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The history of taxation in Vermont

(From the days of the “Grants” until 1900)

By Carol Hammond, Chair of the Vernon Board of Listers

It has been said there are only two things of which we may be certain, and one of them is taxes.  Before statehood, Vermont (formerly known as the New Hampshire Grants) was taxed by England, New York and New Hampshire.  In the beginning, taxation was simple and focused on specific needs, but as the population grew, taxation became more inclusive, focusing on every area of living.

At first, taxation was mainly for paying the cost of surveying the townships and building roads.  For example, in the township of Middlebury, in 1764, it was voted “to raise £25 on each right (parcel of land) and give the same to any man or men who shall, the ensuing summer, clear a cart road from the road last fall cut from Arlington to Crown Point….”  Highway taxes could be paid either in money or labor.  If a road went near or through a person’s land, that person was obligated to clear and maintain that section of road under the direction of the surveyors.  Inhabitants were compelled to work six days each year, or so many days as was necessary to keep the road in good repair.  The work of a team of horses or oxen and a man was equal to three days work of one man.  A penalty of four shillings was charged for every day a person refused to render his services.  Highway taxes in the form of labor were the noticeable feature of contribution for the support of government during the time that Vermont was under New York’s jurisdiction.

As townships were organized, county government was established and county taxation came into play. The earliest act authorizing a tax for the Grants not payable in labor was that of the Act of 1772 for erecting “a more convenient court house and gaol” for Cumberland County, of which Windham County was a part.  This act made provision for the election of supervisors and other officers.  Supervisors were authorized to raise, levy and collect from the inhabitants an amount not exceeding £250 to be applied towards the erecting and building such court house and gaol in the county.  Supervisors were to estimate the expenses of the county and to transmit to town officers the proportion for each town.  Tax was then levied on general property of the inhabitants.  Voluntary contributions were also made.

As Vermont, or the Grants, became more populated, towns were organized and taxation came under town government.  The basis of town taxes in early settlements is a bit vague as each town was free to choose its own method.  While the main source of taxes was most probably land, initially raw or unimproved land was not taxed.  Taxation of raw land was deemed unjustifiable because it often created hardship for the owners. Only after it was improved by building a road to it or building a home was the land taxed—and it was only the land, not the buildings thereon. The buildings were not taxed unless they were commercial, income-producing buildings. As time went on, the simplistic method of levying taxes for specific, local needs was replaced by imposing taxes on people in proportion to the amount of property they owned, of which land was the main element.

In 1749, Benning Wentworth, Governor of New Hampshire, started granting to speculators (many of whom were his friends) large tracts of land in what would become Vermont, despite claims on the territory by the province of New York.  Each township was divided into about 60 units of 250 acres each, with the first two units, or 500 acres, reserved for the Governor.  In order to guarantee the support of the clergy, one unit was reserved for the Society For The Propagation Of The Gospel In Foreign Parts, one unit for the Church of England as a glebe, one unit to each town for the first settled minister, one unit to the town for the benefit of schools, and the balance of the units for purchasers. Governor Wentworth, pocketing a hefty £20 fee paid by each of the grantees per town and reserving 500 acres of each township for himself, became very wealthy in the process.  In creating these new townships, the governor made it possible for his friends to make money also.  They acquired the unimproved land on which no taxes were levied because the land was worth nothing until developed.  As settlements were built, the settlers created value in the land as a whole as they improved it with houses, farms, sawmills and roads.  Wentworth and his friends could then sell their land holdings, profiting from the labor of the settlers whose work gave value to the land, thereby increasing land prices.

A general act of 1781 allowed towns to vote land taxes for churches, schools and bridges as long as the rate of two pence per acre was not exceeded.  Initially, the selectmen levied the tax and were responsible for expending the money raised.  Later, the Vermont General Assembly assessed the tax and appointed commissioners to expend it.  This is one of the first instances of the loss of local control.  The land tax was very unpopular and from 1840 until at least the outbreak of the Civil War, it disappeared completely. At the time the general act of 1781 was passed, most of the early settlers believed in a strong connection between church and state.  And while most embraced Christianity, they did not seek to force their beliefs on others and was so stated in the Constitution.  However, Vermont lawgivers made provision for the building and maintenance of religious institutions as they were convinced that young people needed religious instruction on a par with public school education. Over the years there have been many changes in laws concerning the taxation or exemption from taxation of churches, schools, property owned by churches and/or schools, as well as ministers and teachers. 

Highway taxes have always been a distinct category in taxation dating back to the days when Vermont was under the jurisdiction of New York.  One of the first acts of the General Assembly was to pass “An Act For Making And Repairing Public Highways.”  The main provision of this law required that every male between the ages of sixteen and sixty should work four days each year on the highways.  If the four days were not sufficient to maintain the roads, an additional tax could be assessed.  In 1803, a law was passed that towns could be indicted for neglecting to keep their roads in good repair.  In 1824, highway maintenance was funded by a tax on the grand list.  The rates were often set with one rate for the tax to be paid in money and a different rate if it was to be paid in money plus labor.  A portion of the highway tax was sent to the State and then reapportioned to towns according to the number of miles of road in the town.  By the late 1800’s, payment by labor had been wholly eliminated, which marked the end of a system that had lasted over one hundred and twenty years.

Before the Revolutionary War, schools were few and funded locally primarily by individuals.  The act passed in 1781 allowed towns to vote land taxes for the establishment and maintenance of schools.  This was followed by other acts which continued to increase in scope and complexity for the funding of education. At one point, non residents paid no school taxes but later, as the laws were changed, they paid their share as well.  The distribution of money from school funds and the land tax to the townships changed many times.  At first it was based on the number of school children in a district; later twenty five percent of the money collected was divided equally among the districts and the balance was divided in proportion to the number of students.  This percentage was changed first to a third and then to fifty percent before the district system was abolished in 1892, and the town system was adopted.  This system changed the rules again.  At that time, the selectmen of each town must appropriate for the funding of the schools each year a sum not more than one half and not less than one fifth of the grand list of the town.  The town was also free to raise more than that amount if necessary. 

The constitution of Vermont was modeled after that of Connecticut, from where many of our early leaders migrated. Article 9, Section 4 of the Vermont Constitution reads in part as follows: “Exchange or Protective Theory:  A member of society is protected in ‘the enjoyment of life, liberty and property;’ therefore he is bound to contribute his proportion toward the expense.”  The article was construed to justify a poll tax as a contribution for the protection of life and liberty, and a property tax for the protection of property.  This theory was accepted without question, as it was a part of the prevailing social contract theory of the State, which reduced the functions of the State simply to the task of suppressing violence and fraud. Section 37 of the Vermont Constitution states that “no public tax, custom or contribution shall be imposed upon or paid by the people of this State except by a law for that purpose; and previous to any law being made to raise a tax, the purposes for which it is to be raised ought to appear evident to the Legislature to be of more service to the community than the money would be if not collected; which being well observed, taxes can never become a burden.”  It would seem that this portion of the Constitution has not been read, much less followed, for many years, in light of the heavy burden taxation has become. This clause was hardly intended by the framers of the constitution to contradict the Exchange Theory.  However, it really expresses the modern theory of taxation—that the justifiable purposes of taxation are any social ‘wants felt in common by the members of a community.  

Today, we complain that there are changes made to the assessment and taxation laws almost every year.  But this is no different than it was two centuries ago. Taxation has evolved significantly since its inception thousands of years ago, just as it has in Vermont over the last two hundred years, but the constancy of the evolution is what can be depended on—an articulate reminder of the changelessness of change.

Much of the information for the above article was taken from a book entitled Taxation in Vermont by Frederick A. Wood in 1895, and from the Vermont Constitution.