Not In Your History Books

Interviewer [RLElkins]: “Where did you derive your historical knowledge about the origin of the sales tax in Vermont?”

Interviewee [Unidentified]: “As a college intern majoring in political science with unrestricted access to the inner workings of the Vermont Statehouse from 1968 through 1970. Unbeknownst to my legislative benefactors, a detail journal of the briefings, hearings, and confidential discussions in Montpelier, some that the press did not have access too, were dictated into a tape recorder every night and later transcribed onto Eaton Typing Paper for my college thesis.”

“What was the title of your college thesis?”

“Vermont Sales Tax – The Dazzling New Legislative Toothpaste for Budget Decay.”

“What grade did you receive?”

“A++”

“When did the sales tax come into existence in Vermont?”

“July 1, 1969. It was a 3% tax on all goods excluding food and beverages.”

“From your college notes and thesis conclusions, what prompted Vermont to implement a sales tax on consumer goods in 1969?”

“On the evening of June 5, 1968, as Senator Robert F. Kennedy was walking through the kitchen pantry of the Ambassador Hotel in Los Angeles after thanking his supporters for his victory in the California Democratic Presidential Primary – he was assassinated.”

“Would you please elaborate on that for the readers of iBrattleboro?”

“There is an interview in the archives of The Commons Online entitled When Vermont Turned Blue about the election of Phil Hoff, the first Democratic Governor of Vermont. It covers the timeframe when A. Luke Crispe, an attorney in Brattleboro whose portrait hangs in the Newfane Courthouse, created an independent party, put Hoff on the ballot so Republicans could vote for a Democrat without voting Democratic, that ended by a scant one-thousand votes the political dynasty of the Keiser family in Vermont.”

“During his six years as Governor, Hoff befriended Robert Kennedy. Governor Hoff shifted his thinking and public position on the Vietnam War from a Hawk to a Dove. The general consensus in 68’ was that if Robert Kennedy became the Democrat candidate for President, Phil Hoff was on Kennedy’s shortlist as his Vice Presidential pick. The only political downside would be a geographically unbalanced ticket. At that time Kennedy was a US Senator from New York. Both candidates, however, reined from New England and both were born in Massachusetts.”

“Governor Hoff spent more time in Washington DC in 1967-68 pursuing his national ambitions than governing in Vermont. He became distraught over the assassination of RFK, mislaid his motivation in governing, and lost his battle with alcoholism that he later publically admitted to. The legislative ship in Vermont drifted aimlessly with no leadership from their captain. The Lieutenant Governor, John Dailey, did not have the statutory authority to craft and implement a legislative agenda during Hoff’s absences. The fiscal consequence was a staggering nine million dollar state budget deficit when Hoff left office in January of 1969.”

“Was that nine million dollar deficit in 1968 the precursor for the implementation of the sales tax in Vermont?”

“Yes. Governor Deane Davis, who defeated Hoff’s former Lieutenant Governor John Dailey in the general election, was a tough no nonsense attorney who worked for Vermont National Life Insurance. Many regard him as a great governor because of Act 250. His real success was balancing the state budget within two fiscal years. On his office wall hung an Indian hatchet that Davis bragged he would not hesitate to use to cut the state budget. Despite his rhetoric, Governor Davis was pragmatic enough to understand that budget reductions alone would not reduce the deficit without severely impacting state and local services. A sales tax would be the fastest way to generate more revenue to bring the state budget back into balance. He was correct in his thinking.”

“During the legislative debate over implementing the sales tax was there any discussion about the potential of lost retail business along Vermont’s border with New Hampshire that to this day has no sales tax?”

“It was brought up but did not become a source of contention. Nor were there many complaints of businesses along the Vermont border with New Hampshire that a sales tax would hurt their commerce.”

“Why?”

“Two reasons. In 1969 there were not many retail businesses on the New Hampshire side of the border competing with similar businesses on the Vermont border. The second explanation involves the Vermont income tax. During the 1960’s the Vermont income tax was a fixed percentage of your federal income tax paid. This meant that any deductions on your federal income tax return would in effect be a deduction on your state income tax liability. A tax is a tax is a tax – meaning, if a Vermont resident kept detail records of the sales taxes they paid in ANY state, they could deduct those taxes on their Federal return even if they did not itemize. The Legislature used this as political cover that never materialized.”

“How so?”

“The vast majority of consumers in Vermont did not know that sales taxes were deductible. The Legislature was not about to advertise that fact unless they were confronted with objections to the new tax. If confronted their response would be that the new tax is a new deduction. The few residents who did deduct the sales tax were those who purchased expensive items such as vehicles and construction equipment and were aware of the tax deduction.”

“In July of 1969, how would you describe the impact the sales tax in Brattleboro had on local retail businesses?”

“Irritation. Theft. Irrelevance. Distraction.”

“The irritation was evident because every merchant in Brattleboro responded to the new tax differently. Some would charge the tax and then profusely apologize to their shoppers for doing so. Some would say to the customer – that will be eight dollars plus an additional twenty-four cents for Governor Deane Davis to spend. Some stores ignored the tax and paid the state three percent of their total sales. One sporting goods store in Brattleboro did not like pennies and would round the sale including the tax to end in a zero or five, whichever was lower, telling the customer – that’s close enough.”

“Where the sales tax became the real annoyance was at the supermarket. Groceries were manually keyed into the cash register item by item. Those were the days when the sales clerk had to count back the correct change without the cash register computing it for them. The supermarket checkout clerk had to pick out which items on the grocery belt were sales taxable, place them aside, manually ring them up after the non-taxable items were entered, calculate the tax, or, look up a three percent worksheet at the time of purchase. The checkout lines became debate confrontations.”

“The theft facet of the sales tax occurred when store owners or their employees would charge the customer a three percent tax on each individual item if they purchased more than one item. They would remit to the state the three percent based on the total sale and not the tax collected item by item which is always greater because of rounding. The business would pocket the difference. One store on Main Street in Brattleboro that specialized in this sales tax scam was on the verge of being caught by the Vermont Tax Department when the owners were shut-down by the IRS for stealing their employee’s federal employment tax withholdings.”

“The Vermont Tax Department subsequently issued a directive to all vendors in the state that they can charge the sales tax by individual item, or on the total sale, but regardless of which way the merchant collects the tax, it must be remitted to the state in the same amount as collected.”

“The irrelevance of the sales tax occurred because during the late 1960’s there existed in Brattleboro a quirky circumstance where a large number of residents spent their consumer dollars in Greenfield. They were convinced that Greenfield had better stores than Brattleboro. Brattleboro residents were unconcerned about the Massachusetts sales tax because they believed the quality of shopping in Greenfield was worth it. Conversely, a large number of Greenfield residents shopped in Brattleboro. They were convinced that downtown Brattleboro had better stores than downtown Greenfield, and, Vermont had no sales tax. In 1969 the city of Keene did not syphon away consumers from Brattleboro because their retail stores were considered by many in Brattleboro to be even more inferior than Bellows Falls, a town referred to by Brattleboro residents in the 1960’s as Fellows Balls.”

[Laughter]

“Before you continue, what were the stores in Brattleboro that Greenfield residents preferred to shop in?”

“Sam’s Army & Navy; The Bookseller; Mann’s Department Store; Dick Waite’s Casual House, Brattleboro Restaurant, SS Pierce, Green Stamp Store, Dutch Bake Shop, Sugar’s Furniture, Emerson Furniture, Cindy’s, Cambell & Green Hardware, Tom Thumb Diner, Galanas, Clapp’s, Ludwig’s Salon, Montgomery Ward, and the State Liquor Store on High Street.”

“And what were the stores that Brattleboro residents patronized in Greenfield?”

“Wilson’s, Braff Dry Cleaners, Bill’s Restaurant, Cleary Jewelry, Clarke Sporting Goods, Eastern Textile, Lunt Silversmiths, Millers Falls Tools, Yetters, Hartwin Motors, and Don Lorenz. If you wanted a deal on almost anything, Rockdale’s in Turners Falls was the place to go.”

“What were the distractions in Brattleboro regarding the new sales tax?”

“The sales tax distractions were the consequence of unforeseen national and local events. Consider the timing. The tax went into effective on July 1, 1969. On July 16th the entire world was glued to their black and white television sets watching the launch of Apollo 11 headed to the moon. On July 20th at 1 AM in the morning, Neil Armstrong fulfilled President Kennedy’s promise to walk a man on the moon before the end of the decade. On July 18th two days before the moon landing, Senator Ted Kennedy, the youngest brother of assassinated President John Kennedy and assassinated Senator Robert Kennedy, drove off the Dike Bridge in Chappaquiddick, drunk, that killed not only Mary Jo Kopeckne but also Kennedy’s birthright mindset of being elected President.”

“Meanwhile, in Brattleboro word leaked out in July of 69’ that the FBI had taken up residence in nearby Guilford. They were on the hunt for a Weather Underground radical who had beaten a Chicago police officer with a chain during the 1968 Democratic Convention. It is a federal crime to cross state lines with the premeditated intent of committing violence. The FBI captured their fugitive working under a false name at Lama, Toucan, and Crow on Main Street.”

“A large number of wealthy college kids from Long Island and other New York City suburbs flocked to Windham College in Putney during the late 60’s and early 70’s for the sole reason of holding on to their college deferments to avoid the Vietnam military draft. Many of them lived off campus in 69’ along lower Canal Street. They brought with them a ton of disposable income to downtown Brattleboro that local stores loved. For fun and profit they used their city contacts to transform the Snow White Motel on Putney Road into a distribution facility for marijuana. Brattleboro police had their hands full with that one. During those years the District Court was located in the Municipal Center where the Selectboard now meets. On some days the drug possession arraignments were so numerous that the defendants waiting line extended out the courtroom door, down the stairwell, and outside onto the front lawn.”

“And, it was during that summer of 69’ the Vietnam anti-war protests were heating up in Brattleboro. One particular anti-war woman protestor drove the various veterans groups in town crazy who alleged she was publically desecrating the American Flag. She would parade along the downtown sidewalks wearing the stars and stripes wrapped tightly around her naked body barely covering her private parts. So yes, there were local distractions to the new sales tax.”

[Laughter]

“Did the new sales tax become a campaign issue when Governor Davis ran for re-election in 1970?”

“No. Voters, the Legislature, and the Governor were much more concerned about the massive land fraud sales around the Mount Snow Ski Area in Dover; the flipping of properties for a quick profit by out-of-state investors; and the substandard vacation homes being constructed with septic systems comprised of empty fifty-five gallon drums buried in the ground.”

“That crisis in 1968-69 redirected the sales tax campaign issue into resolving the immediate predicament of real estate speculators in Vermont who were taking advantage of small ski towns with spectacular views, cash poor land rich farmers, and no local zoning or permitting regulations. This development catastrophe thrust onto Windham County over a three year timeframe was brought under state and local control with the implementation of Act 250. In conjunction with Act 250 was a new state tax that confiscated one-hundred percent of the profit from opportunists who were flipping properties in a false demand real estate market. Governor Davis was viewed favorable by the voters as a problem solver and easily defeated his opponent Democrat Leo O’Brian for his second term.”

“It was during the first term of Governor Davis that his Lieutenant Governor, Tom Hayes, for some inexplicable reason went to the news media and criticized Governor Davis’s policies despite both men being Republicans. Legislators in the Statehouse, along with the voting public, felt that Hayes was stabbing Governor Davis in the back for future political gain. Governor Davis, expecting loyalty from his running mate, threw Hays off his re-election ticket in 1970. Hays later became a State Supreme Court Judge.”

“The Speaker of the Vermont House, Republican Jack Burgess from Brattleboro, ran with Governor Davis as his Lieutenant Governor and won. Democrat Tom Salmon from Bellows Falls began strategizing his plan to run for Governor when Governor Davis decided not to seek re-election – which occurred in 1972. Jack Burgess was politically savvy enough to not run against Tom Salmon for Governor because Burgess could not obtain the political endorsement of the Burlington Free Press that Burgess needed to win Chittenden County.”

“Democrat Tom Salmon won the upset election in 1972 defeating Richard Snelling that made heads spin within the Vermont Republican Party. Jack Burgess was reelected as Lieutenant Governor with the new Democratic Governor Tom Salmon. This executive team from different political parties operated extraordinarily well together for two years. Years later upon hearing about the passing of Jack Burgess, former Governor Salmon said that for all the times he and Burgess worked together he could not recall them having one argument or disagreement. They were united in doing what was best for Vermont and not their political party.”

“It was Governor Salmon who signed into law in 1973 the bottle deposit bill. It was that law, and not the sales tax enacted in 1969, that jump started the migration of Brattleboro consumer dollars into New Hampshire.”

“Will you identify yourself to the readers of iBrattleboro?”

“No.”

“Why?”

“With the recent revelations of our government’s intrusion into our personal lives, at my advanced age I have come to believe that a person’s name should appear in print or online only three times during your life. When you are born, when you are married, and after you die.”

“Thank you for your remaining time.”

RLElkins