Just about a year ago, columnist Howard Fineman opined in the then-moribund Newsweek about the shift-to-the-right of Prez-44 and actually quoted the usually-despised-by-the-Progressives Irving Kristol, who's well known for the acerbic (and actually autobiographical) observation that "a conservative is a liberal who's been mugged by reality" to describe his painful Presidential rightward concessions. It was Kristol's son, William, who founded The Weekly Standard in 1994, a journalistic enterprise which, like The Wall Street Journal (WSJ) and Fox News, is under Murdoch leadership. I won't expend column-inches on the recent demise of Newsweek vs. the success of The Weekly Standard, similarly for Fox News vs. the old networks on the ratings scale, or the Journal growing in readership while the Grey Lady of 43rd Street shrinks, and all the well-known Fourth Estate "muggees" ranging from Podhoretz to Krauthammer who've moved from Left to Right, except to conclude that Vermont's proudly Progressive Guv-81, Peter Shumlin, may be (however improbably) striving for the same "muggee" label.
My thesis is based on the barely-credible news that the new Administration wants to "slash" (the verb-of-choice in the AP news report) "income tax rates by about a third and enact the largest expansion of the State's sales tax since it was enacted 41 years ago," which is the just-voted recommendation of the Guv's Blue (not Red) Ribbon Tax Structure Commission. I'd guess it will be revealed later this month as 2 percent added to the present 6, putting Vermont right (pun intended) up there in the Tennessee and South Carolina group, while really blue States like Oregon are still at 0 because of basic ideology: income taxes are superior to sales taxes because they're Progressive and re-distributive, while sales taxes are regressive and consumption-based. Oregon is also in the news these days, and for a related reason: like California and New Jersey, it has experienced a statistically-remarkable flight of upper-income taxpayers. A WSJ editorial (Dec. 21, 2010) described how "Oregon raised its income tax on the richest 2 percent of its resident last year, but now the State treasury admits that it collected nearly 1/3 less revenues than its bean-counters projected ... the State expected 38,000 Oregonians to pay the higher tax, but only 28,000 did ... an instant replay of what happened in Maryland in 2008, when the Legislature instituted a millionaire tax ... roughly 1/3 of the millionaire households vanished ..." As brighter-than-the-rest-of-us Progressives, the technical-experts-in-governance Commission members were aware of the flight-of-the-rich syndrome and realized that, lacking the internal passport system controlling inter-Oblast movement established by the USSR, the U.S. has, unfortunately, no comparable government controls on citizen inter-State choice-of-movement. Not even an exit fee. (Ooops, New Jersey has one tapping pre-departure real-estate sales, but it has recently lost some $70 billion of taxable wealth anyway.)
Not having been invited to the Commission's meetings, I have no insight into their deliberations, but I'd bet that they include two elements. One is the aforesaid flight-of-the-rich syndrome, whereby the evil and selfish exercise their refusal-to-help-others, so that the Members have been forced to suppress their Progressive higher-level DNA wiring for socially engineered fairness and egalitarianism. They have been mugged by reality and dragged, gesticulating, vocalizing, and drapes-in-both-clenched-fists to a reduced-income-tax conclusion. The second element is the probable impact of a substantial sales tax boost on the cost-of-staying for Vermont's already-shrinking two middle-income quintiles. The Census data are instructive: for the 35-39 age cohort, the shrinkage from 2001 (47,375) to 2009 (37,222) works out to (don't test your grade-school math student on this) 10, 153 or 21 percent. Only the 50-and-above cohorts are growing, dare I say by in-migration and not by natural increase. This pattern was advised as policy by one of Vermont's early Gentry-Leftists, W. Douglas Burden, who advised that a desirable middle-class shrinkage could be accomplished by "making it too expensive for them to stay", and, I'd guess on the basis of observeable Golden Dome actions (not rhetoric), that remains the objective today. The imminent closure of Vermont Yankee offers the same opportunity to raise the cost of staying, except that here too Guv-81 is beginning to make some "mugged-by-reality" comments abjuring the very same license-renewal denial he quite recently advocated. In contrast, he hasn't yet (and doubtless won't, having just signaled a substantial sales tax increase) addressed the revenue loss Montpelier experiences when its defiantly frugal citizens cross the border to no-sales-tax New Hampshire or lower-sales-tax New York to purchase and import products back into a state that professes to pursue perfect equality, except that the rich should pay not just proportionately more, but super-proportionately more through the aptly labeled Progressive income tax.
Now, in this remarkable shift to Plan B (the rich might flee Plan A) a magnified sales tax will produce perfect equality: you buy, you pay. Except that, of course, consumption-taxing equality just isn't fair: even though wealthy households spend more, on a dollar basis, of their cash flow for groceries and fun, than those in the lower income quintiles, they unforgiveably spend less on a percentage-of-income basis, hence the social-injustice label. And, of course, the upper income quintiles get no approval for saving-and-investing, which, when directed to capital items, increases output productivity and lowers retail prices, or when directed to business expansion, creates new jobs and new taxpayers. Actually, all five income quintiles react similarly to the retail-sales-depressing function of a high sales tax: green-license-plated vehicles ranging from classic Mercedes and brand-new Volvo's to older Chevies and newer Kia's can be seen in the New Hampshire big-box parking acreages. (Caution to river-crossing credit-card wielders: the Tax Department knows who you are and the State Police might visit you.) Economist Arthur Laffer described this Adam Smith inter-relationship between price (including taxes) demand, and supply on a restaurant-napkin sketch of the Laffer Curve, which looks just about like the IQ Bell Curve: zero population at both extremes, the majority in the center, except that the Laffer Curve doesn't display population distribution across an intelligence spectrum; it displays tax revenues across a rate spectrum. When taxes are super-low or super-high, revenues drop to zero for reasons of no collection effort or such intense effort that would-be payers flee elsewhere, and at some median point of moderate taxation is where revenues are maximized because government doesn't forego revenue while the citizenry doesn't avoid the taxed transaction.
(Note to Guv-81 Shumlin: the Laffer Curve shows up, empirically, in taxpayer flight from high-tax jurisdictions: Oregon for income and Vermont for sales.) Gloriosky, Zero, who knew that balancing all these things while governing is, like, really tough?
Long-time Addison County resident Martin Harris now keeps his eye on Vermont from Tennessee.