Reply #33: Deductions do not remove the taxation [View All]

But only a part of it. It you cannot itemize deductions, if you are not rich enough, you dont get to deduct them at all, which means:

Vermont Taxes Poor and Middle-Income Families More than the WealthyLow- and middle-income families in Vermont pay more of their income in state and localtaxes than do the richest families in Vermont, according to a new study by the Institute onTaxation & 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 topaying for services, Vermont has a moderately fair tax system.”

Vermont’s Tax Code: No Breaks for the Poor and Middle ClassWhen 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 federaldeduction 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-elderlytaxpayers—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 andexcise taxes,” McIntyre said. “Taxes ought to be based on people’s ability to pay them, whichmeans that the share of income paid in taxes should rise as income grows, not fall as is the case in Vermont

http://216.239.51.100/search?q=cache:fJRaEEEPn3gJ:www.itepnet.org/wp2000/vt%2520pr.pdf+Vermont+Taxation+regressive+Tax+institute&hl=en&ie=UTF-8

Prior to Dean becoming governor, this indicates that the tax structure in Vermont was more progressive, and that during the time Dean was governor, taxation became more regressive. Whilestill moderately progressive, Dean was the governor to reverse this trend.

A look at the economic reversals during Deans tenure as governor is also apparant here:

Median family income for four-person families
Middle-income families in Vermont have not fared particularly well during the current economic expansion. The incomes of families in the middle of the income distribution stagnated over the 1990s. Median family income for four-person families was $53,691 in 1998, compared to its 1989 level of $53,103 (in 1998 dollars).

Income inequality
Income inequality in Vermont grew over the 1990s. In the late 1990s, the income of the wealthiest 20% of families was 8.4 times that of the poorest 20% of families. By comparison, in the late 1980s, the wealthiest 20% of families had 7.4 times the income of the poorest 20%.

Poverty rate
The poverty rate in Vermont grew during the 1990s, from 8.1% in 1987-88 to 9.6% in 1997-98. However, the poverty rate in Vermont in the late 1990s remained below the national rate (13.0% in 1997-98).

Wages
In Vermont in the 1990s, the wages of low-wage workers declined, while the wages of similar workers grew at the national level. In 1999, the inflation-adjusted hourly wages of low-wage workers (workers at the 20th percentile) were 0.4% lower than they were in 1989, but due to wage gains in the 1980s they remained 10.5% higher than they were in 1979. The wages of workers in the middle of the wage distribution grew over both the 1980s and 1990s. The inflation-adjusted median wage (the wage of workers in the middle) in 1999 was 12.2% higher than it was in 1979.

http://www.epinet.org/content.cfm/datazone_states_usmap_vt

NOne of this data refers to Dean directly, nor is it partisanly directed, but does indicate changes in Vermoont while Dean was at the helm of government there