Sunday, July 13, 2008
Cooling down the anti-tax rhetoric
Dan Radmacher
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From the RoundTable blog
Some of those opposed to raising taxes to fund Virginia's growing transportation needs like to paint state government as awash in cash.
As one commenter on a blog put it recently, "You seem to be assuming that some additional revenue is needed. It isn't. The state budget has risen over 70 percent in six years."
It is true that the size of the state budget has increased dramatically in recent years, but most of it can be explained by inflation and economic and population growth.
Back in 2006, a blogger who went by the monicker Jaded JD put together an excellent analysis of Virginia's budget demonstrating that the budget is not growing out of control. Jaded JD later revealed himself as Cory Chandler. I couldn't find out much about him or whether he has/had a dog in the hunt, but his data is solid and well-sourced. When he closed up his blog later that year before moving out of state, he offered up the Excel file he used for the analysis to anyone who wanted it. I downloaded it then, and recently updated it to include the 2006 and 2007 fiscal years, using the same sources wherever possible. I'll post the data on The RT blog (blogs.roanoke.com/roundtable).
He looked at tax revenue, expenditures, gross state product and population growth. Graphing the numbers for tax revenue, Chandler allowed that there was a big upward curve, especially for income taxes (the biggest source of tax revenue) and sales and use taxes.
"But now that the anti-taxers are stewing in their own juices from looking at that steep upward climb in tax revenue," he wrote, "let's cool them down. Anti-taxers are like pasta: First you boil them, then you give them an ice water rinse so they don't get too squishy. I like my anti-taxers al dente, thank you."
He proceeded to point out that, adjusted for inflation, Virginians each paid about $221 more in taxes in 2004 than they had in 1990, but per capita state product had grown by more than $6,800 in that same time.
Let me put it another way, using more current numbers: Since 2000, the per capita income of Virginians has increased by $10,000, from $31,000 to $41,000 (in round numbers). But the per capita tax burden has gone up by only $550 -- despite the 2005 tax increase that anti-taxers still moan about.
The point is this: If you take into account inflation, population growth and economic activity, tax collection and expenditures by state government have remained remarkably consistent.
In 1990, total tax revenue was 4.35 percent of the gross state product. In 2007, it was 4.55 percent. As Chandler concluded, "But the long and short of it is, Virginia taxes and Virginia spending are not out of control. Virginia deserves its reputation for being well-managed. And the harder one tries to pierce the veil of mystery shrouding the budget, the clearer that fact becomes."
That 2006 analysis remains true today -- probably even more true after hundreds of millions of dollars in budget cuts necessitated by a declining economy. For even more historical perspective, the Tax Foundation has the state and local tax burden for Virginians going back to 1970. That year, it was 9 percent -- the 35th lowest in the nation. In 2007, it was 10.2 percent, the 33rd lowest in the nation.
I am not arguing that low taxes are a bad thing. Far from it. But as the latest attempt to fix transportation ends in a predictable train wreck, opponents of raising revenue should at least be honest and admit that Virginia is a very low-tax state that is efficiently run.
Though undeniably true, hard-core anti-taxers just can't admit that. Because the need for additional funding for transportation is pretty self-evident to most, admitting that Virginia government charges low taxes and uses its money wisely means admitting that new revenue is necessary.
And that's heresy to many Virginians -- politicians and constituents alike.
Radmacher is the editorial page editor of The Roanoke Times.
