Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, January 14, 1995 TAG: 9501200051
SECTION: EDITORIAL PAGE: A-7 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
By itself, Allen's point is too simple by half. It tells you nothing about Virginia's total state and local tax burden.
When you consider that the Old Dominion ranks a lowly 46th in the nation in total state and local taxes per $1,000 of personal income, the picture looks considerably different from the one Allen paints.
And implicit in the apparent disparity between these two rankings is a reassuring point about Virginia tax policy. The commonwealth's tax structure has all sorts of failings, including a lowest-in-the-nation cigarette tax and a failure to exempt food from sales taxes. But Virginia does rely more than some states do on the individual income tax, while going relatively light on other kinds of taxes, virtually all of which are more problematic.
For raising state and local revenues, the most common alternatives to income taxes are sales taxes and property taxes. Property taxes are relatively stable sources of revenue, but they do not reflect ability to pay as well as a progressive income tax does, and they often must be based on imprecise evaluations of a property's worth. By the ability-to-pay yardstick, sales taxes are even worse; what's more, they cannot - unlike state income-tax payments - be taken as deductions by federal income-tax itemizers.
Another alternative is heavier corporate taxes. But high corporate taxes have a depressing effect on economic development; many of the tax bills are passed on to customers anyway; and the relative volatility of corporate-tax revenues makes it harder for states and localities to plan wisely and operate efficiently.
In proposing to triple, over five years, the personal and dependent exemptions in the state income tax, the governor apparently would make it more progressive. But his populist rhetoric - the choice, he said in his State of the Commonwealth address, is between tax relief for working-class families and more spending by the "out-of-touch elitists and organized special interests [who] have demanded more and more of your hard-earned money" - is less than convincing.
That's partly because the driving forces behind state-budget growth are Medicaid and prisons, not exactly your average elitist's cup of herbal tea. It's also because of what Allen didn't propose: balancing modest tax cuts for working families with modest tax increases on the more affluent.
The question doesn't have to be whether a tax cut for hard-working families is worth, say, cutbacks in community mental-health services - or whether it's worth the eventual result of raising local property taxes. The question could be whether a modest income-tax cut for hard-working families is worth a modest income-tax increase for affluent Virginians.
by CNB