Southern Conference: Talking Tax Policy

[The Center for American Progress is co-hosting a two-day conference this week in Chapel Hill, North Carolina, entitled New Strategies for Southern Progress. The conference is convening more than 200 national, state and local political leaders, policy experts, journalists and academics to rethink critical issues facing the South and chart a new progressive vision for the region. ThinkProgress Team member Jon Baskin is on the scene]

Our second panel today, “Rethinking Tax Policy,” focused on recent attempts to reimagine tax policy in several Southern states, most of which have been virtually bankrupted by economic dowturns and cuts in state aid under the Bush administration. You may not believe me, but this was an extremely interesting conversation, particularly the twin narratives of campaigns for progressive tax reform in Virginia (successful) and Alabama (unsuccessful).

Political consultant Robert “Sid” McAnnally told Alabama’s story. In 2003, Alabama Governor Bob Riley, a conservative Republican and Southern Baptist, proposed a $1.2 billion tax package that raised taxes on the state’s wealthiest residents and businesses and cut taxes on poor families. He had the backing of the state’s corporate conservatives, who realized the state had to deal with budget shortfalls in excess of $500 million. But millions of dollars were raised by groups, including significant factions from the religious right, to oppose the bill, and the Governor’s plan was badly defeated.

A parallel effort was undertaken by Governor Mark Warner in Virginia in 2003. That story was told by George Mason Professor Frank Shafroth. Despite a state legislature dominated by republicans, many of whom had just been elected on pledges not to raise taxes, Warner managed to pass “the most far-reaching tax reform tax increase legislation enacted in two decades.” A year later, Virginia was one of only two states in the country to receive an “A” grade for fiscal management from the Government Performance Project.

What was the difference between success and failure in the two efforts? Both McAnnally and Shafroth referred to framing and presentation as key components. For instance, in Alabama, the package was offered as a separate referendum which became the subject of a noisy campaign on both sides. But in Virginia, tax reform was presented as part of the overall budget, so “everybody understood that what teachers were making, and what policemen were making, would depend on making the tax system more fair.” Shafroth emphasized it was crucial for progressives to “connect the dots” on tax reform, so people understand a more substantial tax base really means increased investment in their communities.

Gratuitous Sports Reference of the Day (so far):

“What happened that day, the Washington Redskins had just agreed to a contract with Joe Gibbs, for an amount of money that exceeded all the money ever paid to all the presidents of the United States. I asked them, ‘is anyone troubled by that amount of money.’ They said ‘no, the Redskins have to go win the super bowl.’ I said, ‘that’s what it’s all about. Do you want Virginia to win the Super Bowl or don’t you care?’”

— Professor Frank Shafroth, on how he convinced a group of local leaders to endorse efforts to reform Virginia’s tax code