One way way to create jobs and enhance opportunities is to grow businesses in Vermont.
There are many factors that determine business formation rates in one state as compared to others. One of these factors is taxes.
Vermont is a high tax state and doesn’t rate well on anyone’s analysis of comparative state tax burdens. According to the Federation of Tax Administrators, Vermont’s top marginal tax rate for individuals is the 7th highest in the country and the top marginal corporate tax rate is the 6th highest. According to the US Census Bureau Survey of State and Local Taxes, Vermont’s per capita state tax burden, excluding property taxes, is 18% higher than the national average.
Vermont’s property taxes are especially high. Using the data from the US Census Bureau Survey of State and Local Taxes, Vermont’s combined state and local property taxes, on a per capita basis, were 54% higher than the national average in 2016.
Of course, taxes are not the only criteria used by businesses. For ten years, CNBC has conducted a survey of all fifty states to rank the overall business climate. They rely on federal data and look at 60 criteria, which are then condensed into ten categories.
In 2016, Vermont ranked number 31, as follows:
CNBC 2016 Business Climate Survey
|Category||Weighting||Description||Vermont Rank (1=Best)|
|Workforce||400||Education level, availability of workers, training programs, union membership, right-to-work laws||47|
|Cost of Business||350||State tax burden, available incentives, utility costs, rental costs||43|
|Infrastructure||350||Value of goods shipped by road, air, rail & water, wastewater systems, quality of drinking water||41|
|Economy||340||Growth, job creation, consumer spending, residential real estate market||26|
|Quality of Life||325||Crime rate, inclusiveness, quality of health care, level of health insurance coverage, recreational facilities||3|
|Technology & Innovation||250||Patents issued, high tech business formation, research grants||30|
|Education||200||Higher education institutions, k-12 education outcomes||7|
|Business Friendliness||160||Regulatory and litigation environment||30|
|Cost of Living||75||Housing, food and energy costs||40|
|Access to capital||50||Venture capital funding, small business loan volumes||49|
All these surveys need to be taken with a pinch of salt. Vermont’s high rankings for Quality of Life and Education seem deserved.
The low rankings for Infrastructure and Access to Capital, both of which are based in part on volume measurements, probably reflect Vermont’s small size more than any fundamental problem.
Regarding the Workforce ranking, availability of workers may be a real constraint. The Informed Vermonter thinks all the other categories are directionally correct.
In 2007, Vermont ranked number 38 in this survey, so progress is being made.