Economy of Vermont
Economy of Vermont
According to the 2004 U.S. Bureau of Economic Analysis report, Vermont’s gross state product was $22.1 billion. The per capita personal income was $32,770 in 2004. Over the past two centuries, Vermont has had both population explosions and population busts. First settled by farmers, loggers and hunters, Vermont lost much of its population as farmers moved west into the Great Plains in search of abundant, easily tilled land. Logging similarly fell off as over-cutting and the exploitation of other forests made Vermont’s forest less attractive.
Although these population shifts devastated Vermont’s economy, the early loss of population had the beneficial effect of allowing Vermont’s land and forest to recover. The accompanying lack of industry has allowed Vermont to avoid many of the ill-effects of 20th century industrial busts, effects that still plague neighboring states. Today, most of Vermont’s forests consist of second-growth.
Of the remaining industries, dairy farming is the primary source of agricultural income. An important and growing part of Vermont’s economy is the manufacture and sale of artisan foods, fancy foods, and novelty items trading in part upon the Vermont “brand” which is managed by the Vermont Secretary of Agriculture and fiercely defended by the Vermont Secretary of State and Attorney General. Examples of these specialty exports include Cabot Cheese, the Vermont Teddy Bear Company, Fine Paints of Europe, Vermont Butter and Cheese Company, several micro breweries, ginseng growers, Burton Snowboards, Lake Champlain Chocolates, King Arthur Flour, and Ben and Jerry’s Ice Cream. Vermont’s Agency of Agriculture, Food & Markets maintains the highest dairy standards in the U.S. Only France’s Minister of Agriculture, Food, Fishing and Rural Affairs (see Minister of Agriculture (France)) has standards for butterfat content equal to Vermont’s.
Captive insurance plays an increasingly large role in Vermont’s economy. With this form of alternative insurance, large corporations or industry associations form standalone insurance companies to insure their own risks, thereby substantially reducing their insurance premiums and gaining a significant measure of control over types of risks to be covered. There are also significant tax advantages to be gained from the formation and operation of captive insurance companies. According to the Insurance Information Institute, Vermont in 2004 was the world’s third-largest domicile for captive insurance companies, following Bermuda and the Cayman Islands.
Tourism is the state’s largest industry. In the winter, world famous ski resorts like Stowe, Killington Ski Resort, Mad River Glen, Sugarbush, Stratton, Jay Peak, Okemo, and Bromley draw skiers from around the globe, although their largest markets are Boston, Montreal and the New York metropolitan area. In the summer, resort towns like Stowe, Manchester, and Woodstock draw visitors looking for a mountain vacation. Resorts, hotels, restaurants, shops and attractions employ many people year-round.
Numerous summer camps contribute to Vermont’s economy. Trout fishing, lake fishing and even ice fishing draw outdoor enthusiasts to the state, as does the excellent hiking on the Long Trail. Several noteworthy horse shows are annual events. Golf courses are springing up with spas to service the weary client. One major fashion outlet mall isn’t really a mall but the old town of Manchester gentrified.
The towns of Rutland and Barre are the traditional centers of marble and granite quarrying and carving in the U.S. For many years Vermont was also the headquarters of the smallest union in the U.S., the Stonecutters Association, of about 500 members.
In recent years, Vermont has been deluged with plans to build condos and houses on what was relatively inexpensive, untouched land. Vermont’s government has responded with a series of laws controlling development and with some pioneering initiatives to prevent the loss of Vermont’s dairy industry.
In 2001, Vermont produced 275,000 gallons (1,040,000 l) of maple syrup, about one-quarter of U.S. production. The Vermont Department of Agriculture maintains a rating standard for maple syrup that is higher than the U.S. Department of Agriculture’s, all other states, and Canada.
Vermont collects personal income tax in a progressive structure of five different income brackets, ranging from 3.6% to 9.5%. Vermont’s general sales tax rate is 6%. The tax is imposed on sales of tangible personal property, amusement charges, fabrication charges, some public utility charges and some service contracts. There are 46 exemptions from the tax which include medical items, food, manufacturing machinery, equipment and fuel, residential fuel and electricity, clothing, and shoes with a purchase price of $110 or less. A use tax is imposed on the buyer at the same rate as the sales tax. The buyer pays the use tax when the sellers fails to collect the sales tax or the items are purchased from a source where no tax is collected. The use tax applies to items taxable under the sales tax. Property taxes are imposed for the support of education and municipal services. Vermont does not assess tax on intangible personal property. Vermont does not collect inheritance taxes; however, its estate tax is decoupled from the federal estate tax laws and therefore the state still imposes its own estate tax.
Vermont is the only one of the 48 contiguous states without a Target store. It is also the only state within the entire United States whose state capital does not have a McDonald’s restaurant.