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Peoples
Republic of Virginia
In
passing the $1.4 billion tax hike, Virginia's
lawmakers started the long march down the road toward socialism
and serfdom.
The
tax debate during the legislative sessions earlier
this year reflects something far deeper than a
dispute over money. The division in the General
Assembly on the tax issue sprang from fundamental
differences over the proper role of government.
One
view is inherited from the framers of the
constitutions of the United States and Virginia, who
believed that the more people are willing to do for
themselves, the less government they will need.
Closely allied is the laissez-faire
capitalism of Adam Smith.
The
other view is that of Jean-Jacques Rousseau and
modern socialists. It distrusts the private sphere
and profit motivation, assumes that the complexity
of modern life requires collective action, and
favors a strong central government.
Describing
tax proponents as socialists may seem a bit of a
stretch, but the premise of their argument clearly
justifies the label. They claim that government’s
role must constantly expand and that the tax burden
must be ratcheted upward periodically to pay for the
expansion. The only logical end to this process is
for the tax rate to reach 100 percent.
Several
commentators explicitly justified their support for
a tax increase on the grounds that the increasing
complexity of modern life requires more and more
government. Gov. Mark R. Warner and state Sen. John
Chichester, R- Stafford, the principal proponents of
the recent state tax increase, intone endlessly
about the need for greater public “investment,”
as if government financing and control were the only
appropriate methods for satisfying human needs.
Virginia’s
preeminent statist, former Gov. Gerald L.
Baliles, argues that a tax increase is imperative
because the population is growing, businesses are
expanding and the need for public services is
increasing. In his view, periodic tax increases are
an inevitable consequence of growth.
But
the need for a constantly expanding government is
hardly inevitable.
A
rising population means more people paying taxes.
Business expansion means higher tax revenues. Why
should the need for public services increase at a
higher rate than the rate of population growth or
business expansion?
Sixty
years ago, Friedrich Hayek, a critic of socialism
and a Nobel laureate, challenged the then-prevailing
view that the increasing complexity of life
necessitated a greater role for government.
Hayek’s The Road to Serfdom demonstrated
that central planning and greater government control
are neither inevitable nor desirable. Competition,
individual initiative and private markets create
their own “spontaneous order” without the need
for strong central control.
A
quarter century later, Britain had forgotten
Hayek’s insight. Marginal tax rates were
suffocating initiative and enterprise. Public
ownership of industries was stifling innovation and
efficiency. Margaret Thatcher reversed the socialist
trend that many had insisted was “inevitable” by
reducing tax rates and government’s role in
British life.
Several
years later, Ronald Reagan won a mandate to pursue
the same economic program in this country.
One
of the stated principles of the Republican Party of
Virginia is that the free enterprise system is the
best system for providing for the needs of the
people. Unfortunately, not enough Republicans
in the General Assembly believe in that principle.
It
is equally distressing, but not surprising, that Big
Business joined with liberal interest groups in
lobbying for the tax increase. Adam Smith warned
that powerful business interests are often not
reliable defenders of the enterprise system. Small
businesses, on the other hand, opposed the tax hike.
Unless
Virginians want to be drawn down a road toward
irresistible government expansion and further tax
increases, they must reject the very premise for the
$1.4 billion tax hike just approved by the General
Assembly.
--
June 7, 2004
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