Unlike sales taxes, property taxes are progressive

BRATTLEBORO — Based upon the letters from Selectboard members responding to the Viewpoint from the board of the Brattleboro Development Credit Corporation, it appears they felt personally criticized by the comments. That was not my intent; there are real problems with Vermont's economy that create challenges for our towns.

The piece was trying to advocate for policies that build our commercial grand list rather than depress certain economic segments that are already in decline. BDCC and SeVEDS own those economic problems, but it is tough to improve the economy when our rural areas are suffering from a fundamental economic decline.

There are, however, several comments that I believe should be added to the consideration of the 1-percent local-option sales tax discussion.

First, the property tax in Vermont is a progressive tax. With the renter rebate program and income-sensitivity mechanism, the cost of property taxes is limited for those with low incomes, and that cost is shifted to higher-income residents.

Property taxes are also not evenly applied to all residents of similar income. Those who own properties with higher assessed values will pay more tax and, therefore, will benefit more from a shift of tax from property to sales. With this sales tax proposal, higher-assessed properties like the Brooks House will save thousands annually rather than $100 as noted by the proponents, while low-income residents will save practically nothing.

Second, the sales tax is not progressive; we all pay the same regardless of income.

The average Brattleboro resident pays $600 in sales taxes annually; a family of four people, therefore, pays about $2,400.

A 1-percent increase in sales tax is a 16-percent increase in that tax. Even if a family spent only $1,000 in sales taxes this year, after this tax change, the same household would spend $160 more.

Unfortunately, the state of Vermont keeps 30 percent of the revenue generated so the net to the town would only be $112. Sales tax is applied to many common goods such as bicycles, furniture, building materials, hygiene products, books, pet food, garden tools, soap, shampoo, and toothpaste, so it does affect every resident of the town.

Lastly, it appears there is a misunderstanding about the property taxes on the Brooks House.

The Brooks House has a tax-stabilization agreement with the town. That agreement delays a portion of the increase in taxes for a few years in order for a project to borrow more money to get it built.

The taxes on that property before the project were $67,000 annually, and the town was paying the previous property owner $20,000 for use of the tunnel and some parking.

The property currently pays $164,000, even with the stabilization. That is a example of a town policy that helped build the commercial grand list and resulted in a significant increase in taxes to the town for many years to come.

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