No Case For Higher Taxes
Posted on Monday, April 03 @ 20:17:09 MST by AnnoRegni
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NO CASE FOR HIGHER
TAXES
By Peter Ferrara
MARCH 30, 2006 - -
The Virginia Assembly is now in special session to consider yet another tax
increase, this time for transportation. The House of Delegates passed a
budget providing an additional $2 billion for roads, with no tax increase. But
the Senate passed a record $4 billion tax increase for roads, raising taxes on
gas, car purchases, car registrations and home sales.
The special session
has been called to resolve this difference between the two budgets. Governor
Kaine supports a tax increase for transportation as well. But a review of the
state budget facts, which are rarely well presented to the public, shows there
is no good case for another tax increase.
Just two years ago, the
Assembly enacted a record tax increase of $1.4 billion in the first two years
alone. We were told that money was needed to balance the state budget.
But the budget they then adopted for fiscal years 2005 and 2006 raised state
spending by an extreme 19% over the prior two year budget, according to
published data from the Virginia Department of Planning and Budget. The Assembly
could have increased state spending in that budget by 15% without any tax
increase.
Even with that spending increase, the state has produced $3
billion in cumulative surpluses since 2004. The Senate and the Governor want to
spend all of that money as well, and increase taxes for even more
spending.
The House passed budget now under consideration would still
increase state spending over the prior two year budget by another 14%, even
without a tax increase. It provides for an additional $2 billion for
transportation, on top of the $9 billion that is already in the
budget.
The House budget also provides for a record $12 billion in state
spending for public schools K-12, including pay raises for teachers. Record
levels of state spending for colleges and universities are included as well. All
told, state spending for education is increased by $2.4 billion in the House
budget over the prior 2 year budget.
But all of this increased spending
is not enough for the Senate and the Governor. The Senate budget would increase
taxes by $4 billion to increase state spending by 17%, rather than 14%, and
spend $13 billion on transportation in the next two years, rather than $11
billion. Under the Senate budget, state spending would increase altogether by an
extreme 36% from June, 2004 to June, 2008.
Ask yourself, is your income
going to increase by 36% over that four year period? It will probably increase
only half as much, at best.
The state is going to have to learn to live
within the means of the families of Virginia. It can’t keep increasing its
spending year after year faster than family incomes are growing in the state.
For it is an inexorable mathematical verity that if they do, state taxes and
spending will eventually grow to 99% of family income.
Frankly, the House
budget increase of 14% is still too high, particularly after the enormous
increase in the last budget. But at least it displays the good sense not to seek
another tax increase on top of a record increase two years ago and a record
surplus since that time.
[Peter Ferrara is President of the Virginia Free
Enterprise Fund and a Director of Entitlement and Budget Policy at the Institute
for Policy Innovation.]
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