The April 15 article “Hamstrung Local Tax Authority” on is an interesting contrast to the March 7 story “Fiscal Slam Dunk for City?”. The two articles are bookends. Where is Alexandria’s benefit of Amazon HQ2? Perhaps the New York people were correct to reject Amazon. The two articles are contradictory. One week, HQ2 is the best thing since sliced bread and several weeks later we read about the search for more revenue sources. What is going on? Where is the slam dunk? Why trust our city’s financial skills?
If all this growth is so good, why the need for new sources of revenue? The Maryland income tax structure cited in the article is about as poor a role model that can be found, and shows the council is not very observant. Amazon could have located HQ2 anywhere in the country, except possibly New York City, as can be seen in the competition. A significant reason for choosing Virginia is relatively friendly business and tax environment. They rejected several sites in Maryland, including Montgomery and Prince George’s counties and Baltimore City, in part because of both counties and Maryland’s unfriendly local income tax structure and business climate. The same thing that they think we should have. Will we see an offset?
Your article singles out real estate taxes as being regressive. That shows a failure to understand that different taxes have different impacts. Progressive and regressive are adjectives, a political description versus any real analysis. It could be argued that tax fairness is in the eye of the beholder. Also, a flat tax is not definitionally a regressive tax.
Why pick on just real estate taxes? There are a variety of taxes at all governmental levels that to some greater or lesser degree are regressive. This includes but is not limited to Social Security, Medicare, gasoline, utilities and restaurants (Alexandria favorites) and sales taxes. Cable taxes are an example of taxing the modern service economy. Most regressive is Virginia’s food sales taxes. There is also a school of thought that “sin” taxes (alcohol and tobacco) along with state run lotteries are also regressive. Additionally, in this area the Virginia income tax effectively functions as a flat tax, as it caps at $17,000, and thus is not really “progressive.”
Why the endless search for new revenue sources? Why isn’t the current roughly 460 sources not enough? What is wrong with controlling spending?
In conclusion it appears that we are merely sheep to be sheared. This really has nothing to do with regressive or progressive. It is simply a money grab wrapped up in fancy language.
William L. Blumberg