Tax Rates Research Paper

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Gor Sargsyan

Political Partisanship in the Tax Rates of Vermont

Introduction:

Why do certain societies adopt different policies than others? Much of the literature on

political outcomes in the United States argues that partisanship is prominent among the

numerous causes to the policies adopted in any given state. Each work encompasses its own view

of the bigger picture, and though some argue that gender differences (Zipp and Plutzer 1985) and

socioeconomic factors (Fritz 1982) are important, studies also emphasize the importance of a

society’s aggregate partisan identity. I argue that political partisanship is the primary cause of tax

rate changes. To study this hypothesis I will examine the role of partisanship on tax rate

decisions made in town meetings in Vermont. In Vermont, partisanship has been born and

nurtured within the town meetings, and the source of influence on voting outcome is from the

groups of people in the meetings. In the sections that follow I outline a research design to

compare the evidence gathered in Vermont and assess which factors influence policy outcomes

in town meetings.

Voter turnout is based on countless factors that shape the general politics of our nation.

One main factor, most people will agree with, is population. In California, for example, the

percentage of people who vote in the presidential elections every year is less than half of the total

population. This means that the elected candidate, or chosen policy, is supported by the majority

vote of a minority group. This, in turn, creates doubt in the policy choices and sparks curiosity in

questioning the legitimacy of our governments. Yet, surprisingly, there is little known fact about

the nature of our government system and whether it should be changed. In this paper, I will

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present a case study of the state of Vermont, emphasizing the presence of voter biases and how

the political partisanship within town meetings affects tax rates.

The significance of the subject of political partisanship as an influence in policymaking

lies in its providing of information that aids in the examination of our voting system, how clearly

our voting system represents the true voice of the people, and what exactly influences its

outcome in the results of policy decisions. This essentially affects how individuals, like you and

me, run our daily lives. As Gerber and Huber show in their article “Partisanship and Economic

Behavior - Do Partisan Differences in Economic Forecasts Predict Real Economic Behavior?”

the political party in control, which has a large influence on policy decisions, affects consumer

habits. Gerber and Huber explain that consumers change their habits of living and spending

based on the policies that they “predict” or “expect” that the new candidate will impose. The

expected outcomes are with respect to the winning candidate’s political views, and economic

plans for the duration of his term. Whether the candidate is a Democrat, a Republican, a liberal

or a conservative, consumers already have an idea of future changes to be implemented and

thereby adjust their lifestyles to future policies ahead of time. Examining partisanship as a cause,

in our government could also explain holes in our system and offer better, more effective, insight

on managing our government, not only in Vermont, but the rest of the US. The acting influence

in Vermont’s town meetings is applicable to larger populations as well, because population size

has little to no effect on the partisanship of a select community.

From the data collected on the 247 towns in Vermont from the 1970’s to the present, I

have discovered a strong pattern between tax rates and political affiliation of the towns. After

running tests on the relationship of partisanship and tax rates I concluded that tax rates, the

dependent variable, are directly correlated with partisanship, the independent variable. As

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partisanship toward a Democratic party increases the tax rates increase, and in the same manner,

as Republican partisanship increases, tax rates decrease. This pattern is expected in most

Democratic systems of governments, and Vermont is a case study of this phenomenon.

A democracy is a system of government based on the consent of the governed. A

democratic government emphasizes the constitutional equality of each citizen in the decision

making process. In most of the country, elections provide citizens with an opportunity to

influence public policy. Usually, states tend to hold public election through the use of secret

ballots or by mail. In this way, anonymous public opinions are collected and voiced as a majority

decision and policy is created. However, not all states have the same voting procedures, and not

all towns hold annual town meetings to determine local policy. This makes us question the

accuracy and reliability of the final decision as it relates to public opinion, and the method of

collecting votes subject to possible variables influencing the voice of a majority.

In Vermont town meetings, locals decide these issues. The voting outcomes for elections

of state and federal officials appear to correlate with the amount of tax imposed in the town

meeting. Simply put, political partisanship at the voting booth should match the local policy

choices taken in town meetings. I expect that towns voting for Democrats will have higher taxes

and towns electing Republican parties will have lower tax rates. The focus of this paper will be

the change in tax rates specifically as it relates to a town’s election voting outcomes. Some

Deliberative Democracy scholars argue for example, that in a well-connected network of

discussion, like those of town meetings, partisan attitudes will harmonize, having provided

people with a unique setting of interaction. Stemming from the polarization of a network of

agreement within a town meeting, the gradual emotional attachment to specific candidates form

with disregard to logical decision-making based on factual information (Parsons 2010).

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However, the tax rates in the towns of Vermont should still be relevant and proportional to the

voting partisanship of the individual. Do towns with higher tax rates tend to vote for democratic

candidates while towns with lower tax rates have Republican Party leaders? This question can

best be answered through data analysis of past presidential elections, used to determine political

orientation of Vermont towns, while keeping track of the tax rates established during the terms

of presidency. The collected election data from 1970 to 2012 will show us each town’s partisan

affiliation based on their vote for either the Democratic or Republican Party candidate. In

accordance, the data on tax rates will show us any patterns of proportionality to partisanship as it

changes, and to the extent that it changes, in each town.

Literature Review:

Group identity affects attitudes and behavior of individuals. This effect is equally and

actively present in political environments. The article “Party Affiliation, Partisanship, and

Political Beliefs” provides answers to the question of external influences acting upon voter

turnout in elections. Gerber and his coauthors discuss the connection that exists between voters’

political affiliations, and the decisions that the voters will make on Election Day. In particular,

Gerber suggests that there is a direct correlation between partisanship and voting turnout based

on a controlled experiment conducted by him for the first time. The subject in this case is the

state of Connecticut in comparison to Vermont. Unlike Vermont, Connecticut does not allow

citizens to vote unless they claim an affiliation toward a specified political party. There were two

groups of subjects in the experiment: the treatment group, in which the researchers intervened,

and a control group in which the researchers had no influence in pushing them to choose a

direction. The experiment, in regards to this, was conducted with a group of randomly selected

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registered voters who claimed to be neutral. These registered voters were given a pre-survey

before the election without requiring voters to choose a political affiliation: the survey was

examined for tendencies toward a certain party. Before the election, each person was sent a letter

reminding them that they must choose a political party in order to be eligible to vote in the actual

election; most chose the party that they had shown tendencies toward on the pre-survey. When it

was time for the actual election, researchers took note of the changes in this same group of

people. When they chose a political party there was an increase in partisan identification. “Our

findings support the theoretical argument that partisanship is a group identity that induces

individuals to evaluate members of their group more favorably than members of opposing (party)

groups” (742). In this same way, I hypothesize that Vermont elections should show similar

partisan influence on the voters’ choices. Of course, partisanship does not imply citizen

participation in active politics, it simply points out the bias in voting behavior based on

individual preconceived notions and judgments.

Much of the existing literature emphasizes that partisanship is in fact a major component

in public policy. At least three conclusions, validating the strong presence of the influence of

partisanship in a community, can be drawn from the existing theories:

1: Partisanship has a strong effect on political and economic behaviors and attitudes.

2: Party affiliation is an underlying factor in candidate choice.

3: A citizen’s partisan identity toward a political party reflects their economic decisions.

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Gerber has written a complementary article coauthored with others, called “Partisanship

and Economic Behavior.” He continues to support the idea of partisanship having a significant

role in elections, and extends those results to economic changes in consumer behavior. “There is

ample evidence linking partisanship to candidate choice and political participation” (Gerber and

Huber 2009, 423). Their studies have shown that before and during the election period, consumer

habits differ. The assumption is that consumers predict forthcoming economic policies based on

the likelihood of a candidate winning, and the actions they will take in reform of the system. This

study is less focused on a single state, however, and more focused on “mass politics.” “Citizens

appear to be adjusting their consumption based on expected income rather than today’s income”

(Gerber and Huber 2009, 424). When citizens expect a Democratic candidate to be elected and

thereby, raise taxes, they would cut down spending and save more in preparation, while the

opposite trends displayed dominance for a Republican candidate. In an expected similar case,

Vermont generates higher tax rates under Democratic leadership and lower tax rates in a

Republican government. Gerber points out some faults in his claim, clarifying that consumption

could take place by consumers from nearby counties that are of different political affiliations,

altering the survey results. That will be discussed in greater detail, however the conclusion

remains consistent that partisanship influences political outcomes. The partisanship in Gerber’s

argument lies in expected economic policy change that conducts political adjustments in the lives

of citizens, hence influencing their political decisions. This same type of partisanship leads me to

my research in its effects on decision-making in Vermont town meetings.

These town meetings have developed as a system of government, which Bryan

juxtaposes with the Democracy of the pre-modern world, over twenty-five hundred years ago, in

Athens, Greece. He calls this system a “real democracy” (Bryan 4, 2004), and in comparison,

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argues that Vermont has kept its roots as a “real democracy” and most people are not even aware

of this. A “real democracy” is a jurisdiction in which all of its people are citizens and eligible to

participate in its politics. In Athens, those who were not citizens still abided by the laws. The

high taxes in place for the citizens of Athens also applied to non-citizens that were nonetheless

taxed equally, but did not receive the services and benefits as citizens. In the same way, Vermont

uses this tactic to its advantage. Fritz points out that this method of taxing non-citizens, or

tourists, was taken advantage of by Vermont as a monetary alternative to reduce the burden on

residential property tax (Fritz 382, 1982). Athens also manipulated agendas, as do towns in

Vermont. Items that may face opposition are placed at the end of the list so that minority groups,

such as farmers, would have to go home to milk, and, near the end, be underrepresented when

the agenda is called to a vote. In this sense, Bryan calls Vermont a “real democracy,” saying that

it comes with the bad and the good, but the bottom line is that a “real democracy” is not partial.

Every individual in a town makes the laws for themselves, and the officials don’t have much

power over them.

Theory and Hypotheses:

. Many questions arise when considering the development and strategy of a town’s tax

rate. Whether tax rates are based off of mutual feelings among policy-making groups or they are

based on strategic decision-making, there is reasoning behind every action in politics. Scholars

offer differing and, at times, controversial explanations for political outcomes in the state and its

towns. Based on collected evidence from historic records of over 240 towns in the state of

Vermont, I have gathered enough analytical data to offer a data-based argument on the cause of

state taxes and what external factors affect them. I also distinguish how these methods differ

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from those of others. Decisions in politics are extremely complicated and require more than

pattern analysis because of the role of human nature in government. The biases that are born

from human environments may act as a valid explanation as to why policies are as they are. In

terms of tax rates in Vermont, I argue that partisanship plays a major role in the direction of

public policy, and its effects are strongly felt in Vermont. Local tax rate decisions are made in an

annual decision-making body consisting of eligible voters who choose to attend the annual town

There is a direct correlation between the levels of partisanship in any given democratic system as

it relates to the amount of tax rate imposed in that region.

This leads me to hypothesize the following:

H1: Partisanship has a direct effect on the imposed tax rates of a town in Vermont.

H2: If partisan identification favors the Republican Party, then tax rates are expected to be

lower.

H3: The higher the partisan majority in a town, the greater is the effect on the shift of tax rates

from the state average.

Even though partisanship is the main cause of differences in tax rates across Vermont

towns, there may also be other variables that affect partisanship and tax rates indirectly. There

are additional hypotheses that could also be factors in the tax rate decision process. These

alternative hypotheses give more insight as to how further influences may have an impact on

partisanship in Vermont.

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H4: Partisanship may be directly or indirectly affected by external socioeconomic factors like

tourism, and urbanization in select Vermont towns, which in turn affect the tax rate.

H5: Variable income levels, and population size are the root causes to variance in partisan

identity in a town, which in turn affect the tax rate.

Each of the hypotheses can be tested with a common method. Since there is a mass of collected

data on town meetings, voting rules, tax rates and political affiliation in each of the towns in

Vermont, the simple method is to use regression analysis to compare the relative influence of

each of the independent variables on the dependent tax rate outcome. This method offers a

repeatable test of the various hypotheses. In order to test these hypotheses we must first explore

the relationship across towns between tax rates and partisanship. To observe this relationship, I

have collected data from the state archives of Vermont for each individual town. As I run

statistical analyses of the data, I anticipate finding a correlation to form between partisanship and

tax rates. A measure of higher Republican partisanship should correlate with lower tax rates, and

to the same extent a measure of higher Democratic partisanship with higher tax rates.

Comparable statistics would be a collection of ratios of democratic towns to republican towns

that would lead to aggregate tax rates over time. To run the tests and prove the hypotheses I

coded the data from the 1970s to the present, on Democrat or Republican votes in the

presidential elections, total tax rates, school tax rates, population, population under 18, and

annual wage. I first tested the relationship between tax rates and partisanship. From this we can

determine what exactly occurs as average partisanship in Vermont increases, so to say

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partisanship in Vermont goes from least democratic, or highest republican, to highest democratic

level. I then evaluated the strength of this relationship by incorporating additional variables in

the statistical test. To do this I tested the same dependent variable, total tax rate, with different

independent variables such as population. From that, I examined the degree of partisan

orientation in each town by measuring the percent Democrat and percent Republican as it relates

to the total tax. Also, I measured the total tax rate in the same time period as the towns

experienced an increase in tourism to compare with the partisanship during its neutral economic

state.

Evidence:

The following visuals are a collection of statistical data to show the relationship between

partisanship and tax rates as well as to disprove possible alternate hypotheses relevant to the

data. As we examine the figures, it is important to note that the main figures in these tables are

the coefficient, the t-test and the p-value of the test. These figures will clarify the relationship

and its strength between the tested independent and dependent variables.

In the summary analysis of Figure 1, we can see information on all of the variables that

are involved in this project. Each section of the independent variables will be discussed

individually to isolate results for clarity and accuracy.

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FIGURE 1: Vermont summary analysis:

.

popden 8574 189.573 519.36 0 5111.092 population 8610 2495.643 4106.259 0 42645 totaltax 6062 2.773971 2.01754 0 24.89 schooltax 9132 1.713645 1.272047 0 21.89 republican 8836 .4635177 .1183995 0 .96875 democrat 8836 .5364823 .1183995 .03125 1 p_over65 2766 .1281443 .0546335 0 .7142857 p_under18 2766 .2644183 .0450244 0 .4836065 p_white 2766 .9867098 .011972 .9012433 1 p_black 2766 .0026792 .0028974 0 .0226572 p_asian 2766 .0038599 .0046614 0 .0539552 p_nativeam 2766 .0034355 .0049408 0 .0517492 percapitai~e 5676 12255.16 5393.124 3072 37210medianhous~e 5181 28211.32 9790.703 5345 68091familypove~d 2805 39.27255 71.13499 0 798 annualwage 6868 17779.01 7661.138 2751 109928 area 8864 32.04243 15.08086 1.430614 73.00948 tcode 9461 8185.179 4326.449 1003 14786 schdid 9461 133.2821 75.42402 1 263 county 0 year 9461 1994.507 10.41992 1976 2012 townname 0 Variable Obs Mean Std. Dev. Min Max

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FIGURE 2: Ratio of Political Parties

democrat

republican

democrat republican

Ratio of Partisan Majority in Vermont

We can see in our first piece of evidence that already, the percentage of Democrats in

Vermont overwhelms the percentage of Republicans. According to our summary analysis table,

this ratio is by 54% to 46%. This tells us the partisan identity of the Vermont state as a whole. To

continue the tests, we must place this into perspective. Knowing that Vermont is a Democratic

state, we are able to make assumptions, which we will test with the following evidence.

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FIGURE 3: Change in total tax over time.

24

68

Tota

l tax

1975 1980 1985 1990 1995 2000Year

Democratic Republican

Tax Rates of Democratic vs. Republican Towns

Our argument is that total tax tends to increase as partisanship increases. Knowing that

Vermont, on average, is a Democratic state, we observe that over time its total taxes, in blue,

have been dropping. Though this may be unusual based on our expectations of Democrats having

higher taxes, it is not unlikely. We can see that the total tax is dropping, however, if we take a

closer look, there is a fine definition between the two lines. The blue line, Democratic, though

intertwined with the red line, Republican, at the initial stages of our sample size, for any

multitude of reasons, it is not below the red line. The tax rates for Democratic towns have

decreased at a lower rate than the tax rates for Republican towns. After around 1980s or so, they

flatten out. The area of intertwined relations in the 1970s to 1980s, as displayed on the graph, is a

simple deviation from its original trend. To exemplify, a soccer team who follows a trend of

winning, receives a goal from the opposing team at some point in time. The soccer team that is

continuously winning is the trend of Democratic towns continuously having higher tax rates than

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Republican towns. The winning soccer team getting scored on by the opposing team is an

unlikely event considered to be a deviation from the norm of the soccer team’s trends. Similarly,

Democratic towns having lower taxes than Republican towns is a deviation from the usual tend

of tax rate proportions. In retrospect, human nature is a factor in the unexplainable shifts from

developing patterns. However, one explanation can be found in the following table.

FIGURE 4: School tax rates over time

_cons 124.729 4.98375 25.03 0.000 114.9592 134.4988 year -.0618619 .0025204 -24.54 0.000 -.0668028 -.056921 popden -.0001036 .0000316 -3.28 0.001 -.0001656 -.0000416 population 9.48e-06 3.80e-06 2.49 0.013 2.02e-06 .0000169democrattown .2099147 .02797 7.50 0.000 .1550842 .2647451 annualwage 4.32e-06 2.57e-06 1.68 0.092 -7.11e-07 9.36e-06 area -.0002577 .0008913 -0.29 0.773 -.002005 .0014896 schooltax Coef. Std. Err. t P>|t| [95% Conf. Interval]

Total 6965.0016 6496 1.07219852 Root MSE = .94308 Adj R-squared = 0.1705 Residual 5772.2053 6490 .889399892 R-squared = 0.1713 Model 1192.7963 6 198.799383 Prob > F = 0.0000 F( 6, 6490) = 223.52 Source SS df MS Number of obs = 6497

School tax makes up a large portion of the total tax because it is a major source of revenue for

the government. We can also conclude this from the R-squared variable measured at 0.1713,

considering that it is a high value, and shows a strong relationship. Therefore, as a contributing

explanation to the intertwined portion of the above graph, it is worth mentioning that between the

1970’s and 1980’s, there was a dip in school tax rates at one point due to state court rule on how

schools were funded. This decrease in school tax rate also decreased the total tax rate, and the

significant difference is visible in the visual above. Of course, it is very likely that there may be

other contributions as to why the trend is slightly inconsistent in that period of time. However, as

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part of the big picture, we see that the average trend of school tax rates increases as democratic

partisanship increases, based on the coefficient of the variable “democrattown,” and its P-value

of less than 0.05 for confidence in our calculation.

FIGURE 5: Partisanship over time

0.2

.4.6

.81

dem

ocra

t

1980 1990 2000 2010year

Growth democratAverage growth

Democratic Partisanship Over Time

Complimenting Figure 3 and 4, this graph shows the percent of each town that identifies

as Democrat over time. We can see the growth of Democrat over time, along with an average

linear approximation to simplify the graph. As you can see, there are outliers present in our data.

These outliers are more present in smaller towns, which I classify as having a population of less

than 1000 people. The noise level in these towns is much greater than large towns, possibly due

to popular influence in town meetings of certain towns, or simply because some towns very

strongly identify with one party or another. However, the general trend is the gradual increase of

democratic party affiliation over time.

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FIGURE 6: Regression analysis of democrat to total tax.

_cons 321.6079 12.06994 26.65 0.000 297.9456 345.2702 2000 0 (omitted) 1999 -.3506705 .1107308 -3.17 0.002 -.5677504 -.1335907 1998 -.5361313 .1088028 -4.93 0.000 -.7494313 -.3228313 1997 -.7472018 .107497 -6.95 0.000 -.9579419 -.5364616 1996 -.9526746 .1065895 -8.94 0.000 -1.161636 -.7437135 1995 -1.206911 .1047563 -11.52 0.000 -1.412278 -1.001543 1994 -1.369321 .1031753 -13.27 0.000 -1.571589 -1.167054 1993 -1.580963 .1015683 -15.57 0.000 -1.78008 -1.381846 1992 -1.661785 .1007334 -16.50 0.000 -1.859266 -1.464304 1991 -1.608861 .0991067 -16.23 0.000 -1.803153 -1.414569 1990 -1.597226 .0995798 -16.04 0.000 -1.792445 -1.402007 1989 -1.689232 .0997527 -16.93 0.000 -1.88479 -1.493674 1988 -1.865114 .0999403 -18.66 0.000 -2.06104 -1.669188 1987 -2.021748 .101247 -19.97 0.000 -2.220235 -1.82326 1986 -2.191923 .1028396 -21.31 0.000 -2.393533 -1.990313 1985 -2.361502 .1049144 -22.51 0.000 -2.567179 -2.155825 1984 -1.977939 .1075425 -18.39 0.000 -2.188768 -1.767109 1983 -1.808346 .1085497 -16.66 0.000 -2.02115 -1.595542 1982 -1.663901 .1101053 -15.11 0.000 -1.879754 -1.448047 1981 -1.571632 .1119582 -14.04 0.000 -1.791118 -1.352146 1980 -.9854743 .1156357 -8.52 0.000 -1.21217 -.7587787 year year -.1599524 .0060842 -26.29 0.000 -.1718799 -.1480248 popden -.0000874 .000046 -1.90 0.057 -.0001776 2.75e-06 population .0000358 5.37e-06 6.66 0.000 .0000252 .0000463 democrat 1.226576 .2272842 5.40 0.000 .7810013 1.67215 annualwage -8.26e-06 4.45e-06 -1.86 0.063 -.000017 4.60e-07 area -.0022655 .001319 -1.72 0.086 -.0048514 .0003203 totaltax Coef. Std. Err. t P>|t| [95% Conf. Interval]

Total 12184.2432 5134 2.37324565 Root MSE = 1.2286 Adj R-squared = 0.3640 Residual 7710.29059 5108 1.50945391 R-squared = 0.3672 Model 4473.95259 26 172.0751 Prob > F = 0.0000 F( 26, 5108) = 114.00 Source SS df MS Number of obs = 5135

note: 2000.year omitted because of collinearity

This figure is also a continuation of evidence from figure 3 and 4. Based on the graph,

this table explains the detailed structure of what was happening. As I previously explained, the

Democrat and Republican values were both decreasing. However, Democrat was decreasing at a

lower proportional rate than Republican. Therefore, Democratic towns still had higher taxes than

Republican towns. As we can see on the table, the democrat variable has a positive coefficient

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showing growth, and a P-Value of below 0.05, and T-test of above 1.96, meaning that the

generated statistic is at a very high confidence rate in its accuracy.

FIGURE 7: Regression summary.

_cons 248.3034 16.95446 14.65 0.000 214.9056 281.7013 year -.1240887 .0085768 -14.47 0.000 -.1409838 -.1071936 popden -.0001063 .0000755 -1.41 0.160 -.0002549 .0000424 population .0000336 6.95e-06 4.83 0.000 .0000199 .0000472 democrat 2.454509 .4861244 5.05 0.000 1.496914 3.412104 annualwage -.0000114 9.38e-06 -1.21 0.226 -.0000299 7.09e-06 area -.0010311 .0032293 -0.32 0.750 -.0073923 .0053301 totaltax Coef. Std. Err. t P>|t| [95% Conf. Interval] Robust (Std. Err. adjusted for 242 clusters in townname)

Root MSE = 1.3555 R-squared = 0.2266 Prob > F = 0.0000 F( 6, 241) = 75.42Linear regression Number of obs = 5135

As I mentioned before, to prove the accuracy of our testing for partisanship, I include

multiple variables to show their counteracting affects and act as alternative hypotheses to

disprove our hypotheses. As we can see, most of these variables have very low significance at a

very high confidence rate. Also, population as a single factor alone, seems to have close to zero

effect on total tax as its coefficient is nearly zero with a P-Value of below 0.05. However, we

continue to see the variable Democrat with a high coefficient showing growth and confidence in

the accuracy of that growth in total tax as partisanship increases.

FIGURE 8: Regression analysis: influence of population

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.

_cons 386.2727 11.63407 33.20 0.000 363.4588 409.0866 year -.1916498 .0058188 -32.94 0.000 -.2030602 -.1802394 republican -4.893252 .337947 -14.48 0.000 -5.555952 -4.230552 totaltax Coef. Std. Err. t P>|t| [95% Conf. Interval]


. regress totaltax republican year if population<1000

_cons 381.3795 11.51041 33.13 0.000 358.808 403.9509 year -.1916498 .0058188 -32.94 0.000 -.2030602 -.1802394 democrat 4.893252 .337947 14.48 0.000 4.230552 5.555952 totaltax Coef. Std. Err. t P>|t| [95% Conf. Interval]


. regress totaltax democrat year if population<1000

_cons 354.7595 8.012116 44.28 0.000 339.0504 370.4685 year -.1759554 .0039954 -44.04 0.000 -.1837891 -.1681217 republican -4.015794 .2739618 -14.66 0.000 -4.552941 -3.478647 totaltax Coef. Std. Err. t P>|t| [95% Conf. Interval]


. regress totaltax republican year if population>1000

_cons 350.7437 7.879962 44.51 0.000 335.2937 366.1936 year -.1759554 .0039954 -44.04 0.000 -.1837891 -.1681217 democrat 4.015794 .2739618 14.66 0.000 3.478647 4.55294 totaltax Coef. Std. Err. t P>|t| [95% Conf. Interval]


. regress totaltax democrat year if population>1000

To go into detail on population, this regression analysis is a comparison of towns with

more and less than 1000 people. To classify small towns and large towns, I use population size

of anything below 1000 to be a small town, and anything greater than 1000, to be a large town.

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These size classifications are in consistency with Fritz’s testing of small versus large towns in

terms of tax and vacation homes (Fritz 383, 1982). Furthermore, as run the regression we can see

that population continues to be so insignificant in the differentiation of total tax, which leads us

to conclude that population alone does not make a difference, and that small towns are not

different than large towns in terms of influence on total tax based solely on population size.

Richard G. Fritz provides an alternative hypothesis of having socioeconomic influences

on total tax rate of a town. He conducted a test to see how tourism and vacation homes affect the

tax ratesHis analysis was based on tourism in select towns, and the development of vacation

homes that are affecting the total tax rate of the town. He argues that the government provides a

monetary alternative in terms of paying taxes for hotel owners that attract tourists. In a town with

high tax rates, for example, these tourists would incur the same amounts of taxes without

receiving any of the governmental benefits that come from having high taxes. However, unlike

the tourist attractions, the impact of a vacation home, acts as a tax burden because it is an extra

portion of land to be responsible for. However, it is also possible, that the effects of vacation

homes, in small towns especially, would increase overall property value. Based on his evidence

and testing, Fritz’s results do not fully take into account the source of tax divergence between

urban and developed rural towns in Vermont, and need to determine if there are other equally

plausible explanations.

Conclusion:

Vermont is a state with its own unique set of procedures and rules. That is what makes

Vermont an interesting state to study; to examine their methods of conducting and developing

policy in the towns, which in turn would give us insight on our own methods of decision-making.

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As we have discussed, partisanship has a strong correlation with the increase or decrease of total

taxes in the state of Vermont. Democratic towns are usually tended toward higher tax rates, and

Republican towns toward lower tax rates.

It is not without the consideration of alternatives that the reading of this paper comes to

an ultimate end. Undeniably, one cannot avoid considering the possibility that there are other

relationships, which lead to the growth or decline of tax rates. To take this idea into perspective,

the tax rates could be the independent variable affecting the partisanship as the dependent

variable instead. As is yet to be proven, the increase of tax rates could be the magnet force

drawing in surrounding Democrats, or if the tax rates are decreasing, then Republicans as the

population of the town shifts. It is true that we disqualified population as an acting influence in

the change in tax rates, but those tests, admittedly, are very limited to strict terms of numbers and

not demographics. The shift in population in terms of demographics, would involve the shift in

partisanship based on the shift in taxes. As the taxes increase, more Democrats choose to live in

the select town, and percentage of Republicans in the population declines in relation to the

growth of the number of Democrats.

Another explanation could involve, instead of a shift in population demographics, a shift

in ideals. The increase in tax rates could incentivize the Democrats who are not for such high

taxes to change their partisanship in order to redirect the flow of taxes in the Vermont towns and

vote Republican. This is to say that partisanship changes because of tax rates acting as the

independent variable influencing partisanship. Even though our tests show that Democrats tend

toward higher taxes, and that a higher percentage of Democrats leads to a higher percentage of

tax rates respectively, there are still many outliers present as is common in any situation

involving human nature. Our regression analyses are not based on an individual level, but at a

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town level showing the partisanship of the entire state of Vermont as a collection of towns. Of

course, the greater the sample size, the more accurate the results will be, but the results, no

matter how accurate, cannot explain 100% of the cause. Republicans as well may also have a

change of heart as has often occurred in the past, and vote for higher taxes. This could be due to

philanthropic reasons, or simply because they believe it is more fair to pay higher taxes.

However, these suggestions are, again, outliers, in the results we have gathered, that should not

be unaccounted.

If partisanship is not taken into account, for example, a cause of tax rates increasing

could be because of a large amount of an under 18 population, forcing the government to provide

more funding to schools and build larger ones, for which they would need more money and

would have to raise taxes.

All in all, though there is simply a possibility for these ideas to be implemented, there is

not sufficient correlation or an initial expectation for the cause to be in lieu of the evident

observations in this paper. As we can see, all of the tests that were performed to investigate the

reliability of my argument, proved to be in very strong correlation to the likelihood of

partisanship being a cause to tax rate change. To summarize my explanations, the P value being

less than .05 suggests a large amount of confidence in the relationship.

Bibliography

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Bryan, Frank M. (2010). Real Democracy: The New England Town Meeting and How It Works. University of Chicago Press.

Gerber, Alan S. Gregory A Huber, Ebonya Washington. 2010, “Party Affiliation, Partisanship, and Political Beliefs- A Field Experiment.” American Political Science Review. 104. No.4. (November), pp. 720-744.

Gerber, Alan S., Gregory A. Huber. 2009, “Partisanship and Economic Behavior- Do Partisan Differences in Economic Forecasts Predict Real Economic Behavior?” The American Political Science Review. 103. No. 3. (August), pp. 407-426.

Fritz, Richard G. 1982, “Tourism, Vacation Home Development and Residential Tax Burden: A Case Study of the Local Finances of 240 Vermont Towns.” American Journal of Economics and Sociology. 41, No. 4. (October), pp. 375-385.

Parsons, B. M. (2010). Social Networks and the Affective Impact of Political Disagreement. Political Behavior. 32 No. 2. pp. 181–204.

Zipp, John F., Eric Plutzer. 2004, “Gender Differences in Voting for Female Candidates- Evidence From the 1982 Election.” Oxford University Press. 49, No. 2. (Summer 1985), pp. 179-197

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