Real tax reform is needed

Beware! Your life, liberty and property are once again at risk as the 108th Congress convenes in Washington and Virginia’s legislature convenes for its session in Richmond.

It will be fascinating to see what comes out of these legislatures. Virginia’s, of course, is part-time only, meeting for fewer than two months of the year. Any doubt that this limitation has nothing to do with the more limited government that Virginia enjoys as compared to New York, Pennsylvania and California just isn’t paying attention.

And for the first time in years, real tax reform is on their agendas. And if you don’t think partisan control over these bodies make’s a difference, then you have forgotten your history.

It’s amazing, when you consider where we have been. The tone for the Nineties was set by the first President Bush, whose 1990 budget “deal” was the last in a series of surrenders by Republican Presidents to Congresses dominated by Democrats. First President Reagan and then President Bush “compromised” with promises of real cuts in discretionary spending in exchange for “minor” tax increases. And both times, promised cuts never materialized, while the economy was hobbled by the tax increases which were the real goals of congressional Democrats.

Just a few months ago, Virginia politicians Republicans and Democrats alike were spending millions to persuade Virginians that they are undertaxed.

Ah, what a difference an election makes! Voters in Northern Virginia and the Hampton Roads area overwhelmingly rejected proposals to increase the sales tax. They rejected the various misrepresentations of those politicians, perhaps most offended by the self-contradictory notion that higher taxes were “necessary,” even though those politicians lacked the courage to increase taxes themselves, or to put the tax increase proposal on the ballot during the same year that they faced the voters.

And for only the third time in the history of the Republic, voters nationwide increased the numbers of members from the President’s party during the mid-term election of his first term.

And for a change, the politicians seem to be listening.

Delegate Jack Rollison, R-Woodbridge, is reputed to be so humbled by the voters’ message that no tax increase proposal need apply. Whether this conversion results from respect for the voters message or the fear of voter retribution is virtually irrelevant. Respect is nice, but fear works.

Most importantly, there is now discussion of serious proposals for reform and for discussions about the fundamental fairness of the tax code. At the national level, among the centerpieces of the Bush agenda for 2003 is an effort to end the double taxation of corporate dividends. And though Democrats already are responding with the rhetoric of jealousy and class warfare, the Bush proposal is being discussed on terms that seem to make passage likely.

The principle is quite simple. The tax code imposes a tax on corporate profits, but also taxes those profits when they are distributed as dividends to shareholders. This is tantamount to double taxation.

Equally important to the tax debate are efforts to repeal the estate tax. After decades of hard work, thrift, responsible living, it doesn’t seem too much to expect to be able to leave something for your children and grandchildren. After a lifetime of work and paying taxes on income, one might expect that the property one accrues is beyond the reach of the tax man.

That is not the case, either nationally or in Virginia. Both the federal government and Virginia’s state government line up at the trough, and exact a portion of many estates. Our tax system penalizes precisely the qualities that most responsible citizens pay lip service to, if not always practice.

But the tax code is fundamentally unfair. The property accrued over a lifetime already is taxed when it is earned as income. Why should government have a claim simply because its owner assumes room temperature? The only justification is the avarice of a bloated government. Efforts both nationally and in Virginia are being made to do away with this government confiscation of property already taxed once.

Likewise, Virginia’s budget “crisis” the only “crisis” is one of government’s spendthrift ways of the last decade, driven by sanctimonious buffoons who couch government confiscation of one person’s property to buy the votes of others as “broader measures that will benefit everyone” provides an opportunity to rethink and restructure government to create a fairer and more efficient method of meeting public priorities, ones which rewards individual charity.

Thus, in addition to repeal of the estate tax and ending double taxation, true tax reform should include dollar-for-dollar tax credits for charitable donations, limited only by that portion of the tax bill going for those portions of the government budget expended upon the appropriate functions of government. To be sure, there are certain minimal appropriate government functions those enumerated in the United States and Virginia Constitutions, such as national defense, foreign policy, the courts, education and maintenance of property records (in the state constitution), highways and some transportation.

Government charity, of course, is not charity at all, as that money is exacted from taxpayers at the point of a gun. And government should not even be in the business of doling out “services” to the less fortunate/lazy/handicapped, or anyone else, for that matter. At the same time, the less onerous, but more effective, method of promoting the public good of charitable giving is to grant dollar-for-dollar tax credits and permit churches and charities to do what they do eminently more efficiently and better than the government. The rub is, of course, that politicians and bureaucrats would be required to surrender their control over a large portion of the nation’s wealth, something many are disinclined to do.

As our representatives reassemble, it is appropriate to consider what not only is fair, but also what is effective. And if they were to do so, government would get out of many of the businesses into which it has gotten itself.

An attorney, Young lives with his wife and their two sons in Montclair.

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