Analysis

Vermont is one of the few states that conforms to the generally mistaken but common view that so-called blue states intervene extensively in the economic realm but are more relaxed when it comes to social policy. It performs quite poorly in terms of economic freedom but is one of the best states for personal freedom. Vermont’s fiscal policy is among the worst in the country. Overall tax collections are by one measure the fifth highest in the country (11.8 percent of adjusted revenues as a percentage of personal income). Property taxes are a particular problem, and selective sales taxes, largely aimed at tourists, bring in more as a percentage of the economy than in any other state except Nevada. Vermont is the most fiscally centralized state by far, with local governments raising just 11.7 percent of total state and local revenues. Local governments are dependent on state grants for nearly 70 percent of their revenue, the highest figure in the United States. Labor laws are worse than average, with a very high minimum wage when adjusted for median earnings. Vermont has adjusted community rating for health insurance but at least has not piled on as many coverage mandates as most other states. Vermont ranks second in personal freedom largely due to its great respect for the individual right to bear arms and its embrace of same-sex civil partnerships.³⁹ Indeed, it arguably has the best gun laws in the lower 48 states, including open carry and concealed carry without a permit. Vermont also scores well on its asset-forfeiture rules, and arrests for victimless crimes are much lower than the national average. Yet it has much room for improvement even in the realm of personal freedom. Like Utah, Vermont has full state control of beer, wine, and spirits distribution. Marijuana laws could be much better; while the state has a medical-marijuana exception and low-level cultivation is a misdemeanor, high-level possession is not, and low-level possession is still criminalized. Campaign-finance limits are quite strict even after some relaxation. Smoking bans are extensive, and cigarette taxes are high.

Policy Recommendations

1. Drastically reduce state aid to schools (repeal or amend Act 60) in order to decentralize taxation and make schools more accountable.
2. Maintain, if not reduce, the minimum wage, even in the face of future inflation.
3. Decriminalize marijuana possession.

38: Vermont had same-sex civil unions from 2000 until 2009.It now has same-sex marriage, which was approved legislatively and took effect September 1, 2009.