Approaching its crunch time, Vermont’s budget debate is in the grip of two falsehoods.

One comes from the right side of the political spectrum, the other from the left. Those who assert the first are guilty of haughtiness, and perhaps greed. Those who claim the second  are guilty of over-dramatizing and perhaps naiveté. Pointing out the first is not respectable. Pointing out the second may seem cruel.

That’s fine. Dispassionate analysis sometimes has to be disreputable or cruel or both. This site never claimed to be respectable or nice.

Because the discussion is complicated, we’ll divide it in two. Disreputable today; nasty tomorrow.

The falsehood from the right is that Vermonters have no more “capacity” to pay higher taxes.

“I think we are out of tax capacity,” Finance Commissioner Jim Reardon said the other day, echoing the oft-stated sentiment of his boss, Gov. Jim Douglas.

OK, these guys are politicians, arguably not subject to the rules of intellectual honesty. But the businesspeople, professors and editorial writers who make the same claim should be ashamed of themselves. They spout balderdash.

Do not misunderstand. This is not an endorsement of tax hikes. There is always a good argument against raising taxes, and  good arguments aren’t even necessary. In a functioning democracy, the voters of any state, city, county, or nation can decide not to raise taxes simply because they don’t want to. It’s their choice.

But choice is not necessity. This state had, at last count,  a gross domestic product of $24 billion. As if conspiring to make the arithmetic easy, the budget hole facing the state (before last Friday’s recapitulation increased it somewhat)  is $24 million, or one tenth of one percent of its economy. The idea that one of the most prosperous, innovative, and educated societies in the history of humanity can not tax itself by another tenth of a percent is absurd. It can.

This does not mean that it should. To begin with, there is a strong macroeconomic case against tax increases. As Douglas and his supporters regularly point out, raising taxes in a recession is a mistake. With less money in their pockets, people will buy less, just when economic policy is trying to get them to buy more.

Almost every economist would agree. But all the honest ones would then add that increasing taxes is the second worse thing to do in a recession. What’s worse? Spending cuts, especially those that entail laying off workers.

Just what the governor wants to do. So maybe the macroeconomic case against higher taxes isn’t all that strong.

But at least it’s minimally honest, which can not be said of the “businesses will run away” delusion and its cousin, the “all the rich folks will leave” fallacy. Conveniently illustrating the absurdity of the former, the folks at the Vermont Tiger web site recently warned against raising taxes because ” people will leave a state that is failing economically And they will head for a place where the business environment is friendly. Like North Carolina.”

North Carolina? Give us a break. The “business environment” may be great down there. The economy is a disaster. With a 10.8 percent unemployment rate (Vermont’s is 7.2), North Carolina is the state that’s “failing economically.”

Remember, these are the folks who not long ago wanted Vermont to follow the economic model of Ireland. Who, in fact, may have named their site after the “Celtic Tiger,” nickname for the Irish economic boom of not long ago.

The inanity of this comparison boggles the mind. Ireland is a sovereign nation with control of its currency. It did ease financial regulation and cut taxes in the early 1990s, but it increased spending, largely on education, mooching off the European Union and going into debt.

Oh, and its boom has gone bust, largely because it is under-taxed and under-regulated (and possibly corrupt; see here). No intent here to trash the folks at Vermont Tiger, who seem civilized and who sometimes make sense. But their economic analyses should be viewed through the filter of their Irish delusion.

Anyway, all this stuff about businesses switching states because of taxes is something of a fraud. Businesses rarely move from one state to another at all. When they do, the availability of skilled workers, proximity to materials and markets, quality of life for executives and employees are the major factors, not taxes.

As to the rich folks leaving, we know they won’t because they haven’t. For several years now, we are told, Vermont has had the highest marginal state income tax rate in the country. We are told wrong. Californians who earn more than $1 million pay a higher rate. Still, Vermont’s rate is high And in those years, the number of rich people in Vermont has – believe it or not – gone up.

One reason for Vermont’s appeal to wealthy folks could be that despite that high rate, the actual tax payment of the financially well-endowed is higher in many other states. That top rate – 9.5 percent – doesn’t kick in until a taxpayer’s 357,701^st earned dollar. In neighboring New York, the top rate is only 6.5 percent. But that’s on every penny earned over $20,000. As to the Californians who don’t quite pull in a million a year (there are a few), their top marginal rate is 9.3 percent, almost as high as Vermont’s, and that starts at $47,055

So maybe Vermont isn’t such a bad state to be rich.

No place is, and here’s another reason why. According to economists Thomas Piketty and Emmanuel Saez, the highest-income households pay less of their income in federal taxes than they have in decades. Taxes, then, are simply not that big a factor – they are, one might say, an increasingly diminishing factor — for very wealthy people in deciding where to live.

Perhaps that’s why, after New Jersey added a higher income tax bracket on households earning more than $500,000 in 2004, the number of “half-millionaires” in the state went up, according to a study by Princeton University’s Woodrow Wilson School of Public and International Affairs.

It isn’t that no rich New Jerseyans left the state in anger. Some did, just as some people from other states who had been thinking of moving to New Jersey decided not to because of the new bracket. But they were outnumbered by far by those who stayed, or moved in anyway. The new bracket did not hurt the state’s economy and did help its treasury.

Obviously there are limits here. If Vermont or any state doubled its taxes, or even raised them by 10 or 15 percent, the economic consequences could be severe. But that’s not what’s under consideration in Montpelier. The tax bill passed by the House of Representatives would add less than 75 bucks to the  annual tax bill of most Vermont households. This is not going to send anyone to the poorhouse, or out of the state.

Again, do not interpret anything here as an endorsement of higher taxes. It is an endorsement of intellectual honesty. Not just for the politicians, either. Also for the press, which regularly reports the fraudulent claims about the disasters of tax hikes without comment or correction. Mainstream reporters may not add, “but that’s a lot of garbage” after those quotes, even though a lot of garbage is what it is. They could  – after quoting Mr. Yifniff proclaiming that another penny of taxes will create a mass exodus of entrepreneurs and their enterprises – say something along the lines of…”most economic data and analyses indicate that Mr. Yifniff may be over-stating his case.”

“May be overstating his case “understates the case. But at least it would provides some hint that Yifniff should be taken with a spoonful of salt.

Meanwhile, Instead of repeating (falsely) that Vermont lacks the “capacity” to raise taxes, opponents of higher taxes should argue (plausibly) why they are bad policy. Or they should acknowledge that they just don’t want to pay more. Either way, they then (continuing to insist on intellectual honesty here) have to face the consequences of not paying more.

Under the current circumstances (falling revenue) the most obvious consequence of not paying more would be doing less. Those most obviously affected by doing less would be those who have little.

But perhaps not as little as they and their advocates often say. Tune in tomorrow when the News Guy gets really mean and applies the same standards to the low-income as he did today to the rich.

Some unrelated information and commentary to end the week…(and, yes, to those of you who asked, the News Guy is almost fully recovered from the mid-week attack of the ague)

A reasonable person  might almost sympathize with Burlington Police Cpl. Paul Glynn for arresting 21-year-old Darin Cassler Monday for the crime of organizing and engaging in the well-known felony of pillow-fighting.

Put yourself in the position of a police officer walking down the Church Street mall and all of a sudden coming upon a veritable regiment (48-strong, according to published reports) of young folks who might have been clogging the street, but who were at any rate obviously organized, not to mention armed.

OK, armed with pillows, not usually considered a lethal weapon. But you never know. Faced with what must have been an unprecedented (for everyone, not just him) spectacle, Cpl. Glynn appears to have fallen back on a cop’s instinctive reaction: Arrest Somebody.

The reason for the sympathy is that the rest of the Burlington and Chittenden County law enforcement establishment clearly recognized that he had over-reacted. In this case, being (at least so it seems) ridiculed by his peers would be sufficient punishment, especially because the charges against Cassler were dropped. Or perhaps it would be more accurate to say that they were never really picked up.

Of course, the police department, being a police department, in announcing that the young man would not be prosecuted, had to put out a stern statement, warning that “these types of events can have collateral/negative impact on the area in which they are held.”

Were there any reason to take such statements seriously to begin with it might be tempting to try to find some meaning in this one. Happily, there is not.

Do you suppose it’s possible that Entergy Vermont Yankee actually hires the folks who protest against it?

Probably not. But how else explain how the nuclear power plant’s most recent antagonists have been its best friends?

First, at a meeting in Brattleboro, a Massachusetts woman named Sally Shaw (all this courtesy of the Brattleboro Reformer story by Bob Audette), who belongs to an anti-nuclear group called the New England Coalition, threw some compost at Michael Colomb, a Vermont Yankee Vice President.

Presumably there was some symbolic point to the use of what Shaw called “really good quality compost.” If so, the point is too subtle for some of us to grasp, making the  childishness of the gesture even more obvious.

Then there was the complaint by the New England Coalition  asking Attorney General William Sorrell to investigate the relationship between Vermont Yankee lobbyist Jay Thayer and Commissioner David O’Brien of the Department of Public Service.

On its face, this is not entirely a frivolous suggestion. O’Brien’s department regulates Thayer’s company. Keeping an arms length relationship between the two of them would probably be a good idea. So O’Brien might have been well advised not to invite Thayer to a Christmas party in Stowe last December. He invited him anyway.

But Shay Totten provided the world with that information in his Seven Days column on January 21. Asked for further evidence of questionable O’Brien-Thayer contact, Clay Turnbull of the  Coalition could only say that O’Brien seems to give Vermont Yankee everything it desires.

True enough. Still, one invitation to a fairly large gathering (it wasn’t a two-man tete-a-tete) seems scant evidence of impropriety, as Sorrell immediately noted. (Friday morning update: Sorrell has officially rejected the request to conduct an investigation) Pressure groups, like investigative reporters, should pay attention to the My Darling Clementine Rule, based on one of the great lines from that great 1946 movie: “When you draw a gun, kill a man.”

Today’s theme seems to combine possibly imprudent political protest with arguably unnecessary law enforcement. Let’s wrap them together at the University of Vermont, where 100 students protested academic budget cuts with a sit-in Wednesday afternoon, and 26 Friday morning update: or 31, or perhaps 33) were arrested when they refused to leave that night. (Apparently only one was taken into custody; the others were given citations).

There are roughly 10,000 undergraduates at UVM. If this pocket calculator is correct, that means about one (1) percent of the students support the faculty union, United Academics (of which News Guy, a very part-time adjunct at UVM, is a member), in opposing faculty layoffs. Instead, the union argues, the university should save money by getting rid of some of its highly paid top managers, or at least cutting their pay.

Faced with a one percent turnout, the student and/or union leaders might have wondered whether going ahead with the protest demonstration would demonstrate more weakness than protest.

But let’s admire their tenacity, if not their wisdom. Off they went, and some of them refused to leave the president’s wing of Waterman Hall, the University administration building, when ordered to do so by the police (whose boss is Gary Margolis; no relation if anyone wondered). Meaning they were probably guilty of trespass, meaning arresting them was legally justified.

But maybe not smart. According to all the reports, the students weren’t hurting anything. This was not like Columbia University in 1968 when students trashed offices, destroyed property, and defaced books. This demonstration was arguably pointless and juvenile. It wasn’t dangerous. Arresting the demonstrators made the demonstration seem stronger than it was.  Leaving the kids in there, possibly to get bored and tired and drift out one by one, would have accentuated the ineptitude of the demonstration. Arresting them could arouse sympathy for them. The headline becomes “student arrested” instead of “demonstration fizzles.”

But you know what they say. Sometimes all that edjy-kay-shun gets in the way of common sense.

Oh, and speaking of education, the Greek whose last words asked a friend to make a sacrifice on his bahalf to Asklepios, the god of healing, was not Spiro Agnew. It was Socrates (up top; a photo of a statue in the Louvre), who just after drinking the hemlock, but before it had taken full effect, said (according to Plato), “Crito, I owe a cock to Asklepius. Will you see that the debt is paid”?

The News Guy was under the weather yesterday.

No big deal. Vital signs normal. Just aches, pains, sneezing. You know the drill.

So instead of creating deathless prose, he spent the day sleeping, drinking as many (non-alcoholic) beverages as he could manage, and, of course, sacrificing several small animals to Asklepios, the Greek god of healing (above).

(For extra credit, identify the famous Greek whose last words were to ask an associate to make a sacrifice to this god in his behalf).

Full recovery expected, by tomorrow it is to be hoped (not, note, “hopefully,” as folks commonly, but incorrectly, say in this context).