Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, August 1, 1994 TAG: 9408010063
SECTION: VIRGINIA PAGE: C1 EDITION: METRO
SOURCE: PETER BAKER THE WASHINGTON POST
DATELINE: RICHMOND LENGTH: Long
Last month, the same lawmakers overwhelmingly approved hundreds of millions of dollars in pension tax refunds, retirement benefit increases and income tax cuts aimed at Virginia's growing population of older residents.
Where will the money come from? Not to worry, they said, we'll find it somewhere.
The sudden generosity not only underscored the senior citizen lobby's power in Richmond, but also thrust Virginia into the middle of a generational battle being waged across the nation.
As the population grays, the young are beginning to look at their elders with resentment - bitter at the payments and policies that benefit older Americans and convinced they will be left paying for Social Security and the federal debt.
The decision by the General Assembly to spend $713 million in the next five years for refunds and tax breaks for retirees is the latest example of the shifting burden, critics say.
"What's happening in Virginia is a leading edge of a trend that will pretty seriously change this country over the next 20 years," said Jon Cowan, 29, co-founder of Lead or Leave, a Washington-based group trying to energize young voters through such events as a huge Virginia Tech rally against tuition increases. "It's indicative of what's happening around the country."
Michele Mitchell, 24, co-founder of another young group called Third Millennium, said she is so angry with the legislature that she might organize a town meeting in Alexandria, where she lives.
"I was just completely flabbergasted," she said.
But some seniors are astonished anyone would begrudge them what they have coming after a lifetime of work. They also contend the money will benefit far more than just older Virginians, because many will help their children pay expenses or will use their refunds for medical bills and retirement homes rather than lean on younger relatives.
"Don't they think that retirees have kids?" asked David M. Certner, an economic analyst for the American Association of Retired Persons. "This generational stuff is a little silly. ... This concept of intergenerational warfare, we think, is something people have tried to create where none exists to make political arguments."
State leaders issued similar denials. As far as they're concerned, they simply resolved issues first raised by a 1989 U.S. Supreme Court decision on pension taxes.
House Majority Leader Richard Cranwell, D-Roanoke County, who brokered the final deal, said Virginia lawmakers passed a large tax relief measure in 1987 that applied to all age groups and particularly benefited those with modest incomes. "The tax structure in Virginia is very fair," he said.
After signing the measure, Gov. George Allen said, "This is not a question of pitting people age against age, federal vs. state, private vs. government retirees. This is a matter of meeting our obligations."
Nonetheless, Allen was quick to promise to look for ways to cut taxes for middle-aged and younger residents.
The three-day special session that ended July 8 did not start out as such a grab bag. Allen had called the legislature to town to resolve the 5-year-old court battle with federal retirees over illegally collected taxes from the late 1980s. Cranwell had worked out a $340 million payback deal.
But legislators got caught up in the spirit. By the time they adjourned, they also had increased the retirement checks of state and local workers by 3 percent and cut taxes for nearly every Virginian over 62.
Long after the final refund checks are sent, those two additional actions will be costing state and local governments more than $117 million each year.
A few lawmakers warned that the proposals targeted tax relief to the group that needed it least and will divert money from programs for the young, such as education. But they were steamrollered by colleagues with their eyes fixed on courting voters in the 1995 legislative elections. In the end, just two of 132 legislators present voted against it.
Perhaps the final outcome should have come as no surprise. Young and middle-aged voters have no lobbyists in Richmond and carry little of the clout of older citizens, who routinely write letters and pack public meetings.
In last year's statewide elections, 73 percent of registered voters 66 and older cast a ballot, compared with 30 percent of those 18 to 25.
Numbers like that aren't lost, even on legislators such as 32-year-old Del. David Albo, R-Springfield.
"The reason they're so important is they're out there voting and participating in elections and calling" their representative, Albo said of older citizens. "People my age, they're going to work, they're taking care of the kids, they go to sleep and start all over again. They don't have any idea what's going on because they're too busy."
Even before the new legislative package, older Virginians enjoyed tax benefits that were among the best in the nation, according to a legislative analysis.
In 1992, the typical taxpayer over 62 made $36,347 in adjusted gross income and paid $954 in state income taxes. By contrast, the average taxpayer under 62 made slightly less, $34,751, but paid a third more in taxes, $1,305.
The plan signed by Allen last week will help older residents even more. By the time it is fully in place in 1996, people 62 to 64 will get a flat $6,000 age deduction, and those 65 and older will get $12,000. Combined with the standard deduction and personal exemption, a single 70-year-old will be allowed to subtract $16,600 from his income, compared with $4,600 for a 40-year-old.
"It's not just unfair. From our point of view, it's unwise," Cowan said. "It may be great to put money in the pockets of seniors. But they've probably paid down their mortgage. They probably don't have any dependents any more. They probably have good health insurance. They don't need it."
Bill Strauss, 47, an author from McLean who has written two books on generational differences, said some older people already benefit from property tax breaks and lower federal tax burdens.
"Why don't we just pass a law saying senior citizens don't have to pay any taxes at all?" he asked. "Jeez! Where does it end? ... Virginia is now the most senior-friendly jurisdiction in America."
Such tax decisions carry long-range consequences. The number of residents 65 and older in Virginia skyrocketed by 81.5 percent in the last 20 years, compared with 29 percent for other age groups. By 2000, the number of older residents will grow 15.8 percent more, nearly twice the rate of the rest of the population.
But the AARP's Certner said statistics showing that elderly taxpayers pay less to the government do not include the many retirees who make so little they do not have to file tax returns. Statistics, he said, give the impression that average older people are better off than they really are.
And some of the retirees who roamed the halls of the state Capitol recently bristled at the idea that they are somehow greedy.
"Money doesn't mean anything to me," said Henry Harper, 73, the retiree from Arlington who was the lead plaintiff in the pension tax case. "It's principle. What's right is right, what's wrong is wrong. And today we did some right."
Their windfall from refunds and tax breaks will go not to extravagant living, several said, but to paying expenses that are already difficult on fixed incomes. Harper said that many of his fellow retirees are barely making ends meet - "semi-poor," he called them - and that he would probably give his $3,000 refund to a struggling widow.
Rose S. Musumeci, state chapter president of the National Association of Retired Federal Employees, said she probably would save her rebate.
"When you get to this age, you don't know what kind of medical bills you're going to have," she said. "I'll probably save it for a retirement home. I'm not going to Disney World."
by CNB