ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, December 26, 1996 TAG: 9612260080
SECTION: EDITORIAL PAGE: A-11 EDITION: METRO
SOURCE: SUE CAPERS
EVERYONE enjoys receiving birthday presents. But many of us have also experienced the discomfort of receiving a present that seems inappropriate - that may have cost the giver too much, or that maybe we don't need.
Since 1989, millions of Virginians have received a gift from the commonwealth on their 62nd and 65th birthdays - the tax deduction for age. Regardless of work status or wealth, every Virginia taxpayer on turning 62 receives a $5,000 deduction from his or her adjusted gross income; the deduction increases to $10,000 when the taxpayer reaches 65.
In 1995, the deductions cost Virginians collectively approximately $150 million in lost revenues, and will cost far more in 1996, when the deductions are increased by 20 percent.
For those who need it, this tax deduction provides appropriate financial relief as they move into an age of fixed income and rising costs. But there are many other senior citizens who, through hard work, ingenuity, perhaps a bit of luck, have achieved financial security. Some have even achieved considerable wealth.
Because everyone gets the age tax-deduction based on age alone, some of our wealthiest citizens are receiving an inappropriate gift. As a result, important programs like the Virginia refundable earned-income tax credit for working poor people and their children go unfunded.
As Virginia faces spending limits on services to the poor, we must reconsider our services to the wealthy. It is time to institute means-testing, whereby individuals qualify for the deduction based on income and assets rather than receiving the benefit automatically.
Means-testing the tax deduction for age would assure that those senior citizens who need tax relief would continue to receive it while the commonwealth would save millions of dollars by phasing out the deduction for wealthier individuals.
The money saved by means-testing could be used to fully fund the earned-income tax credit. This credit is offered to low-income, working Virginians whose labor does not, despite our promises, lift them out of poverty.
The earned-income credit rewards work, supports families and helps guarantee that, in Virginia, work pays. Yet Virginia legislators say it is a program we can't afford.
The elderly deserve a lot from us: our esteem, our regard, our honor and compassion. Some of our elderly deserve and require financial assistance; thankfully, the age tax-deduction is there for them. However, thanks to our government's recognizing and addressing the poverty of our elderly, they have moved from the group with the highest poverty rate in the 1960s to the group with the lowest poverty rate in the 1990s.
It is time that we adjust our thinking and our help. It is time we reserve our limited resources for those most in need now.
Today it is children who need our help. Currently, more children are poor than any other group in our state and nation, and their poverty is the direct result of the poverty of their working parents.
The working poor, and their families and children, deserve an income that provides decent housing, adequate food, medical care and child care. If Virginia had had an earned-income tax credit in 1995, it would have helped 433,000 poor working Virginia families and their more than 500,000 children.
A tax deduction for a particular group of citizens should be able to stand the scrutiny of all. The deduction for age does not meet this criterion as currently structured.
A responsible tax policy would assure equity among all citizens. Means-testing is the fairest way of implementing this principle. Let's restructure the age tax-deduction to specifically assist low- and modest-income seniors; let's use the resulting savings to assist low- and moderate-income workers and their families through a Virginia refundable earned-income tax credit.
It is time to eliminate inequities by doing for our children what we do for our grandparents. Virginia would be taking a significant step toward a tax policy that supports a decent standard of living for all its citizens.
Sue Capers is public-policy coordinator for the Virginia Coalition for the Homeless in Richmond.
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