Republicans unite behind tax cut resolution

Each December, the policy-making board of the Republican Party of Virginia meets to review the year that is ending and to make plans for the following year. This past weekend, at the annual Republican "Advance," Republican activists strongly and loudly affirmed the party’s low tax philosophy, and sent a message to both Gov. Mark Warner and some Republican elected officials.

By a nearly unanimous vote, the Republican state central committee passed a resolution demanding that a majority of Virginia’s record budget surplus be returned to the taxpayers. The activists suggested that legislators either repeal the 2004 Warner tax increase, complete the phaseout of the car tax, or do both. The resolution will be delivered to every Republican member of the General Assembly. Ideally, there would be a way to hand-deliver a copy to all taxpayers in Virginia, so that they would know which party is on their side.

The logic of the resolution is inescapable. While not mentioning the fact that Mark Warner was elected on a pledge not to increase taxes, the document does refer to this year’s larger-than-ever $1.4 billion tax increase, and reminds voters that "within days of the tax increase, the Governor revised his economic projections to announce anticipated budget surpluses of over $300 million per quarter." During the debate last spring, the Governor claimed that the tax increases were necessary to balance the budget.

In reality, as the resolution points out, Virginia’s economy had already started to recover in 2003, earlier than almost any other state in the nation, largely because of the avoidance of unnecessary tax increases under former Governor Jim Gilmore. This year, Virginia’s businesses and entrepreneurs have added 49,000 new jobs, contributing to an unemployment rate of 3.4 percent, the lowest state unemployment figure since 2000.

Just in the month of October 2004, general fund revenues grew by more than 10 percent, with year-to-date tax collections growing above estimates, and job and wage/salary growth also rising above the Governor’s forecast. In other words, Virginia’s economy is improving and, as the resolution states, will likely "continue to improve, in spite of the recent intervention by Virginia’s government." The total surplus for fiscal year 2004-2005 could top $1 billion. This number works out to about $140 for each man, woman and child in the Commonwealth. (More, if those who oppose a tax increase have the integrity to refuse one.)

The resolution is less blunt than I would have made it, because it calls for the return of only a "majority" of the surplus, rather than all of it. In addition, it refers to "programs such as transportation, education, and law enforcement [which are] among the worthwhile investments for some of the surplus." While I understand and agree with the sentiment expressed in these words, I fear that Democrats will turn them into a justification for more spending, without a tax cut.

The resolution is a timely application of the Creed of the Republican Party of Virginia, which reads in part, "fiscal responsibility and budgetary restraints must be exercised at all levels of government." Everyone who runs as a Republican in Virginia is supposed to agree with and uphold this principle.

Nevertheless, the resolution did not pass without some controversy. Some committee members suggested that the resolution was an implicit criticism of the Republican legislators who voted for the Governor’s tax increase. In response, Del. Terrie Suit (R-Virginia Beach) said that she would vote for the resolution, and pointed out that it is the responsibility of the party state committee to define and highlight the party’s principles.

It seems to me that if this implies criticism of Republicans who forget, or reject, Republican principles, it only makes the message to voters that much clearer.

Moreover, the resolution is less a criticism of pro-tax Republicans than it is an opportunity for them. Legislators who voted for the tax increase because they were, like the rest of us, deceived by Warner about the state’s fiscal condition should have no difficulty in voting to return the state’s ill-gotten booty to the taxpayers.

To keep the money is to take a stand with Warner himself, who still refuses to own up to his obvious fraud in getting the tax increase passed. In addition, by refusing to discuss a tax cut, Warner makes it plain that he did not really care about the alleged deficit to start with; he simply wanted the money.

This is an odd position for someone who ran for Governor as a fiscal conservative, but Warner has to shed that image now that he is a candidate for the Democratic Presidential nomination. Over the remaining months of his term, look for Warner to make more moves to curry favor with the left-leaning primary voters of the Democratic Party. As he does so, it will become clear that Warner sees himself as a candidate for President.

It is not clear why Virginia taxpayers should pay for his ambition.