There were two op-eds in Sunday’s Richmond-Times Dispatch which looked at the Virginia budget deficit. The writers each took different approaches on how to solve the problem.
Donald Boudreaux’s position is that taxes should not be raised; in fact, he calls for a tax cut, albeit almost as an afterthought at the end of the editorial. He starts by providing statistics that show that our tax burden – on a per capita basis – has grown 67% in 30 years. While the chart which accompanies the article (pdf) shows that Virginia ranks 20th in state and local taxes per capita, it show that Virginia ranks 40th in terms of state and local taxes as a percentage of personal income.
Boudreax argues that there is no need for additional revenue and bolsters this argument based on something that I find quite interesting, especially given our current political season:
Projections for fiscal 2010, however, are for those revenues to nearly completely recover to their 2008 levels.
Aren’t we having a conversation right now about the reliability of the estimates?
Since Boudreax is an economist, I would expect his op-ed to be more about the facts and less about what appear to be nothing but talking points for the no-tax crowd.
On the other hand, Michael Cassidy provides some no-nonsense solutions to the budget problems. He points out that the answers so far have been one-sided:
They have relied heavily on spending cuts to address the budget shortfalls we’ve faced in the past two years. For every $1 raised in new revenue, the state has made more than $33 in cuts.
That “starve-the-beast” approach only goes so far and, in fact, hurts the economy, says Cassidy. He points to targeted tax increases that could be implemented:
Three revenue solutions in particular should be explored: reforming our out-of-date income tax structure, closing corporate loopholes, and eliminating special-interest tax breaks and giveaways that cost more than they bring in.
At the very least, these revenue solutions should be explored. I expect, though, that they never will be. One that he mentions, elimination of the dealer discount on sales taxes, was the subject of a bill this past GA session. The bill was defeated with the help of intense lobbying efforts.
Anyone who thinks Virginia has sufficient revenues need only look at our transportation system. At some point, we need to face the reality that something has to be done to solve major problems like these and that something involves money.
VIVIAN J. PAIGE | All Politics is Local 