A List of Tax Cuts
Tuesday, February 28, 2006 :::
The Speaker's office released a summary of the tax cuts the House has proposed in this session. It's not a big list, but it's worth mentioning. On car taxes, under which the state's rebate has been capped at $950 million since 2004:
The House Budget (HB 30) includes $50 million in funds to offset this increase, allowing consumers to receive reductions in their car tax bills at the current 70% level on a statewide basis.
It looks more like indexing than actual relief, but the spin on this is rather interesting:
"?The car tax relief is one of the few benefits the taxpayers of the Commonwealth, especially northern Virginia, receive in a visible way," noted Delegate Callahan. "The impetus for providing car tax relief originated in a bi-partisan manner in northern Virginia nearly a decade ago. It is a promise we in the legislature made and a promise our citizens rightly expect us to keep."
The new talking points? Always mention the benefit to Northern Virginia. Always.
Moving on to the death tax:
Long a priority for organizations representing small businesses and family-owned farms, repealing the death tax has gained momentum nationally throughout the last several years. The House legislation is the only legislation remaining that mirrors the federal phase-out. The plan approved by the Senate this Session does not, and would continue to tax some estates at a higher rate.
Included in those 'organizations" are some created especially by McGuire Woods to push the idea. Even though I happen to agree with the House bill, and consider the taxing of estates to be somewhat...ghoulish...the benefits of repeal are highly concentrated.
And lastly, on the sales tax holiday:
As the expense of returning children to the classroom each fall has increased, states have offered the holiday as an incentive for parents to find good values at merchants close to home. The District of Columbia and North Carolina already have sales tax holidays, and Maryland is scheduled to begin its holiday this fall. Consequently, competitive pressures played a role in Virginia enacting its own version this year. Delegate Parrish's bill (HB 532) would bring this incentive to Virginia. The House passed HB 532 by a vote of 100-0. It also incorporated legislation from Delegates Cline (R-Amherst), Cosgrove (R-Chesapeake), Frederick (R-Prince William), Jones (R-Suffolk), and Rust (R-Fairfax) among others.
I think a sales tax holiday, restricted to school supplies, is very poor public policy -- being both timid (it's only good for a very brief time. Need an extra notebook in the Spring? Tough luck, you pay the sales tax) and discriminatory. Don't have kids? Tough luck. You pay full freight each and every day.
A far more effective means to bring relief would be either to a) repeal the unnecessary 2004 sales tax hike or b) substantially revise the state's standard income tax deduction.
And again -- Virginia legislators aping the tax policies of other states. That's just laughable. If North Carolina, Maryland, DC, West Virginia, Kentucky and Tennessee all decided to repeal their sales taxes entirely, would Virginia politicians fall all over themselves to do the same? No (bills in the drawer, don't you know).
::: posted by Norman Leahy at 2/28/2006