Which taxes are relevant? I believe they all are.

On page 24 of the merger booklet, there is a question about IBM leaving the Village. I questioned the question. IBM sold to GlobalFoundries in 2015 and the answer to the question in the booklet talks about changes in tax policy driven by the State. It seems to me that the question should be something like “Did changes to the education tax driven by the State of Vermont have anything to do with the desire to merge?” Instead we get a very vague discussion of where IBM’s tax dollars went. This should all be known information and should not be written in an informational document in vague terms as if it was a conspiracy theory.

A couple of years ago, I found on the Town website a page that is titled “Essex Community Tax Rate History.” It includes Town, Village and School tax rates back to 1951. IBM came to Essex in 1957. History shows that even before IBM opened its doors in Essex, the net tax rate in the Village was lower than outside the Village if you include municipal and school taxes. This was because the Village school tax was so much lower than the TOV school tax. In 1951, the Village school tax was 2.4000 and in the TOV it was 4.5000. So, even though Village residents paid taxes to both the Village (1.9000) and the Town (1.0000), their out of pocket tax rate was 5.3000 while the TOV out of pocket tax rate was 6.0000 (general fund 1.0000, TOV highway 0.5000, school 4.5000).

It remained the case that Village net taxes were lower with the exception of 4 individual years until 1999 when the State of Vermont changed how education taxes are levied. Ever since 1999, taxes have been higher in the Village due to a change in how the education tax is levied, not because the Town added new services already provided by the Village.

The Village school tax went from 1.3210 in 1998 to 1.7863, a 35% increase in a single year and to add insult to injury, because Essex Junction Recreation and Parks, which was operated by the Essex Junction School District at the time, was not central to the education mission of the school district, EJRP’s budget had to be separated from the school tax and so a separate Recreation tax was created which had an initial tax rate of 0.0258 (and within 2 years was 0.0877).

So, I again assert that the relevant issue is a change in Vermont Education Tax policy. Now, I have brought this up in a Selectboard meeting and I got a lot of pushback. I was told that we have no control over school taxes, so they should not be part of the discussion. Also, a Selectboard member said that things that did not happen during their adult lifetime weren’t relevant. It is correct that the Selectboard has no control over education taxes but, like the weather and pandemics, we are certainly affected by them.

Back when door to door campaigning was allowed, I knocked on a lot of doors during my campaigns for Selectboard. By far, the number one issue brought up on front porches across both the Village and TOV, was school taxes. It is the size of the check written and the obviousness that the education tax is by far the largest component of it that makes school taxes a relevant concern for the Selectboard.

High education taxes limit how much the Selectboard is willing to increase the Town budget. There is a report in front of the Legislature now that recommends moving education taxes from the property tax to the income tax. If that happens, can you imagine how the Selectboard will be salivating over the headspace that gives for municipal tax increases? If the education property tax goes away, my property tax bill will drop by 75%. You don’t think that the Town will want a keep a piece of that and add a sharp increase that year?

There is also a proposal to spread the Vermont sales tax to include services which will allow the rate to drop from 6% to 3.6%. This means you’ll pay sales tax on haircuts and more grocery items. Guess who will step in and want to keep some of that by adding a local option tax.

So, to say other taxes are irrelevant to merger is an oversimplification. Yes, it is true that since 1999, taxes are higher in the Village but let’s not point to changes in IBM’s taxes and instead say that the change was driven by the State of Vermont education tax policy.

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