Tax Freedom Day

From Lieutenant Governor William T. Bolling comes an e-mail this morning reminding recipients that today is “tax freedom day” in the Old Dominion: the day that Virginians, on average, stop working to pay taxes and start working for themselves. He adds this commentary:

My friends, when you have to work for 107 days every year to pay your taxes, that is excessive taxation. …

We used to hear that Virginia was one of the lowest tax states in the nation. While that used to be true, it is true no more. The Tax Foundation reports that Virginia now has the 17th highest state and local tax burden in the nation. That puts us in the top 1/3 of states when it comes to taxing our citizens. Nonetheless, there are still those who think we don’t pay enough taxes. They are back again this year asking us to pay higher taxes, albeit to support a worthy goal of increasing funding for transportation.

But with Virginia’s economy growing at a rate of 11% per year, and with state spending set to increase by 19% in the upcoming biennium, we do not need to raise taxes to fund transportation. What we need is the fiscal discipline to direct our resources to our highest priorities.

When ranked by total dollars exacted, Virginia has become a high-tax state. The Axis of Taxes points out, with some legitimacy, that Virginia is a moderate/low-tax state when ranked by taxes as a percentage of income. In other words, because Virginians have higher-than-average incomes, the tax burden isn’t as heavy.

I don’t find that riposte particularly consoling. The harder I work to make more money, I can be assured that my state and local governments will be soaking up their “fair share” of my income. I’d prefer to see state/local governments that committed themselves with unremitting zeal to boosting productivity, re-engineering processes and re-imagining services to meet core needs more cost effectively. That’s something we did for two years of the Warner administration while the state was in financial “crisis.” Now we’ve reverted to a multi-year phase of aggressive expansion — which will last as long as the current economic expansion does.


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Comments

5 responses to “Tax Freedom Day”

  1. Neither figure tells the whole story, because, for example, governments must pay higher worker salaries in high income areas. For example, Fairfax County can’t pay teachers Mississippi level wages. People in higher income areas expect better amenities, like nice parks, etc.

  2. Michael Snook Avatar
    Michael Snook

    ermm… maybe I’m confused. Virginia’s tax revenues are 17th in the nation, but its actual tax rate is much lower in the rankings. If you ask me, I’d rather be low on the tax rate scale, and high on the total tax revenue scale.

    I am a fiscal conservative, and I too am troubled by government spending which grows faster than tax revenues, but why does a high total tax revenue ranking bother anyone? Aren’t we only worried about the rate? Doesn’t the economy only suffer when the rate is high? Ok, so I cheated on the last question. The answer is yes. Speaking in terms of economics, only a high rate of taxation slows the economy.

  3. NoVA Scout Avatar
    NoVA Scout

    Mr. Snook hits a pitch that should be hit hard and hit often. Public revenues are not really the issue. The issue is tax burden. Obviously, fiscal discipline should be expected and required by the voters. But it is a central tenet of conservative public economics that lower rates can stimulate tax revenue increases, both through the stimulative effect that they have on economic activity and because lower rates remove incentives for evasion and avoidance.

  4. James Atticus Bowden Avatar
    James Atticus Bowden

    Hooah for Snook and NoVa!

    It’s the tax rate, stupid.

    The abundance of revenue enables a spending problem. The way to address that is to cut the tax rate – and limit (note that I didn’t say cut) spending.

    In some cases the abundance of revenue means we (the Commonwealth) should spend more – transportation, environment. And in some cases we should spend less (actual flat line or cut) or slow the rate of growth.

  5. NoVA Scout Avatar
    NoVA Scout

    Bravo, JAB. Now we’re cooking. I knew you and I would come into synch sooner, not later. We may go out of phase a little on some things, but by and large we share a lot of values and perceptions

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