| Grinches
Planning to Raise Taxes |
| Sales
Tax Would Hit Seniors Hard |
| This is normally the season to be jolly and full of joy,
but if you live in Virginia and are a senior citizen, you'd
better stop dreaming of Bing Crosby crooning about a white
Christmas. |
| While you've been busy shopping for gifts for your grandkids,
who already have a collection of toys that would rival Toys
R Us, the tax grinches are hard at work to stuff your Christmas
stocking with lumps of coal in the form of tax increases.
|
| Here's the story, and it's no fairy tale. |
| Last month, the Greater Reston Chamber of Commerce (GRCC),
representing more than 1,100 members, announced it had joined
in what it called a battle of Northern Virginia businesses
to form the Northern Virginia Transportation Compact. |
| The Compact's purpose is "to advance self-help solutions
to our region's transportation gridlock." The plan is to have
a referendum on raising a local sales tax to pay for road
and transit improvements. |
| We've all been stuck in traffic gridlock, so there's little
argument for the need to improve transportation and roads.
But the GRCC's "solution" to increase the sales tax is inequitable
and may even be counterproductive. |
| Of all the ways to raise revenues, the sales tax is the
most regressive because its flat rate across the board, regardless
of income level, hits hardest at persons on a fixed income,
such as retirees and working people who have to scrape by
on subsistence wages. Everybody pays the same sales tax even
if you're on welfare and have no taxable income. |
| This is an especially severe hardship in Virginia, because
our sales tax is levied on necessities of life such as food
and clothing. These aren't avoidable luxuries; they're basics
needed for survival. People have to eat and clothe themselves. |
| I discussed tax alternatives with Al Buckberg, a former
colleague in the Bureau of the Budget, who later joined the
Congressional Joint Committee on Taxation. Al pointed out
that a sales tax is not only regressive but it's not always
the most efficient way to raise revenues because more and
more people avoid paying this tax by buying through the Internet. |
| Instead, he favors the income tax, which is progressive.
The more you make, the more you pay. And an increased income
tax isn't necessarily bad news for the more affluent. Unlike
the sales tax, state and local income taxes are deductible
from federal taxation. |
| Bob Chase, president of the Northern Virginia Transportation
Alliance, agrees it would be preferable to have a local income
tax like the one Montgomery County has in Maryland. So why
the sales tax? He cites the results of a phone survey that
shows the public prefers it so it's considered more politically
salable. |
| To administer and control this new-found source of revenue,
the Compact would create a regionally focused Northern Virginia
Transportation Authority. |
| Apparently, this would be a semi-autonomous quasi-government
agency, with its own dedicated funding that would have authority
to set priorities and allocate sales tax revenues. It wouldn't
replace or reduce existing governmental entities. In effect,
it would add on another bureaucratic layer with its own dedicated
source of funds. |
| Virginia's transportation problem isn't only a lack of funding
and who should pay for it. A recent study by a legislative
independent review committee reported that the Virginia Department
of Transportation is woefully mismanaged. Yet this is the
very same department that would be responsible for administering
an augmented budget! Giving more tax dollars to a mismanaged
VDOT to lay down more concrete is commonly known as throwing
good money after bad. |
| The Reston chamber of commerce is correct. Northern Virginia
has serious transportation and road problems. The system is
indeed broken and needs fixing. What is particularly troubling,
however, is that nowhere is there a hint as to a cause of
these problems, such as over-development creating underfunded
burdens on public agencies unable to pay for added services.
|
| Glenn Dowell, chairman of the GRCC, justifies its support
of the Compact "because it gives the business community a
voice in seeking solutions to the traffic crisis we all face
daily." |
| The GRCC's "self-help solution" brings to mind the self-serving
statement of Charles Wilson, former head of General Motors,
who declared to a U.S. Senate committee in 1953 that what
was good for General Motors was good for the country. Perhaps
the GRCC and its members should look to themselves as one
of the causes of the problem. |
| It's obvious that the GRCC's plan is seriously flawed as
well as poorly timed. It flies in the face of reality to push
for tax increases when the nation is waging a war on two fronts:
terrorism and economic recession. |
| The national surplus of $127 billion has vanished. Virginia
is facing a $1.3 billion budget shortfall and still growing.
Unemployment is at a six-year high. Life is tough for many
people. This is no time to add to their misery. Nor does it
take a Keynesian economist to know that it's not good for
business to increase taxes during an economic recession. |
| The GRCC is to be commended for its civic interest but it
could make a positive contribution by redirecting its battle
to use its knowledge and resources to call for a comprehensive,
objective study of Virginia's fiscal structure to better provide
for its transportation and roads. |
| Stu Gibson, the Hunter Mill district representative to the
Fairfax County School Board, sees a need for such a study
to include the long-range problems of meeting the continuing
education needs of Fairfax's growing population. |
| This isn't only an age issue. It affects seniors and the
general public as well. As grave as it is, there is cause
for optimism. Northern Virginia's political leaders are aware
of this issue. Both Sen. Janet Howell and Del. Ken Plum are
open-minded and urge everyone to make their views known to
them. |
| And you don't have to travel to Richmond to have your voice
heard. To make it real easy, Plum has mailed out a survey
form to all constituents. Just fill it out and mail it back
before Jan. 15. |
| Or, if you prefer, phone Plum at 703-758-9733 and Howell
at 703-709-8283. They even invite you to come meet them at
a public hearing on Jan. 3, 7:30 to 9 p.m. in the Reston Regional
Library. |
| Now for you cynics who ask what good can the little guy
do to fight the system, I've invited the ghost of Helen Keller
to respond: "Alone we can do so little, together we can do
so much." |
| Be an active citizen. It's the patriotic thing to do. |
| Happy holidays! See you all next year. |
| |
| Bill Wohlfeld may be reached by e-mail at billw@observernews.com. |
