Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, February 27, 1992 TAG: 9202270478
SECTION: EDITORIAL PAGE: A6 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
RECIPE FOR A HIGH-TAX STATE
THE VIRGINIA General Assembly isn't earning itself points for fiscal responsibility and attention to the commonwealth's long-term health. It's doing quite well, on the other hand, in the neglect, cowardice, delay, shame and sham departments.Failure so far to produce bond-issue legislation, for which practically everyone recognizes the need, is only part of the story. Another key chapter is the apparent deaths of modest tax-increase proposals that would have provided urgently needed revenues for such things as improved health care for disadvantaged children and increased support for poor school districts.
Barring resurrection by parliamentary maneuver, the assembly has killed proposals:
To introduce a new top income-tax rate of 6.25 percent, up from 5.75 percent, on taxable income of more than $100,000 for a married couple.
To ask voters to increase the sales tax from 4.5 to 5 percent.
To increase the state's absurdly low cigarette tax of 2.5 cents per pack or, alternatively if less preferably, levy a new tax on health-care providers.
To defer repeal of the sales tax on non-prescription drugs.
Curiously, it's not as if Virginia's politicians were utterly afraid to vote for higher taxes.
The income-tax increase, to provide money for schools, won bipartisan support in the state Senate. The sales-tax proposal, also to provide money for schools and to be linked to a $1 billion bond package, was approved by the House of Delegates. The health-provider tax was pushed by the Wilder administration.
Curiously, too, the tax increase that elicits the strongest support from the public - on cigarettes - got the least support from the legislators, an indication of what lobby money can buy.
(Not only did an increase in the state tax get nowhere; a Senate committee on Tuesday also snuffed out a proposed change in Roanoke's city charter to allow imposition of a 5-cent local cigarette tax here.)
Assorted tax proposals were defended, like dear pets, to the death:
Until this week, when he allowed as to how maybe a rise in the gas tax would be OK to fund road projects, Gov. Wilder would back his health-provider tax and no other. The Senate will back the income-tax increase but not House Majority Leader Richard Cranwell's sales-tax proposal. The sales-tax proposal is OK with Cranwell's House Finance Committee, but not the Senate's income-tax proposal.
There's cause to hope some tax proposals will yet be revived: Balancing the budget may be difficult otherwise. But sadly lacking, meantime, is comprehensive examination of the tax system as a whole. Sadly lacking, too, is acknowledgment that even if all these tax proposals were passed, they would still be inadequate.
If Virginia's public schools, its child-health and anti-poverty programs, its higher-education system and its physical infrastructure are to be good enough to make the commonwealth competitive in an increasingly global economy, an additional $200 million or so for the 1992-94 biennium is not enough. That sum plus another $1 billion or so is more like it.
Would the availability of money guarantee its wise expenditure? Of course not. But there cannot be wise expenditure without money.
According to the most recent U.S. Census figures, Virginia has dropped from 42nd to 44th in state and local taxes per $1,000 of personal income. The too-mild General Assembly proposals might have put Virginia back to 42nd. A $1.3 billion tax-increase package proposed in these pages last month would have raised Virginia to no higher than 38th or 39th.
There is no immediate threat, in other words, of Virginia's becoming a high-tax state.
But in the long run, that threat assuredly exists - in the prospect of a state economy made perpetually sluggish by substandard services and infrastructure, and an ever-increasing diversion of dollars to the fruits of undereducation, ill health and poverty.
In this nightmarish scenario, a Third World-like Virginia would zoom up on the tax charts - not because tax rates go up, but because personal income goes down. And if you think it's no more than a bad dream, consider current reality: escalating diversion of state dollars to Medicaid and prisons.
A high-tax Virginia? An unpleasant thought. One way to fall into the high-tax trap is to fail to invest now in the physical and human capital that tomorrow's prosperity requires.