special session virginia general assembly

Tax Increases For The Rich

As the countdown to the Special Tax Session of the General Assembly begins (it starts two weeks from today) we take notice of a post from yesterday at Tertium Quids about one of the chief lobbying/special interest groups supporting massive tax increases. Click here to read it. Basically, the Virginia Chamber of Commerce is pushing for tax increases (as noted in an op-ed Tertium Quids cites). However, as blogger Norman Leahy reminds us, the Chamber fought like crazy four years ago an attempt to close certain tax loopholes that benefited its members. Here's an excerpt:

Let's just accept these contentions as true. If we really, honestly, need a broad revenue base to address the unmet needs of paving contractors across the state and "everyone should share in paying for them" then the first thing the legislature needs to do is look closely at the tax code and close the various and sundry loopholes that the Chamber and its allies have carved out over the years.In other words, if the Chamber wants more taxes fine. Let's make sure all of their members pay them, too.

It also illustrates how those opposing tax increases have failed to properly frame the issue, at least as it concerns the business community.

It may sound populist, but it is the truth: Certain elements of the business community want higher taxes because it serves as a government subsidy that lines their pockets. All of a sudden the shopping centers, condos and office complexes they own or plan to develop, with new roads built nearby with massive new taxes, become more affordable to build and profitable to keep. It is someone else paving the way (literally) for their projects' success by decreasing their own investment costs by shifting those costs to taxpayers. When the government pays for projects to benefit a private project it's called a subsidy — or a transfer of wealth. By any standard these proposed tax increases qualify as money would be transferred from families and individuals to those who have commercial interests from which to make personal gain.

Call it corporate welfare, call it anything you want. It is still government extracting money from private citizens to help certain businesses pay for projects that benefit their bottom line. Their hypocricy in preserving their own tax breaks proves it. 

More Truth About State Government

Yesterday, we posted our reasons to oppose Governor Tim Kaine's tax increase plan (and all tax increase plans) at the upcoming (June 23) Special Tax Session of the General Assembly. But there are other reasons to reject tax hikes for transportation (not to mention that the Governor Kaine apparently is not even considering our Lottery Ticket Increase plan even though others of high intellectual esteem are). But the primary reason is the new third rail of politics — education funding. During the General Assembly's regular session, the biannual "re-benchmarking" of the Standards of Quality resulted in a $1.1 billion increase in education spending in the new budget. (Click here to read our previous commentary on the educrat revolt to SOQ reform.) What does "re-benchmarking of SOQs" mean? A convoluted formula that automatically ensures that Virginia's public school establishment will receive at least a billion more dollars every two years, regardless of student outcomes or reductions in enrollment. That spending goes up no matter what. By continuing with this system, public education is assured of securing funds at the expense of other core budget items (public safety, transportation, etc.). Any legislator who is honest will tell you that there is absolutely no way to fund this annual education increase and the rest of state government without some type of massive, statewide tax increase. 

So here we are. In fact, do you know how much spending increased on transportation in the recently passed new budget? Zero. Not a penny. Zilch.

Why? Because as long as the SOQ funding formula remains unchanged, every other area of state government, including transportation and public safety, will get short changed. (Of course, the Virginia Education Association was one of the first to publicly endorse the Governor's plan.)

This year, The Family Foundation supported a short-lived proposal to adjust the SOQ formula slightly, which would have in no way directly affected what is spent in the classroom. But such a change would have saved $200 million per year. That nearly half billion dollars every biennium would go a long way toward fixing the transportation "crisis" Governor Kaine alleges needs immediate action.

Because The Family Foundation has opposed increases in taxes over the years, we have gained a reputation as being "anti-tax." That is not the case. We simply want our state government to be more responsible in how it spends our money before it comes to working families asking for more.

Truth In Reporting: The Special Tax Session

Governor Tim Kaine surprised absolutely no one when he rolled out his transportation — er, make that tax — plan Monday. It includes nearly $1 billion tax and fee increases under the guise of fixing transportation for what he and the media mistakenly call a transportation special session of the General Assembly to begin June 23. Truth in reporting requires us to call it a Special Tax Session. Governor Kaine's plan doesn' leave out much. It increases the sales tax in Hampton Roads and Northern Virginia from 5 to 6 percent, something rejected by voters in those regions in 2002. Governor Kaine also would have us pay more for cars by increasing from 3 to 4 percent the motor-vehicle titling tax as well as another $10 increase in the cost to register our vehicles. Governor Kaine doesn't stop there: He also proposes an increase in the grantor's, or property seller's tax, of 10 cents per $100, just as the real estate market is tanking. Detect a theme here?

How anyone can fathom adding a tax to house sales right now, on top of the fee for mortgage and refinance originations as part of former Democrat Governor Mark Warner's 2004 record tax increase? (By the way, does he like his successor's plan?) What does this show of Governor Kaine's understanding of basic economics? Why do he and other liberals complain about getting branded as big taxers and spenders when they thoughtlessly and reflexively propose more tax increases for every problem (real or imagined)? The fact that spending cuts and prioritizing never seriously are considered shows a true lack of imagination, leadership and courage.

There are at least two reasons why we do not support increasing taxes for "fixing transportation." One is the lack of a constitutional amendment to protect Virginia's Transportation Trust Fund from being raided. The other is the depression era law that controls how Virginia funds its transportation needs. Until those two issues are resolved, Virginians should not be asked to send more money to Richmond to fund a broken system.

It is a misnomer that conservatives are anti-tax. We're anti-tax increases when taxpayer money is wasted on useless programs that often are counterproductive, when taxpayer money is not used for constitutional purposes, when politicians want to start new programs (especially during a shaky economy) to buy their "legacy" (pre-K, anyone?), and when government is so big and bloated that waste and abuse are rampant. When spending is cut in real terms and re-prioritized, and only constitutional functions of government are funded, then let's talk about taxes.