Galbraith: Financing free tuition for Vermont high school graduates
Bernie Sanders campaigned for president with a proposal to provide free tuition at public colleges and universities to all high school graduates.
We can do this in Vermont at no cost to working Vermonters.
I have put forward a plan for four years free tuition for every Vermont high school graduate who wants to attend any of the five colleges in the Vermont State College system. This will benefit the nearly 8,000 Vermonters who enroll in our state colleges, the Community College of Vermont and the Vermont Technical College.
The estimated annual cost of providing four years free tuition is $28 million. We can pay for it by repealing special interest tax breaks, ending corporate subsidies and raising the minimum wage to $15 and hour. These steps will save taxpayers $46 million each year. Some of the extra revenue could provide free or reduced tuition at the University of Vermont for high school graduates who meet the income criteria to qualify for Pell grants.
Special interest tax breaks cost Vermonters at least $26.5 million a year. These are intended to promote economically desirable behavior but there is scant evidence that they do so. The Vermont Research and Development Tax Credits ($3 million) supplement far more generous federal tax credits and almost certainly reward activity that would have taken place anyhow. There is no evidence that taxing capital gains at a lower rate than ordinary income ($11.5 million) promotes investment, but it certainly treats better those who live off their wealth than those who work.
Some tax breaks exist because well-connected companies and individuals hired expensive lobbyists to advance their cause. Spare parts for private aircraft are exempt from the sales tax ($1.1 million) but auto parts are taxed. While justified as an incentive to locate plane repair facilities in Vermont, this nifty tax break appears more about private privilege than broader public policy.
The Vermont Investment Tax Credit ($600,000) has the statutory purpose of supporting property investment in "advanced coal products and gasification products." At a time when the state is debating divestment from fossil fuels, it is hard to explain why tax dollars should go to coal products, especially when there are so many better uses of the money.
The biggest tax single savings comes from raising the minimum wage to $15 and hour. Raising the minimum wage is not only good for workers but it will also save taxpayers up to $18 million in Earned Income Tax Credits that low wage workers receive because they don't make enough to live on. (The EITC is a cash transfer to low-wage workers intended to supplement their incomes but has the economic effect of subsidizing their employers who use the EITC and other public assistance programs to cover part of their labor costs).
In recent years, the Vermont has handed out millions to large corporations through the VEGI (Vermont Employment Growth Incentive) program. Green Mountain Coffee Roasters, for example, received $10 million over several years. It thanked Vermont taxpayers by shifting its coffee buying business to Switzerland, at a cost of 200 Vermont jobs. I propose to make VEGI a loan or equity participation program, so that taxpayers will earn income instead of giving it away.
More information on my plan for free tuition and the tax savings can be found at http://galbraithforvermont.com/educationplan/.
We have a choice between continuing special interest tax breaks and educating young Vermonters. While Vermont has one of the highest high school graduation rates in the country, half of low-income Vermont high school graduates do not continue to college, largely because of the cost. As a result, Vermont does not have the work force needed for 21st century jobs and our economy suffers. But, even those who do go to college come out with crippling debt that may make it impossible to buy a house and that even affects such basic human decisions as whether to start a family.
Our tax and spending policies reflects our values as a state and society. Do we really value private jet ownership more than education for young people?
Peter Galbraith served as a senator from Windham County and is a candidate for the Democratic nomination for Governor.
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