Throughout his gubernatorial campaign, Lt. Gov. David Zuckerman has consistently called on the wealthiest Vermonters to bankroll new investments in infrastructure and the environment.
Zuckerman's Green Mountain New Deal, as he's described it on the campaign trail, would raise $100 million a year by temporarily hiking taxes on the top 5 percent of income earners — recapturing a portion of the federal tax breaks they have enjoyed under the Trump administration. The Progressive/Democrat would devote roughly $20 million apiece to renewable energy, weatherization, regenerative agriculture, affordable housing and broadband.
"The idea is to really invest resources in rebuilding the rural economy," he said in an interview.
Though Zuckerman calls the proposal the central policy plank of his campaign, he has not previously described how exactly it would be funded. And until last week, when Seven Days inquired about it, his campaign hadn't even figured out the details.
As it turns out, they're different than advertised.
According to a summary and spreadsheet provided by the campaign, Zuckerman would raise only half of the $100 million through higher taxes on the rich. He would come up with the rest by borrowing $50 million a year over the four years the program would be in place. That would leave the state paying $13 million a year in debt service for the following two decades, according to the campaign.
- GRAPHIC: ANDREA SUOZZO / SOURCE: ZUCKERMAN FOR VT CAMPAIGN
The notion of borrowing half the program's cost came from state Auditor Doug Hoffer, a Zuckerman ally who volunteered last week to flesh out the funding plan.
"It's perfectly reasonable to look at debt," Hoffer said, arguing that the resulting investments would have immediate, tangible benefits and spur economic growth. "The economy will respond."
Borrowing also carries political benefits, Hoffer noted. "It reduces the need for more taxes in the short term — and if I were running and trying to propose this sort of thing, I'd want to limit the hit," he said.
Not everyone agrees that the approach is prudent, given the state's existing debt obligations — including its underfunded pensions. Among the skeptics is Glen Wright, who serves as campaign treasurer for Zuckerman's opponent, Republican Gov. Phil Scott.
"I don't think we could even consider handling any more debt," said Wright, a retired managing partner of the accounting firm KPMG's Vermont office. "I think that's dead on arrival."
Even state Treasurer Beth Pearce, a Democrat who has endorsed Zuckerman's campaign, appears cool to the idea. As chair of the state's Capital Debt Affordability Advisory Committee, she has recommended reducing the state's debt load, and she opposed a plan earlier this year to borrow $50 million to build more affordable housing.
"I think it's fair to say I would want to look at other alternatives to borrowing," Pearce said of Zuckerman's Green Mountain New Deal. "Debt has an interest rate associated with it, so if you can do it through other means, you have more bang for your buck."
Zuckerman himself seems to have reservations about his own campaign's plan. In an interview last week, he distanced himself from the borrowing proposal, saying, "I think that's an area that we actually have more work to do."
"My goal is to borrow less rather than more because we continue to indebt future generations," he said. "But at least, in this instance, it is around infrastructure that will also be useful for decades, so that would be a reasonable indebtedness."
Zuckerman also appeared to walk back the scale of his plan. Though he has repeatedly described it as a $100 million proposal, he suggested in the interview that it could end up totaling much less. "It's a robust amount," he said. "It's clearly more than $50 million. I think it's probably in the 70 to 80 range."
The lieutenant governor said he had been forced to adjust his assumptions after Scott pointed out at a recent debate that the top 5 percent of filers include those reporting as little as $159,000 in taxable income. "So we're talking about middle-class families that are going to be taxed more for some of those initiatives," Scott said at the debate, which was hosted by VTDigger.org.
Zuckerman has since clarified that he would hold harmless households earning less than $250,000 a year. "My priority has always been to make sure we don't raise taxes on working-class Vermonters, and I won't do that going forward," he said at a debate last week hosted by WCAX-TV.
The written plan Zuckerman's campaign provided Seven Days, however, would raise taxes on households reporting more than $200,000 in income.
Those making between $200,000 and $300,000 in 2018 paid an average of $11,773 in state taxes, according to the Department of Taxes. Under Zuckerman's plan, they would have paid $1,766 more, according to the campaign. Those earning more than $1 million paid an average of $185,562 in state taxes that year. They would have paid $32,473 more under the lieutenant governor's plan.
In his view, that's hardly a burden for those who benefited from the federal Tax Cuts and Jobs Act of 2017, better known as the Trump tax plan.
Zuckerman points to a 2017 analysis by the nonpartisan Institute on Taxation and Economic Policy, which projected that Vermonters would save $556 million in federal taxes the next year under the Trump plan. Of that, more than $237 million — or 42 percent — of the savings would go to the top 5 percent of filers. The richest 1 percent, the institute found, could count on a tax break averaging $33,400. (According to Tax Commissioner Craig Bolio, his department has not analyzed how much Vermonters actually received in federal tax breaks.)
"We're not putting anyone through any hardship," said state Sen. Anthony Pollina (P/D-Washington), a Zuckerman ally and chair of the Vermont Progressive Party.
Pollina introduced his own Vermont Green New Deal this year in the state Senate, though his version would only have raised an estimated $30 million a year. (Both plans are named after the federal Green New Deal proposal popularized by U.S. Rep. Alexandria Ocasio-Cortez, a Democrat from New York.)
"I think it's more ambitious," Pollina said of Zuckerman's plan. "And I think it's appropriate to be more ambitious, given the situation we're in."
But Oliver Olsen of Londonderry, a former member of the tax-writing House Ways and Means Committee, is skeptical that it would raise as much money as its proponents imagine. That's because many of those who report high incomes in Vermont do so only once — upon selling a business or inherited stock. They could simply put off such a move until the expiration of the Zuckerman tax hikes, which would lapse after four years, in 2026.
According to a 2017 report by the legislature's Joint Fiscal Office, 46 percent of those who reported more than $300,000 in income at any point during the previous decade did so just once. Only 6 percent made that much each year of the decade in question.
"If you know that there is some sort of an income tax surcharge that is temporary in nature and it's financially advantageous to do so, you're simply going to avoid that event and avoid incurring that additional tax burden," Olsen said.
He pointed to Zuckerman's own 2019 tax return, which showed that he and his spouse, Rachel Nevitt, reported more than $171,000 in capital gains that year — far more than usual. Zuckerman has explained that, following the death of his mother, he chose to sell off or give away the fossil fuel, airline and pharmaceutical stock he inherited.
The candidate said he would have made the same decision no matter the tax consequences, and he's skeptical that others would delay selling a business for several years in order to avoid a surcharge. "That's a pretty big risk to take," he said.
In Wright's view, Zuckerman's plan would prompt high-income Vermonters, including some of the certified public accountant's own clients, to leave the state in order to shield their earnings. "They really don't want to. They really feel they should be contributing and paying their fair share. However, enough's enough," said Wright, who moved to Florida in 2005 — in part, he said, for tax reasons.
Hoffer doesn't think many Vermonters would follow Wright's lead. The same 2017 report from the Joint Fiscal Office found that roughly the same number of high-income filers moved to the state as left it during the previous decade.
"The notion which we often hear that something like this would lead to a giant and rapid exodus — there's no evidence of that," Hoffer said.
While Zuckerman's proposal outlines roughly how much more in taxes each income group above $200,000 would pay, it doesn't explain how they would be taxed. That's a problem, according to Jason Maulucci, Scott's campaign manager. "Considering how much air time the candidate put behind the proposal, we were surprised it wasn't more thought out," he said.
If Zuckerman were to retain the state's existing tax structure, Maulucci argued, he would have to raise the top marginal rate covering income in the highest tax bracket from 8.75 percent to more than 13 percent, making it one of the steepest in the nation. But according to Hoffer, focusing on marginal rates is merely a means of "scaring" voters, since that higher rate would only touch income over $200,000 for a single filer. The effective tax rate for someone earning $3 million a year, he notes, would increase from 6.15 percent to 7.22 percent under Zuckerman's plan.
Scott is certainly intent on scaring voters about Zuckerman's revenue record. "The lieutenant governor has proposed a lot of taxes over his years in government," Scott said at the WCAX debate. "I don't knows as there's anything that has been left untouched, whether it's sugar tax or a clothing tax or income tax rate increase or — whatever it is, he's in favor of that."
Zuckerman has, indeed, given Scott plenty of ammunition. In addition to his Green Mountain New Deal, the Progressive/Democrat has proposed several other new taxes this campaign, though he's described few of them in detail. He's pitched a 10 cent-per-hour-worked tax on employers to fund childcare; a higher property transfer tax on homes worth more than $700,000 to fund affordable housing; and a payroll tax to fund paid family leave. Zuckerman has also advocated for a universal primary care system, though he has not said what it would cost nor how he would pay for it.
"We are looking at the various options," he said, referring to the revenue source for universal primary care. "I'm not going to get pinned down on one or another. It's just that simple."
Zuckerman appeared cognizant that he might be portrayed as "David the tax man" — as he put it — but he argued that he's simply asking those of means to contribute their fair share to lift up all Vermonters.
"The governor claims to balance the budget and care for our most vulnerable, and yet we have kids falling through the cracks; we have an IT system that's failed when unemployment went through the roof; we have a state college system that ... was not going to be adequately funded," Zuckerman said. "The governor has balanced the budget on the backs of working people, and I'm presenting an alternative to that."