Lots of Virginians hate the car tax, even in its currently reduced form. In fact, it was hatred of that tax which fueled Jim Gilmore's "No Car Tax!" road to victory in 1997. Well, now it's 11 years later, and Virginia is in a world of budgetary hurt. Sometime in the next few weeks, we're likely to hear from Gov. Kaine about an additional $2 or even $3 billion hole in the budget, and how that hole is going to be filled. We're also likely to hear about major (10%? 15%?) cuts to state programs, including education, public safety, health care, transportation, you name it. In short, this will NOT be pretty, but it WILL be painful. Very painful for all Virginians.
With that in mind, I thought the Virginian-Pilot's editorial this morning, "Car tax relief should not be exempted from fiscal fix," was highly relevant. The question is, why are we only talking about cutting important services (including education, transportation, and even law enforcement) and NOT talking about dumping (at least in part) Jim Gilmore's foolish (but politically popular) "No Car Tax" gimmick?
Here's the Virginian-Pilot:
... The car tax is alive and well today, but the state continues to spend nearly $1 billion a year pretending it is not.Kaine unwisely vowed back in August that taxes would not be part of any budget solution, even though he did not know the full extent of the problem facing him at the time. That means there's little chance that the car tax will be part of any final budget fix this year.
Still, Kaine and lawmakers maintain this year's budget crisis is too severe to take anything off the table, including schools. If that's the case, they ought to be willing to at least have a serious discussion about dialing back the car tax.
Again, hardly anybody likes the car tax. In fact, hardly anyone likes ANY taxes. However, taxes are the price we pay for services in non-flat-earth-Republican reality world. Also, it's not generally a smart idea to raise taxes in the midst of a recession. On the other hand, it's also not a good idea to slash education, public safety, transportation, environmental protection, health care, and other essential state services.
So, what's the answer here, given that people want it all - great services and low taxes? I don't know for sure, but one thing I DO know is that cutbacks on the spending side shouldn't be the only thing that's "on the table" right now. Especially if "this year's budget crisis is too severe to take anything off the table."
While we're at it, why on earth isn't the foolhardy estate tax repeal - which costs the state as much as $150 million per year to benefit a few hundred super-wealthy Virginians out of 7.7 million - on the "table" as well? I'm sorry, but if we're talking about cutting schools and public safety, I think multi-millionaires can afford to pay the estate tax. Especially when we have a governor who doesn't have to face reelection and should be able to do the RIGHT thing, not just the less politically unpopular thing.
Disclaimer: I am a state employee. My agency is facing the possibility of laying off 10% of its staff, with 20% furloughs for those that remain.
You want more tax revenue, increase the progressivity of the state income tax. Basically, state income tax amounts to a flat tax here. Or bring back the estate tax.
But you know, I also have a hard time feeling sorry for the state. We spent all this tax revenue from increased property tax receipts and increased sales tax receipts like the good times were never ending. We were raking in all this money from granter's tax and taxes on mortgages. Instead of saving a good portion of our operating funds to cover us in bad times, we spent it.
But in the end raising taxes at a time like this is an untenable position. If they can't sneak in some fees, then it will be cuts.