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Testimony to House Ways and Means

Testimony to House Ways and Means
February 16, 2011
Vermont Businesses for Social Responsibility
Andrea Cohen, Executive Director

I. About VBSR
Vermont Businesses for Social Responsibility is a statewide business association with over 1200 members--large and small from a variety of business types.  VBSR just celebrated our 20th anniversary this past fall.  Our members generate $4 billion in revenue annually and employ over 36,000 people, which equates to about 13% of the state’s workforce.   60% of our members have been in business in Vermont for more than 10 years, 75% more than 5 years.   87% of our members report, “Vermont is a good place to do business”.

II. Messages From our Members (Annual Policy Survey-Excerpts)
The greatest barrier to the success of our member businesses is the cost of providing health insurance (70% gave it a “4” or “5).  “Taxes” ranked lower than availability of affordable housing, state economic development priorities, and telecommunications infrastructure.
VBSR members expect that government will provide services and infrastructure that they cannot provide themselves. In general, they do not believe that taxes are “bad”, it all depends what they are getting back for their tax dollars.   63% of VBSR members report that they are getting good value for the taxes they pay.
The greatest contributor to the success of our member businesses is the “Vermont brand and quality of life”.  That was followed by retaining/attracting a skilled workforce, networking and peer support, and government accessibility.  Tax incentives were ranked last for the 19 choices provided.
VBSR’s current economic development priorities include health care reform, implementation of the farm to plate strategic plan, workforce development, and development of a robust telecommunications infrastructure.  In general, we favor investment in infrastructure that supports all businesses and communities over sector or specific business incentives.

III. Some Comments on the Blue Ribbon Tax Commission Report
VBSR would like to commend the Commission for their thoughtful hard work and their open process. It is a model of good process to inform other legislative studies in the future.  We appreciate the emphasis on fact-based decision-making, which adds great value to the Vermont tax policy debate.  We especially appreciate the statement of facts addressing the perception of Vermont being a high tax state and the issue of wealth flight.  We believe good policy making must be based on the facts and not on rhetoric or false claims.  

  • VBSR supports a move toward Adjusted Gross Income because it allows us more control and transparency about what exemptions and deductions we choose to allow.  It may also facilitate more accurate tax comparisons with other states resulting in better information exchange and perception about our tax climate.   VBSR does not support tax shifting away from the progressive income tax towards other more regressive taxes.
  • In general, VBSR supports broadening the tax base but does not want to see an associated increase in regressiveness. As the committee explores this we hope to participate in your future discussions.
  • VBSR supports the Commission’s recommendations regarding tax expenditures.  It is necessary and appropriate to increase the transparency and accountability of tax expenditures.  Tax expenditures should be subject to the same kind of analysis and review as budget appropriations.  The Blue Ribbon Commission found that there is over 1 billion dollars (2009) in lost revenue from tax expenditures due to insufficient oversight and compliance.  This gap needs to be closed.

As Vermont continues to grapple with a budget deficit of over 130 million dollars, we believe the state must continue to scrutinize all public expenditures  (including tax expenditures) because we need to be increasingly smart and efficient about how we use our precious dollars. We also must ensure that we do not cut critical programs and infrastructure investments that could compromise our social safety net or end up costing us more in the long term. A recession is not the time to stop government spending, quite the contrary.

 

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