor and middle class.

[dsc]

23. It is not a tiny point

you called all poor people hos, drug dealers, and theives. If Dean had said this you would have lynched him by now. Hell if I did you would have lynched me. And BTW that would be income and thus they would no longer make 10k now would they. I have no problem taxing people making more than 10k at rates more than those who do make 10k. And illegal though the income may be it is income.

[AP]

24. Right. You can only imagine ONE kind of poverty, and I give you more...

...examples BASED ON FIRST HAND EXPERIENCE AND OBSERVATION and I'm the one who doesn't know what I'm talking about. Right.

Also, Dean has said what you're misattributing to me. He thinks most black men in jail are there because of drug problems. He thinks that it's poor peoples' fault that they're poor.

As for your rebuttal claim -- yes, it's income. but how would that study know about it if they're basing their study on earned income? Go check the study and see what they're using as measures for income. Do you think all those waitresses and construction workers are declaring all their income?

[dsc]

25. actually that would be you again

Evidently you think most poor people and most blacks are in prision. The opposite is true. To say that most of the small number of people who go to prison are indeed there due to drugs is by no means the same as saying, as you did, that all poor people are hos, drug dealers, and theives.

[AP]

26. reading. it's a skill.

I said that dean thinks that most black men in prison have drug problems.

I said a few poor people engage in illegal activities to get money which they don't declare as income. That's a fact which I know from first hand experience. It's not the only way poor people get money which isn't declared as income.

If you didn't realize that there were many ways to get undeclared income, well, I think that's an interesting comment on your credibility on this issue.

As for getting an orgasm over my saying that, and your being able to twist it, I think that's also an interesting commentary on the weakness of your argmument that this study revealing VT's tax code regressivity has an error.

[dsc]

27. most people in prison do have a drug problem

that is an undeniable fact. But very few people go to prison. We currently have something like a couple of million out of close to 300 million in prison. What you said, and now wish to deny having said, is that all poor people do this stuff and they don't. Not even most do. I am glad you decided to edit yourself but I think the first statement is far closer to your actuall belief.


In any case Dean did not say most poor people or most black people use drugs. He said, and correctly it should be noted, that most people in prison have drug problems. They do.

[Name removed]

28. Deleted message

Message removed by moderator. Click here to review the message board rules.

[AP]

29. You're admitting that lots of poor people engage in illegal activities

when they don't have any other options? By the way, black men aren't going to stop going to prison at higher rates than white people because Dean gives thema drug treatment problem. You keep throwing around the word "all" like I said it. I didn't say it and I didn't edit anything in response to your posts. Check the times on those posts. The misrepresentations about what I posted were made after I posted.