Op-Ed: Vermont can have tax relief without sacrificing public education

May 1, 2025  |  By Jared Duval 

Vermonters who can’t afford higher costs are concerned about rising property taxes. They need and deserve relief. At the same time, we have a responsibility to provide a quality education for Vermont’s children. How can we achieve a fairer tax system while meeting our obligations to our kids? 

A key, often overlooked problem is our long-outdated schedule of income-sensitivity tax thresholds (which show up as property tax credits related to home values and household income). Updating these thresholds to reflect current home values and incomes should be priority number one in the school tax and funding debate.

The stakes are high: If we don’t fix this problem, legitimate concern over rising property taxes could push Vermont to reduce educational access and quality, at the expense of Vermont’s kids and our system of public education. 

These thresholds haven’t been updated in decades. As a result, fewer Vermonters are qualifying for income-sensitive tax rates, and those who do are getting less help. At the same time, lower- and middle-income taxpayers are increasingly subsidizing the richest.

Consider this example: This year, a family that owns a $350,000 home and earns $89,999 a year pays school taxes of $2,304, or about 2.5 percent of their income. But if a family with the same-value home makes just one dollar more – $90,000 – their school tax bill balloons to $3,943, or about 4.4 percent of their income. This family falls over the threshold – or “cliff” – into a tax increase of $1,600. 

The source of this problem is that Vermont’s income-sensitivity thresholds have not kept pace with inflation in home values and incomes, not just over the past few years, but over the past decades. Two decades ago, a $350,000 home in Vermont was far above average value. Today, $350,000 is a lower-than-average home value in many parts of our state. Similarly, $90,000 in household income would have been considered upper-middle income two decades ago in Vermont. But today, $90,000 is near the statewide median household income.

Another perversion of the current education funding system is that it favors the highest earners. According to the most recent analysis, Vermont households earning about $120,000 paid about 3% of their income in school taxes, while those making $750,000 paid 1% or less.

Restoring income-sensitivity thresholds would lower tax bills for 50,000 Vermont households this year while making the funding of education fairer and more progressive, as originally intended.

Right now, the conversation about school funding starts with the claim that we’re spending too much. In fact, after adjusting for inflation, education spending in Vermont has been flat over the past 20 years and per-pupil spending has grown only about 1% a year. Moreover, the single-largest cost driver has nothing to do with schooling: That is, the galloping cost of health insurance. 

Instead of looking to make school taxes fairer and more progressive or dealing with the primary cost driver of school budgets, both the administration and the House are primarily looking at one-time across-the-board property tax rate buydowns, including tax cuts for wealthier Vermonters. If instead we were to focus tax relief in a durable way for those who need it most – those with the least ability to pay – we could do more to fix the growing inequity in who pays school taxes in Vermont. 

The administration is presenting Vermonters with a false choice: sacrifice the integrity of public education or face rising school taxes. Indeed, a big part of the administration’s proposal is to end local control while sending more public funding to charter and religious schools, including those located outside of Vermont. 

This suggests that the administration is less interested in achieving fairness for taxpayers or attacking the real causes of budget increases, and is more intent on undermining public education to the advantage of the private and religious schools. These are the same schools that want the benefits of being treated as public, without the critical responsibility of serving whatever student comes through the door. Furthermore, evidence has shown that a foundation formula, another key part of the administration’s plan, would worsen inequity, acting as a ceiling on investment in kids in poorer districts while being a floor for spending by wealthier districts. 

It’s time to focus on providing school tax relief for those who need it most – Vermonters with lower and middle incomes – by updating decades-old income sensitivity thresholds. 

Additionally, to responsibly and durably relieve the pressure on school budgets, we must address the rising cost of health insurance. This can be done with thoughtful strategies such as hospital pricing reform, including reference-based pricing for teacher health care. 

This dual strategy of ensuring tax cuts for those who need them and tackling the largest cost driver of school budgets is preferable to continuing to leave 50,000 Vermonters exposed to tax rates they can’t afford while sacrificing educational access and opportunity for Vermont’s children.

Jared Duval grew up attending public school in Fairlee and is the parent of a child in public school in Montpelier. He is on the board of directors of the Public Assets Institute, which is advocating for a fairer tax policy to support public education in Vermont.