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The
Joint Subcommittee to Study and Revise the State Tax
Code meets again in the General Assembly in Richmond
on
Thursday, September 12. Why bother? No Virginia
political
leader of consequence seems ready to get past the
"study" to the "revise" part of
the mandate. Dozens of experts are pouring thousands
of hours into preparing for an action step that may
never come. Perhaps it's time to move our illusions
to another topic, such as the state meeting its own
mandate to fully fund 55 percent of public
education.
This
will be the fifth meeting for the Joint Subcommittee
this year under the overall chairmanship of Dele.
Robert McDonnell, R-Virginia
Beach, and Sen.
Emmett Hanger, R-Mt.
Solon, but meetings to examine state and local tax
and spending issues have been a fixture for decades.
These efforts have brought together interesting
data, critical analysis and strong recommendations
for change so often that the current Joint
Subcommittee effort spent much of its fourth meeting
in August getting briefed on proposals that had been
ignored from other studies, such as the Morris
Commission and the Revenue Resources and Economic
Study Commission, which met from 1968 to 1979. Among
the recommendations was one to create a permanent
fiscal studies commission, the better to
institutionalize the worry about the problem!
There
certainly is no shortage of talent or experience on
the Joint Subcommittee. Del. William J. Howell,
R-Fredericksburg, is Speaker-Designate. Del. H.
Morgan Griffith, R-Salem, is the House Majority
Leader. Del. Harry J. Parrish, R-Manassas, chairs
the House Finance Committee. Senators Charles Colgan,
D-Manassas, Kevin G. Miller, Harrisonburg, Walter A.
Stosch, Glen Allen, and Kenneth W. Stolle,
R-Virginia
Beach, are
veteran members of the Senate Finance Committee.
Secretary of Finance John Bennett and former Fairfax
Republican Delegate John H. "Jack" Rust
add extraordinary expertise and perspectives
critical to tackling the most arcane details.
One
also must give Joint Subcommittee members credit for
knowing the problems inherent in Virginia's tax
structure. After commencing their meetings in 2001,
the members put together a comprehensive list of
issues that included subtractions, deductions and
tax credits on the income tax; exemptions from the
sales and use tax; localities’s need to share
income tax revenues; extension of the sales tax to
services; local gasoline and sales taxes for
transportation; and the phasing out of personal
property taxes on vehicles and business and
professional occupancy taxes. Simplifying taxes and
administrative appeals made the list, too.
But
tax adequacy, the straightforward question as to
whether the tax and revenue system meets the
expectations for education, transportation, public
safety, water resources and other basic needs of
Virginians, still hasn't made the top ten. A group
of Joint Subcommittee members who have taken the no
tax pledge, instead, say their primary concern is
"revenue neutrality." This is widely
interpreted by observers as precluding any
recommendations or actions that would result in
increased revenues for the Commonwealth and/or local
governments.
A
tax and revenue structure that is equally
inadequate, unfortunately, is not equally unfair.
Even without bold new investments from the
Commonwealth, some students still have the latest
computers and best teachers, some localities still
have growing revenue streams and some businesses are
still creating new jobs. That plenty of other
Virginians don't and aren't apparently doesn't
concern some officials as much as the thought of new
tax revenue.
Having
climbed into that economic straitjacket, these
officials sound threatening enough to have pulled a
lot of others into the same policy stance. The
clinking of the hardware on those self-buckling
straitjackets is loudest around the state during
campaign time, which runs from now until the
November 2003 General Assembly elections. The other
thumping sound comes from investment-minded citizens
and business leaders frustrated by inaction beating
their heads against padded cell walls. The tax
structure appears to drive everyone crazy one way or
another.
Now,
"standing pat" often is a preferred tactic
in complicated times. The phrase comes from the
strategy in draw poker of holding onto the cards in
your hand. William McKinley elevated the phrase to a
campaign slogan in 1900 and, as a recent best-seller
on Theodore Roosevelt pointed out, so did his
successor in 1904. It worked as a slogan, but no
poker player ever won for very long with
"standing pat" as a strategy, must less a
full-blown ideology. Theodore Roosevelt, in fact,
became the model of the activist, rule-bending,
conventional wisdom-defying, tax-reforming president
as others from Congress to foreign leaders folded.
The
cynical among Virginians might suggest that, as
politicians never really believe what they say, they
are always surprised when people take them at their
word. A Joint Subcommittee mandate both to study and
revise seems to imply action, not standing pat.
Observers do expect a few results when the General
Assembly convenes in 2003, although insiders
describe them as technical in nature, such as bills
to allow the tax department to grant sales and use
tax exemptions for non-profit entities according to
strict criteria -- the General Assembly now
legislates on each of these decisions -- and to use
independent examiners for tax appeals in some cases.
Some questions, such as extending the sales and use
tax to personal and repair services or to Internet
access and digital downloads, are cards that the
Joint Subcommittee may want others to draw at
another, undetermined time.
Given
the current budget and services crisis, however,
Virginians across the state can ask how the state
can postpone resolving the larger questions of tax
adequacy, the appropriate division of revenue and
service responsibilities between state and
localities and fairer, more affordable car tax
relief. Standing pat seems to be the tactical
explanation, even though it is clear even to
Virginians who don't play cards that it is a
foolhardy and financially disabling strategy.
As
for the no-tax ideology, ask Virginia Senate Finance
Committee Chairman John Chichester, R-Frederickburg,
a conservative's conservative, why he has never
taken the no-tax pledge. Straitjacket is likely to
appear in the answer somewhere. And as to the lack
of resolve to revise, not just study the state tax
code, a mother's challenge, "Can't never could,
won't never would" works just fine.
--
Sept. 9, 2002
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