Red State Blues

The editorial page of today’s Wall Street Journal singles out Virginia’s state Senate for well-deserved criticism. “If you think Republicans are Capitol Hill have trouble, take a look at Virginia,” the WSJ writes. The Senate rammed through $1.5 billion (biennial) tax increase in 2004, the state is running a $2 billion (biennial) surplus, property tax bills for median-priced homes in Northern Virginia have risen by $2,000 in six years, and now the Senate wants another $1 billion (per year)?

Last week the senators floated another tax plan that is so bizarre and complicated that it has made them a laughing stock. This scheme would raise the gas tax by 5%, but the sponsors insist that “no one would have to pay the tax if they didn’t want to,” because motorists could get a rebate at the end of the year if they keep shoeboxes full of tiny scraps of service station receipts. This would add immeasurably to the joys of April 15.

Good editorial in most respects. But it would have been better if the writer had gotten the details right. The WSJ referred to “state property tax bills.” The property tax is, of course, a local tax.

The WSJ also said: “Only 18 months ago this same senate gang rammed through a $1.5 billion sales tax incrase, even after 55% of the voters had defeated the same tax scheme when it was a ballot initative a year before.” Incorrect. Northern Virginia and Hampton Roads citizens voted in regional referenda against a sales tax hike to fund transportation. The sales tax rammed through by the Senate went into Virginia’s General Fund, mainly for education. The two tax schemes, though equally ill conceived, were very different.

There’s plenty to criticize with the real facts. No need to misconstrue facts to bolster the case.

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10 responses to “Red State Blues”

  1. Rtwng Extrmst Avatar
    Rtwng Extrmst

    Lazy lazy lazy… Shame on the MSM.

  2. I think that is a good comment Jim.

    I think the NOVA and Hampton Roads taxes went to defeat, not so much because people weren’t will to pay for what they get, but because there was no assurance that the money wouldn’t be hijacked downstate – again, and because the plans for spending the money were so fuzzy and non-accountable.

    I don’t think the person paying the tax makes much distinction as to whether it is local or state: to him it is government tax. The state should recognize that they are intertwined. People are diligent about paying property tax in order that they not lose their home. If the state pushes more burden of on the locals, it will be reflected in property taxes, mostly. That means, as JAB points out, people will have less to spend, and that translates to less sales tax. It also translates to less jobs, and therefore, less income tax.

    In areas of rapidly rising home values, the property tax tends to become more regressive over time. Republicans should like that, especially since NOVA is becoming more Democratic anyway.

    We should tax income and sales (gas included) and let it go at that. Having once earned the money and paid taxes on the earnings, and purchased property and paid taxes on the transation, we should leave the property alone. Such a policy would reward thrift and industriousness.

    Let the state and the locals argue about how to divvy up the money and leave me alone with what I’ve got.

  3. Lucy Jones Avatar

    Ahhh… see, I can understand and comment now! Thanks Mr. Hyde. I agree with you 100%!

  4. Anonymous Avatar

    My favorite part of the Wall Street Journal editorial was its endorsment of legislation to cap real estate tax assessments. Not a cap on tax rates, mind you, but on the assessments, which are required by the Virginia Constitution to be fair market value. An artificial cap on assessments makes just as much sense as Dick Nixon’s price control scheme. At that point I realized this editorial wasn’t written by anybody with a brain.

  5. Putting a cap on the assessments is as stupid as putting a cap on the rates. Which is as stupid as the idea of taxing property to begin with. We don’t tax stock or bank accounts, even if they are invested in property.

    Property doesn’t pay tax, income does, and only income.

  6. dittohead Avatar

    I hate be anal here, but VA tax day is May 1st.

  7. James Atticus Bowden Avatar
    James Atticus Bowden

    Ray: I can see a reason for taxing real estate property. Not property like a boat, car, etc. That is just milking the cash cow.

    I wrote in the Rebellion about Virginia’s ‘finitudes’ of land, water, air (and possibly time = labor) which may be owned by individuals. But how ‘hard’ we use them is relevant for our stewardship of these finitely limited resources in the Commonwealth. Part of the social contract, I believe, is to be taxed on the private and corporate ownership of what is Virginia’s commonweal.

    There is a principle behind the tax. Not that most politicians would recognize that. Or bureaucrats understand it.

  8. I’m not blind to your argument about the commonweal, but it has to work both ways. The government has made certain contracts with us about property, but it turns out you cannot trust the government.

    The PW times Democrat has an opinion letter by Sean Connaughton. In it he complains about vesting of prior year re-zonings.

    So say you are a farmer, and thirty years ago you saw the handwriting on the wall, so you went and had your farm subdivided, but continued to operate as a farm. You paid much higher taxes over the years than you might have otherwise, and you invested in not only the land, but the surveyors and lawyers to draw new boundaries.

    Then someone changes the comprehensive plan and wants to make it retroactive. I think that’s wrong.

    Last year I built a new hay shed. Cut the timber, milled the lumber, and constructed the shed. the only thing I bought was the nails and tin for the roof. this has nothing to do with Viginia’s Common Weal in the land as far as I can see. But my reward for my labor is that my usable income is now permanently reduced, by the amount of tax on that shed.

    Still, I’m not blind to yur argument. However, it is possible and it frequently happens that people get priced out of their own property on account of government actions. If I built enough hay sheds, I’d be broke. Somehow I don’t think that’s the way it is supposed to work.

    Yes, real estate taxes are more secure. That is good for the state, but not for the individual. We are the state and it doesn’t seem to much to ask that the state not screw us indiscriminately. If I go broke building hay sheds, what is going to happen? A developer is going to happen.

    I’m in a position where the value of my land is such that it is rapidly outpacing my ability to pay tax on it. That value is largely the result of actions by others, development, that I am prohibited from taking part in.

    To answer your argument, I would suggest, not that assessments be capped, or that tax rates be capped, as some others have suggested. Instead I would suggest that real estate tax be capped at a percentage of the owners income.

    Land use tax, sort of does that, but if you have a farm that needs a lot of infrastrucure, all your buildings get taxed at the same rate as local homeowners.

    The way it is now, if you own a farm, you are better off to sell it and buy stocks and bonds, which are not taxed, just the income is taxed. Then if you still insist on farming, rent the land back from the speculative owner who is taking a big tax loss until the rules change.

    This is not a plan to improve the Common Weal.

  9. Anonymous Avatar

    Too little comment about the basic message, which is that our “republican” senate isn’t republican.

    Take a look at the smoking bill. It actually passed in the senate. THe so-called republicans in the senate saw nothing wrong with banning smoking.

    But in the house, not only was every republican against it, so apparently were the democrats, as it was unanimously rejected.

    How far out of the mainstream of your party do you have to be to PASS something that is UNANIMOUSLY rejected by the other body.

    Part of me wants to let the democrats win back the senate, just so these “republican” dinosaurs are taken out of the leadership. They don’t deserve to be rewarded, they need to be dis-empowered.

  10. James Atticus Bowden Avatar
    James Atticus Bowden

    Ray: I’m saying there is a principle behind property taxes, not that they should impoverish or steal from folks. The property tax with the additional, defining guidance I suggest (‘finitudes’ to the principles) would have ‘right’ low taxes for some property – like open space, farms, etc.

    Anon: There is another way. Replace RINOs with Conservative Republicans.

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