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Virginia Is Facing .
A Tax Increase
If the proposal to suspend thfe automatic tax reduction law is adopt-. 1 ed by the Virginia legislature it will mean a 12 per cent increase in the State’s income tax. State Senator Harry Flood Byrd Jr. warned recently.
The truth of his statement is easily discernible from the following facts:
The automatic tax redaction law has been in effect in Virginia for —three yearsr It ha? resulted in saving the taxpayers 20 million dollars. The first year it operated, the reduction amounted to 20 per cent, the second year 9 per cent, and last year the cut was 6 per cent.
The law operates in this fashion. If there is a surplus in the State’s treasury at the end of the fiscal year after alT annual expenses have been paid, a formula automatically calls for a reduction in income taxes. The fiscal year ends June 30. The announcement of the amount of surplus is made in August after all tabulations on revenue and expenditures have been completed, and the reduction is noted on the tax bills due in December.
W hen the budget for the next two years was presented at the opening of the present session of the legislature it was estimated that at the end of this fiscal year there would be a surplus of $7,000,000. If the tax reduction law is not tampered with, this will mean that there will be a 12% reduction in the income taxes in December.
However, some members of the legislature are proposing to do away with the tax reduction and to earmark the estimated $7,000,000 for more schools or other pet projects dear to the heart of vote-seeking politicians.
In the first place, the budget is sufficient as it now stands to meet all the major needs of the State and to provide large increases in some departments. For instance, the new budget proposed to increase the appropriations for mental health by 25 per cent, to hike the bill for public health by 44 per cent and add 16 per cent to the schools.
In the second place, the $7,000,000 figure is just an estimate. It may turn out to be more or less. If it is less and the legislature obligates the State for the full amount, there will be a deficit. I f it is more than is appropriated, the balance of the money will remain in the treasury to be used by the politicians on more pet projects in future years. In either
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