Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, February 1, 1992 TAG: 9202030156
SECTION: EDITORIAL PAGE: A-11 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
HOW TO RAISE TAXES (CONTINUED)
TODAY'S letters columns feature readers' reactions to our recent editorial series on Virginia taxes. The letters merit further dialogue:
We erred, writes Phillip Short of Roanoke, in saying that doubling Virginia's taxes on beer and wine would bring its rates in line with other states. But that's not quite what we said. Doubling the tax on all alcoholic beverages, we said (citing state Board of Health calculations), would bring Virginia in line with such states as North and South Carolina, Florida and Alabama.
Short's key point is that higher alcohol taxes would hurt the beer and wine industry, at a time when Virginia needs all the industry it can get. His is a limited version of the broader argument advanced by Robert Huddleston of Covington: Taxes cause recession, because they take money out of consumers' pockets.
Wrong. The fallacy is the erroneous assumption that tax money, once collected, goes nowhere. Tax dollars don't vanish into thin air; they are reintroduced into the economy in the form of government spending.
Economies now eating America's lunch are following a lesson that America once knew but sometimes seems to have forgotten: Who spends the money, government vs. the private sector, ultimately counts for less than what the money is spent on - immediate consumption vs. productive investment.
Should the marketplace be replaced by government as the principal allocator of goods and services? Of course not. But Virginia is not a high-tax state, and our proposals would not make it so.
Is public spending always productive? Of course not. But it's economic suicide to starve public investment in such things as education, preventive health care, the physical infrastructure.
True, tax policy can hurt specific economic sectors. It's certainly possible, for example, that higher taxes on booze and cigarettes would mean Virginians would spend less on those products. But if the net effect is fewer bartenders and more schoolteachers, fewer cigarette vendors and more primary-care physicians, it's no bad bargain.
Our proposal to up the state cigarette tax is fine, says Carolyn White of Blacksburg, but other tobacco products also should be taxed more heavily. No quarrel here, though it should be understood the big money is in cigarettes.
We are absolutely correct, says Kitty Boitnott on behalf of the Roanoke County Education Association, in urging the state to raise taxes earmarked for schools rather than wait for revenue miracles. The public isn't getting its money's worth from the schools as it is, counters Byron A. Mullen of Roanoke, and putting more dollars into education would be like rewarding incompetence.
Mullen's assessment is too harsh; it fails, for example, to consider the external social forces with which the schools today must deal. And there is a link between what money can buy - better teachers, smaller classes, more library books and newer lab equipment, broader curricula - and educational quality.
The link isn't automatic. Which is why we also called for stricter accountability for school performance at both the state and local levels, and for the schools to search continually for more effective ways to do their job.
If the schools see the money as a "reward" for themselves, forget it. The only reward ought to be better education for Virginia's children.
It's generally true that Virginia's income tax is about one-fifth the federal tax on the same income, writes Cornelia Smith of Narrows, but not always: The state's low personal exemption ($800) means large families near the bottom of the income ladder can end up paying several times more for the state than the federal tax.
We tried to keep an eye on the principle that taxes should be imposed according to ability to pay. Our aim was less tax reform, however, than putting forth doable ways to get the resources needed for adequate investment in Virginia's future. At the moment, the latter is the more urgent need.
Smith's point, though, is well-taken. If the federal Social Security tax were also figured in, Virginia's income tax would look better in the comparison - but only because the Social Security tax is so regressive. Making the commonwealth's overall tax system more progressive ought also to be on Virginia's agenda.