Greg Hughes: There is a better way.

Vermont is facing an affordability crisis, and it is time to rethink our property tax system to ease the financial burden on working residents. According to 2023 US Census data from the Tax Foundation, Vermont ranks fifth nationally for property taxes paid by primary homeowners. These high taxes are undermining our economic vitality. Workers who power our local economy increasingly cannot afford to live here, leading to labor shortages that further weaken Vermont’s financial health.

But it does not have to be this way.

South Carolina offers a compelling example. Ranked 47th in the same Tax Foundation report, South Carolina has, for two decades, taxed primary residences differently from second homes. This approach allows local workers to afford housing while generating substantial revenue from second homeowners to fund public schools. Vermont could benefit from a similar strategy.

Another model worth examining is Montana. Like Vermont, Montana is rural, dotted with small towns, and rich in natural beauty. Both states saw a surge in population during the COVID-19 pandemic, which drove up home prices and property taxes. In response, Montana enacted bipartisan property tax reforms led by Republican Governor Greg Gianforte. These reforms shifted the tax burden away from residents and toward non-resident property owners and short-term rental operators.

Montana’s system creates clear winners and losers. Residents who earn their living locally benefit from reduced taxes on primary homes and long-term rentals. Lower-value properties are protected through tiered rates. Meanwhile, second homeowners, short-term rental operators, and owners of high-value properties pay more.

If Vermont adopted a similar approach, the impact could be transformative. Speculation in the second-home market would slow, easing competition for housing and making it more accessible to local buyers. At the same time, Vermont could maintain—or even increase—its overall tax revenue by redistributing the burden more equitably.

Affordability is the core issue. If Vermont wants to attract young professionals and retain families, we must rethink who pays what in property taxes. Shielding primary homeowners while asking more from second homeowners is the key to restoring balance in our housing market and revitalizing our economy.

Greg Hughes