Freedom in the 50 States

Vermont’s economic policies are much worse than its social policies. Indeed, it is a stereotypical blue state. It is among the worst states on economic freedom, doing poorly on both fiscal and regulatory aspects, but among the best on personal freedom despite a skid down to number six today from number two in 2020.

Vermont is the second-highest-tax state in the country. It also looks extremely fiscally centralized, with state government taking a whopping 10.8 percent of adjusted personal income and local government taking just 2.0 percent. However, this statistic is overstated, because Vermont counts the property tax as a state tax, even though towns have some discretion over the rate at which it is set locally. Vermonters would benefit from decentralization of tax and spending authority, as they have 3.5 effective competing jurisdictions per 100 square miles, well above the national average. Government debt is below average, but so are cash and security assets. Government share of GDP is slightly below average, but public employment is slightly above the 2022 average.

Vermont had a moment from about 2007 to about 2011 when it was doing better on regulatory policy. However, it fell consistently after that until 2018, when it bottomed out at 45th. It is among the worst states on land-use and energy freedom; one measure of local building restrictions based on the prevalence of the term “land use” in appellate court decisions shows a dramatic escalation in restrictiveness since 2000. The other measure—using the Wharton Residential Land Use Regulation Index survey and imputation forward and backward with cost-of-living data—shows improvement since 2005. The state has done little to restrain eminent domain for private gain. One of the toughest renewable portfolio standards in the country was enacted in 2016. Vermont did pass a basic statewide ADU law in 2022. In 2023, it passed a big housing reform package that should increase the state’s score in future years. On labor policy, the state has a very high minimum wage compared with local market wages. Vermont does not have a right-to-work law, but it does permit noncompete agreements. Health insurance mandated benefits are low, but managed care has been hobbled by several measures. The state legislature authorized single-payer health insurance, but the executive branch declined to implement the law, so we do not code this law in our index. Cable has been liberalized. Occupational freedom is one of the bright spots for Vermont for this dimension. It is better than the national average and comes in sixth. For instance, Vermont is one of only five states that do not license massage therapists. Vermont has sunrise review for new licensing proposals, and it is one of the few states with such a requirement to have taken it seriously, as evidenced by the review reports posted online. Nurse practitioners gained full independent practice authority in 2011. Insurance freedom is excellent, with a “use and file” system for most property and casualty lines, long-standing membership in the Interstate Insurance Product Regulation Compact, and no rating classification prohibitions. In general, Vermont is one of the least cronyist states. However, the state has a hospital certificate-of-need law, and in 2014, it enacted an anti-science and anti-consumer GMO (genetically modified organism) labeling law, since preempted by Congress. Its civil liability system is mediocre; the state has passed no tort reforms.

Vermont ranks sixth for gun rights—but it has slid in the rankings since the fifth edition of the freedom index. It has passed a large-capacity ammunition magazine ban, increased the minimum age to purchase a firearm, and expanded background checks. It is likely to slide again in the next edition with the addition of a waiting period law in 2023. Silencers were legalized in 2015. Vermont is one of the lowest states for alcohol freedom, with a state monopoly over wine and spirits retail sales and beer wholesaling. It is one of the better noninitiative states for cannabis, with decriminalization and a reasonably broad medical law. Legalization of personal possession and cultivation has only made it freer, as has the legalization of commercial sales in 2020. However, maximum penalties are rather high, high-level possession is a felony, and Salvia divinorum was banned in 2011. Vermont took some travel freedom with one hand and gave back more with the other in 2013–14, enacting a primary handheld cell phone ban, which research has shown to be useless under most circumstances, but also letting undocumented immigrants get driver’s licenses and placing some limits on automated license plate readers (which were sunsetted in 2015 but reenacted in 2016). Vermont has almost no legal gambling. Physician-assisted suicide was enacted in 2013. The state does well on educational freedom because some towns are allowed to “tuition out” students to private or public schools of choice, a century-old practice approximating a voucher law. Homeschool regulations are strict. Tobacco freedom is extremely low, with airtight smoking bans, vending machine and internet purchase restrictions, and high cigarette taxes. The incarceration rate is below average for the state’s crime rate, and victimless crime arrests are very low. Prison phone rates dropped by half in 2016 and then nearly half again in 2018. Vermont has one of the country’s better asset forfeiture laws, but it was weakened in 2015, and equitable sharing provides an easy path for law enforcement to circumvent forfeiture restrictions. Still, the state continues to perform well on this margin. Vermont has always been a legislative leader in marriage freedom and today retains its place with no waiting periods, blood tests, or ban on cousin marriage.