Taxes: 3. How Do Vermont’s Tax Revenues Compare to Other States?

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With Vermont’s per capita total state government spending materially higher than the national average, one might expect taxes to be a bit higher as well.

The US Census Bureau conducts an ongoing survey of state and local taxes across the entire country. While quarterly data is available for a portion of fiscal year 2017, full year data is only available for fiscal year 2016, which will provide the basis for the information below. The full year results for fiscal year 2017 will not paint a materially different picture.

States tend to spend their money on the same public services and comparing state government expenditures is very much an apples-to-apples exercise. Unfortunately, state government revenue sources can differ quite dramatically. In particular, states with large extractive industries, like oil and gas, coal and other ores, receive a high portion of their revenues in the form of royalties and other mineral-based taxes. So, while the mix of expenditures is quite similar across states, the mix of revenues can be quite varied.

Fiscal Year 2016 Per Capita State Government Tax Revenues ($)

 

Category Vermont New Hampshire All US States Vermont vs. All US States (%)
Total State Taxes 4,984 1,967 2,849 +75%
Property Tax 1,694 303 56 +2925%
Sales & Gross Receipts Taxes 1,654 732 1,353 +22%
License Taxes 188 245 160 +18%
Income Taxes 1,328 587 1,204 +10%
All Other Taxes 84 101 75 +12%

Source: US Census Bureau, State Tax Collections Fiscal Year 2016. Population data from the US Census Bureau

Vermont uniquely centralizes education spending through the imposition of a state property tax. This structure greatly skews the data in the table above negatively for Vermont. Not included in the table are municipal property taxes, which are the primary source of education revenues for the average state. Vermont’s total property taxes ARE NOT 2,925% higher than the national average.

Local property tax data for the country as a whole and Vermont is available for fiscal year 2015. The table below adjusts the state tax information, above, to account for local municipal property taxes.

Per Capita Tax Burden Adjusted for Local Property Taxes

 

Category Vermont All US States Vermont vs. All US States
Total State Taxes, Excluding Property Taxes 3,290 2,793 +18%
State Property Taxes 1,694 56 +2,925%
Local Property Taxes 710 1,499 -53%
Total Property Taxes 2,404 1,555 +54%
Total State & Local Taxes 5,694 4,348 +31%

Source: US Census Bureau, 2015 State and Local Finance (for total US municipal property taxes). Vermont Joint Fiscal Office, The Vermont Tax Study, 2005-2015 (for Vermont local property taxes)

 

Key Observations

Vermont Has High Taxes: While total per capita state government taxes are 75% higher than the national average, the tax burden including local property taxes is about 31% higher than average.

Education Costs Are The Key Driving Factor: With the cost per public student 58% higher than the national average, Vermont’s total property tax burden is 54% higher. Vermont’s property taxes are particularly high.

Vermont’s Low Population Is Also A Factor: To the extent Vermont’s low population drives per capita overhead and infrastructure costs higher, there is bound to be a similar knock-on effect in taxes. Excluding property taxes, Vermont’s per capita state tax burden is 18% above the national average.

 

Notes

  1. Sales and Gross Receipts Taxes include sales tax, motor fuel taxes, public utility, tobacco and alcohol taxes, gaming taxes and insurance taxes.
  2. License taxes include motor vehicles, hunting & fishing and license fees charged to a variety of professions.
  3. Income taxes include individual and corporate income taxes.

 

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