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Virginia Courts Strike Down Taxation Without Representation

The Virginia Supreme Court today struck down a state law giving unelected bodies the power to levy taxes in Marshall v. Northern Virginia Regional Transportation Authority. It blocked regional transit authorities from levying taxes to pay for regional transportation projects. (Some of the money is being wasted on pork-barrel projects).

I earlier criticized the biggest tax imposed by the transit authorities, the regional grantor's tax, in the Richmond Times-Dispatch and the Examiner, noting that it violates the "user-pays" principle, and economic common sense, by making homeowners, not motorists, pay for transportation (Many motorists using Northern Virginia roads are from out-of-state; the grantor's tax applies only to Northern Virginia homeowners, including elderly people who seldom drive).

The decision will lead to demands that the legislature itself (or local governments) raise taxes to replace the invalid regional taxes. In an ideal world, the revenue needed for transportation should be generated, not with regional tax increases, but with cuts in public employee compensation (such as their overly generous pension and health benefits), which has outpaced inflation in recent years. (Northern Virginia has some of the region's worst roads and most ornate municipal buildings. Arlington, Virginia teachers typically have compensation packages that exceed $100,000 per year, reflecting salaries of over $70,000 and generous benefits worth nearly $30,000 -- and they're not even the best paid public employees!).

But given the clout of the public employee unions, that may not be possible. If it isn't, then the legislature should avoid reimposing the grantor's tax, and use more transportation-related user-fees. If it does raise any taxes, they should be taxes related to transportation, like a gas tax increase, not taxes on homeowners or businesses that create jobs.