I’ll never forget it. It was bright sunny day at the Tuckahoe Little League park. Hundreds of kids and their parents were wandering around a grassy field. Standing stationary amidst the hub-bub was a tall, solidly built man, maybe 40 years old, holding his wife’s hand. Scars covered his cropped head, leaving his eyes utterly ruined.
He had a military bearing, and the war was raging in Iraq, and I could only assume that he was one of the many soldiers ravaged by an IED. I choked up a bit, thinking, “There is no way I could ever repay you for the sacrifice you made for your country.” I wanted to thank the man but words seemed so inadequate, so I said nothing at all.
A new law signed by Gov. Bob McDonnell will attempt to honor a small part of the debt we owe veterans like the one I saw that day. Qualifying veterans who are 100 percent and permanently disabled as a result of a service-connected injury will receive a real estate tax exemption for his principal residence. (See Luz Lazo’s story in the Times-Dispatch.)
The Virginia Department of Veteran Services estimates that as many as 7,500 veterans statewide could qualify, although not all of them will own their own houses, so not all will be able to avail themselves of the break. Henrico County officials project that the exemption for some 260 veterans will cost the county about $510,000 in tax collections. Projected statewide, that implies the law will cost local governments roughly $15 million a year.
I can think of no group more deserving of public support than the veterans who paid such a devastating price. But I think the tax break is bad public policy.
The law adds one more exemption, albeit a small one, to Virginia’s ever-narrowing tax base. The problem with these “tax expenditures” is that they are not transparent. There may be a debate the year they are enacted, but they then renew automatically more or less forever. They cost the state or local governments money, but they do not appear as a line item in the budget. Lawmakers do not know what they cost, and they rarely if ever think to review them. The lack of transparency is even worse when the General Assembly mandates that local governments provide the tax break. The expenditures become one more step removed from accountability.
Back when he was grappling with Virginia’s last budget crisis nearly a decade ago, Gov. Mark Warner had identified roughly $1 billion in exemptions, deductions, credits and other loopholes that shrink tax revenues. That number has grown markedly since then, as the General Assembly has dispensed tax breaks like the Good Humor man tossing popsickles from his truck.
If the General Assembly wants to demonstrate its generosity to Virginia’s disabled warriors, then it should fund its compassion through a line-item expenditure in the General Fund so taxpayers can see the level of commitment they are making. While they’re at it, they should convert all other tax breaks to line-item expenditures as well. It’s one thing to show largesse — it’s another to do so blindly.
