Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, December 3, 1994 TAG: 9412060016
SECTION: EDITORIAL PAGE: A11 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
The slickness begins with the governor's comment that "Virginia's income-tax burden ranks in the top third of states," leaving the impression that this is bad. Actually, given the relative fairness of income taxes and Virginia's low 47th spot in total state-local tax burden as a percentage of personal income, it's enviable.
The unmentioned flip side of the governor's point, in other words, is that Virginia has lower property, sales and nuisance taxes than most states. Experience elsewhere suggests that one effect of cutting state income taxes can be to shift the burden onto more onerous sources, such as local real-estate levies.
The slickness continues with the plan's postponement of its most drastic consequences until after Allen's term. The fiscal time bomb would be for another governor to defuse. The trend lines are worrisome, but you have to admire the Allen audacity: Within months of winning General Assembly approval for tougher sentencing policies that will send corrections costs soaring into the 21st century, the governor proposes a tax cut phased to decelerate revenues that would otherwise be available to meet those costs.
If Allen is trying to draw attention to himself as a prospective vice presidential candidate, the anti-tax ante apparently has risen. For his predecessor, Democrat Douglas Wilder, simply holding the line on taxes was deemed enough to gain a share of the limelight. Politics, though, isn't the only grounds on which tax cuts should be judged.
The trouble is not that Allen invariably has chosen the wrong taxes to target. He hasn't, as a rule.
The governor's proposed tripling of the age exemption extends Virginia politicians' unfortunate habit of throwing unwarranted tax goodies to that vote-rich group for no other reason than its members' age. (The plan also raises technical issues regarding the impact on itemizers' federal taxes, which may not have been sufficiently considered.) But tripling over five years the personal and dependent exemptions on the state income tax would provide deserved relief to lower-income workers and to middle-income families with dependent children.
Moreover, Allen's proposal to phase out the local business, professional and occupational license tax would rid Virginia of a headache levy nobody likes.
The trouble is that Allen isn't willing to replace the lost revenues from a better source - may we suggest a modest increase in the top-bracket income-tax rate? - or, for that matter, from any source at all. Instead, the revenue losses are to be offset by savings from increased governmental efficiency, reduced state payroll, privatization of some services, etc., etc. The painless details are to be revealed Dec. 19, when the administration is to present its budget proposals to the assembly's money committees. We'll see.
Meantime, it's worth keeping in mind that low taxes are not all it takes to ensure prosperity. The quality of such tax-funded or tax-assisted enterprises as higher education, marketing, public schools, physical infrastructure, quality-of-life infrastructure, public health and environmental protection is also fundamental, as is fiscal sobriety.
It would be a shame if Virginia, hardly in danger of losing its low-tax niche regardless of what Gov. Allen does, were to forgo the advantage by allowing political slickness to let slide the other essentials.
by CNB