washingtonpost.com: Socialism in the Old Dominion

The other day, I wrote a check for $500.28 for the privilege of driving my 1999 car for another year. It used to be much more, so maybe I shouldn't complain. . . . Of course I should, because I shouldn't be paying one red cent of this unfair tax.

But now comes William & Mary economics professor David H. Feldman [Close to Home, Sept. 15] to inform me that I have an unfair advantage over residents of poorer sections of Virginia because I pay higher taxes than they do. Never mind that I started with nothing and worked for 40 years to achieve a small degree of financial security.

And never mind that folks in Scott County chose to stay there and accept a lower income but take advantage of a much lower cost of living.

According to Feldman, Gov. Jim Gilmore's partial repeal of the car tax worsened the "inequity" in income because it "shifts so much state money from Virginia's poorest regions to its wealthiest." That assumes, of course, that the state has money of its own, which it doesn't. Instead, this is a zero-sum situation in which if you start out with less you are going to end up with less.

"The big winners are suburban and wealthy," Feldman writes. Why? Because "[l]ow income means cars of lesser value, so the local tax base eligible for state reimbursement is correspondingly small." What a revelation! But he goes on: "Virginia's rural counties and small towns tend to have lower tax rates on vehicles than suburban districts, so they collect less in state reimbursement."

Feldman's thesis is simple socialism, an economic approach to government that has failed everywhere it has been tried. If Scott County taxes vehicles at a lower rate than Fairfax County, then those of us who live in Fairfax County are obligated to make up the difference? I don't think so.

But Feldman isn't satisfied with a simple redistribution of income. He also wants to use the car tax to accomplish his kind of social engineering. He's upset that the Virginia legislature decided not to tax 70 percent of the first $20,000 of a car's valuation because it "decreases the cost of owning the car and thereby encourages people to own more cars and more expensive cars." To the best of my knowledge, Virginia has never used the tax code to regulate what residents can own, and Feldman is wrong to advocate that it do so now.

Professor David H. Feldman writes "that siphoning off state revenue to fund local tax cuts is a deeply disturbing policy that worsens Virginia's already stark regional income disparities." Perhaps Feldman should visit the Northern Virginia counties he wishes to plunder on behalf of the rest of the state. Yes, these are affluent areas that still lead the state in employment and income, even in the current economy. But to the thousands upon thousands of residents who don't live in McMansions and drive a Cadillac, the reduction of the car tax has helped them survive in the high-cost, highly taxed environment of Northern Virginia.

If the state needs more revenue to dole out, it would be fairer to tax luxury cars and yachts and increase "sin" taxes on liquor and cigarettes. The personal property tax affects too many people of all economic stripes, and if we abandon its repeal we hurt everyone.

A short response:

These writers do not seem fully to understand that the car tax is a local tax. They pay their car taxes to Fairfax County, not to Richmond. Their car taxes remain in Fairfax to fund services for Fairfax residents. The car tax rebate takes state money to compensate local governments for the tax cut that their citizens receive. Why should the average taxpayer of the state of Virginia pay for local tax cuts that go disproportionately toward wealthy suburban districts. If people who earn substantially more than average deem that they need tax relief, then the appropriate tax to cut is the income tax. Such a cut would at least treat all wealthy people alike. The car tax rebate currently gives a car owner in Alexandria up to $560 in annual tax relief per $20,000 car. A person of equal means in Bath county would receive a mere $24. Frankly, that's unfair.