by Randolph T. Holhut
Chief of Ar Correspondents
April 24, 2014
A.L.E.C. THINKS VERMONT IS AN ECONOMIC HELLHOLE
DUMMERSTON, Vt. -- Few Vermonters expressed alarm at the news last week that Vermont ranked 49th in the seventh edition of the American Legislative Exchange Council's economic competitiveness index.
Then again, when the first edition of "Rich States, Poor States: [The] ALEC-Laffer State Economic Competitiveness Index" came out in 2008, Vermont was dead last. New York apparently beat us out for 50th place this year, while Utah retained the top ranking it has held since 2008.
Vermont has been either 49th or 50th every year. In an earlier edition, Vermont was slammed for "high personal income taxes, high property taxes, along with some of the highest labor costs in America [that] all hurt Vermont's economic outlook." It has also referred to the Northeast U.S. as "an economic black hole" that's now "irrelevant" to the nation's economy.
As with any ranking, one has to consider the source.
ALEC refers to itself as a nonpartisan organization, but it was formed in 1973 by the late Paul Weyrich, one of the founding fathers of the modern conservative movement. It consistently favors big business over labor. By offering so-called "model" legislation for states to adopt, ALEC works to weaken environmental, labor and workplace safety laws that supposedly harm economic competitiveness.
And it should not be a surprise that Charles and David Koch, the billionaire sugar-daddies of the far right, are the two biggest private benefactors of ALEC, which has branched out from pro-business cheerleading to supporting voter suppression laws and the now-infamous "Stand Your Ground" law.
So, when a conservative pro-business, anti-worker group hires two pro-business, anti-worker conservatives - economist Arthur Laffer and Stephen Moore of The Wall Street Journal - to write a report on economic competitiveness, the result is a predictably flawed measurement of what's good and bad in a state's economy.
Their ratings speak volumes for the priorities of ALEC in particular and conservatives in general, especially when you use some of their criteria to compare Vermont and Utah, starting with taxes.
It's an article of faith with conservatives that taxes are bad. So in the survey, Vermont was 43rd in the top marginal personal income tax rate (8.9 percent), 36th in the corporate tax rate (8.5 percent) and 48th in property tax burden ($52.97 per $1,000 of personalincome). Vermont was also rapped for having an estate tax.
Utah, on the other hand, has no estate tax. The top corporate tax rate is 5 percent and the state is 16th in property tax ($27.37 per $1,000). Its top marginal personal tax rate of 5 percent puts Utah at 17th in that category.
Laffer and Moore don't seem to like state governments that provide services to its residents. With 632.6 public employees per 10,000 residents, Vermont was ranked 44th. Utah came in 20th with 523.1 per 10,000 residents.
Of course, the study does not take into account that - even with the lingering effects of the Great Recession - Vermont has a balanced state budget and one of the highest bond ratings of any state in the country. That's why, under the category of debt service burden as a percentage of total tax revenue, Vermont was ranked sixth, while Utah came in 20th.
Also, Laffer and Moore apparently don't like to see workers get paid a living wage. Vermont's minimum wage of $8.73 per hour earned it 48th place on the list. Utah's minimum wage, the same as the laughably small federal standard of $7.25 per hour, makes it first in that category. Utah is also an anti-union right-to-work state, earning it another first.
So, if you buy into the central premises of the ALEC report - taxes and state spending are bad; paying workers a living wage is bad, and having a state government providing social services is bad - Vermont is an economic hellhole.
Yet Vermont regularly outperforms the rest of the nation in several categories related to the health of our environment, our communities, our schools and our children - categories that conservatives tend to sneer at as being liberal, touchy-feeling values.
And Vermont has the second-lowest unemployment rate, which was at 3.4 percent in April - nearly half that of the national rate of 6.7 percent.
In the real world, states that cut taxes on the wealthy and suppress wages end up with greater economic inequality, while depriving local and state governments of the revenues needed to adequately maintain public infrastructure and public schools that are the real engines of economic growth.
Most mature adults recognize that the traditional role of government is doing the collective tasks that all civilized societies need, and that taxation is what all of us as responsible citizens pay to accomplish those tasks.
The privatized, free-market world advocated by ALEC is only a great deal if you are one of the haves. And we have to be on guard for those who want to make sure that the rest of us are have-nots.
AR's Chief of Correspondents, Randolph T. Holhut, holds an M.P.A. from the Kennedy School of Government at Harvard University and has been an award-winning journalist in New England for more than 30 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at firstname.lastname@example.org.