June 1, 2000 | Commentary on Internet And Technology

A Matter of Principle

Outside of John Wayne movies, it's increasingly hard to find people who stick to their principles. Real life is replete with people who jettison their beliefs for fame, money, power - or a favorable editorial in The Washington Post.

So it's refreshing that on one of the critical issues of our time - taxes - Virginia Gov. James Gilmore has stuck by his conviction that money belongs to the people who earn it, not to the government. Even as some of Gilmore's fellow governors have raised taxes, he has celebrated - and practiced - the small-government philosophy of one of our state's most famous politicians, Thomas Jefferson.

Consider Internet taxation. Gilmore used his post as chairman of a congressionally mandated commission on Internet taxation to argue that e-commerce should remain tax-free. In the face of intense lobbying from governors and mayors eager to plunder the economy's new Internet wealth, Gilmore refused to yield. "Buying and selling stocks and bonds, using a search engine, even sending a simple e-mail - nothing will be safe from the government once the tax collector goes online," the governor said in a recent speech.

Gilmore's opponents were quick to claim that states and localities would lose revenue if "bricks and mortar" businesses, whose sales are taxable, started losing out to tax-free Internet retailers. But as a recent survey by the National Trust for Historic Preservation shows, sales for historic downtown areas are climbing, and the overall number of retail stores locating in historic downtowns is growing. Far from hurting stores with a physical presence, the Internet is helping many of them reach new customers.

Gilmore's opposition to Internet taxes has rightly earned him the gratitude of the Internet entrepreneurs who are fueling America's "miracle" economy. Closer to home, his anti-tax stance has won him the appreciation of another constituency: Virginia car owners.

Virginia has long been one of the few states to levy a personal property tax - year after year - on automobiles. During his campaign for governor, Gilmore promised to do away with the dreaded "car tax." His victory proved that the tax issue, properly presented, still has traction with voters. The average Virginian has already saved hundreds of dollars as part of Gilmore's five-year phase-out of the tax.

Gilmore has been active on other tax fronts as well. He has convinced the legislature to cut Virginia's food tax in half, eliminate the sales tax on nonprescription drugs, and reduce the sales tax on computer software and hardware. Estimates vary, but the total value of tax relief could reach $1.5 billion a year by 2002. No wonder Northern Virginia, more so than neighboring Maryland or Washington, D.C., has become a high-tech home to hundreds of new dot.coms and telecommunications companies. They now line virtually the entire 16-mile corridor from the Washington beltway to Dulles airport.

What explains Gilmore's willingness to go after taxes with a chainsaw when other politicians use a butterknife? Part of the answer is that Virginia governors are limited to one term. Politicians who don't have to purchase re-election votes with someone else's money are more willing to let that money remain with its rightful owners. Virginia provides powerful evidence of the ability of term limits to reign in taxes (Gilmore's predecessor, George Allen, was a staunch supporter of tax cuts, too).

But give Gilmore his due. It's a rare politician who can say, as Gilmore told a magazine interviewer, "I just don't start from the assumption that everything in America ought to be taxed." Even rarer is a politician whose policies prove he means it. We need more elected officials just like him.

Edwin Feulner is president of The Heritage Foundation (www.heritage.org), a Washington-based public policy research institute.

About the Author

Edwin J. Feulner, Ph.D. Founder, Chairman of the Asian Studies Center, and Chung Ju-yung Fellow
Founder's Office

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