Following up on his announcement of earlier this week, Gov. Timothy M. Kaine used his State of the Commonwealth speech to plug two narrowly targeted tax cuts.
One initiative would raise the filing threshold for state income tax from $7,000 to $12,000 for an individual and from $14,000 to $24,000 for married couples. That would eliminate income tax liability for an estimated 147,000 Virginians.
I have mixed emotions. On the one hand, I’d like a little income tax relief myself. The 2004 “tax reform” stuck it to wage earners in my income bracket. Plus, Gov. Kaine wants to raise another $850 million in revenues, much of it new taxes on the middle class. (Let’s not even talk about the federal income tax, with its highly progressive “clawbacks.”) On the other hand, I’ll say this: Easing the tax burden is a better way to help the poor and working class than creating new entitlement programs.
Kaine’s other idea is a very bad one: He proposes a constitutional amendment that would allow local governments to exempt up to 20 percent of the value of an owner-occupied home or farm, providing targeted tax relief to homeowners. The idea, I guess, is to shift the tax burden to commercial businesses. This comes from the same guy who, earlier in his speech, bragged about Virginia’s recognition as “the most business-friendly state in America”.
Cognitive dissonance, anyone?
Wherever such tax relief was passed, it would only increase the “beggar thy neighbor” competition between local governments for commercial development, and it would only aggravate the perverse perception that residential development doesn’t “pay its way.” If you want to intensify the paucity of affordable and accessible housing in Virginia, this is one sure-fire way to do it.