Editor’s note: This commentary is by Robert Feuerstein, who is president of Kennedy Brothers Inc. in Vergennes.
Recently VTDigger ran an article titled “Vermont millionaires see 70% boost” leaving the impression that millionaires are making ever more money, while the rest of Vermont isn’t. This is misleading.
We must always remember what Mark Twain popularized, “There are three kinds of lies: lies, damned lies, and statistics.”
All numbers used below are from the Vermont Department of Taxes website statistical data. For 2010 e.g, https://tax.vermont.gov/content/statistics-income-state-2010-xls
Let’s first look at “The data show that between 2010 and 2017, the adjusted gross income — the earnings after deductions — reported by tax filers in Vermont making $200,000 to $500,000 has increased by about 70%.”
Now, one reading this would think, damn those rich people are getting richer. A completely erroneous interpretation. What happened is the number of tax returns in the $200,000 to $500,000 Vermont Adjusted Gross Income (VAGI) level increased about 70% as well. The average VAGI for this level in 2010 was $275,088.05. In 2017 the average VAGI for this level was $272,420.49.
So they are actually getting less income, on average, especially taking inflation into account. There were 9,817 tax returns in this VAGI range in 2017 versus 5,735 in 2010. This is something to celebrate. More Vermonters are increasing their incomes. Isn’t that what we all want? More Vermonters earning ever more income?
Let’s look at another misleading statement. “That growth accelerated in 2017 when Vermont’s millionaire filers reported 40% more income than in 2016.“ In looking at 2010 vs. 2017, the income for millionaire filers doubled, but the number of millionaire filers increased 84%! Their average income increased 9.6%. Not adjusted for inflation. So again, many more millionaire earners, a good thing for Vermont, no? The average income tax paid by these filers was $85,584 in 2017. If we had another 1,000 of them in the state, our income tax revenues would grow by about 85 million sorely needed tax dollars. We should be celebrating the increasing wealth of Vermonters.
If we look at the income range of $35,000 to $100,000 (2010 vs. 2017), the number of tax returns increased from 110,786 to 120,559. If we look at the income range of $10,000 to $35,000, the number of tax returns decreased from 104,474 to 94,996.
Also during this time, the number of state resident returns filed increased by 11,000. So one can surmise that there are fewer lower income bracket Vermonters, because many of them increased their income over these seven years.
If we look at the average VAGI of Vermonters earning $200,000 and above, in 2010 it was $421,321 and it increased by 4.65% to $440,910 in 2017. If we look at the average VAGI of Vermonters earning $10,000 to $35,000, in 2010 it was $21,365 and it increased by 2.36% to $21,870 in 2017. Not exactly a major disparity in income growth between the rich and the not so well off.
So what do all these statistics tell us? Vermonters are increasing their incomes. There are fewer lower income Vermonters because they are earning more money, and that is why the lower income is falling as a group. And the rate of VAGI income growth between the well off and the lower income Vermonters is pretty equal. So, let’s all celebrate the fact that Vermonters are growing their incomes, and we have many more higher income earners now than in 2010.
