At least three distinct sets of economic beliefs have provided the foundation to this year’s budget battles in Virginia’s General Assembly. There are the Senate and the Governor, the anti-taxers in the House, and finally, a coalition of community, church and labor organizations called Virginians For Tax Reform. Each presented a different tax proposal. What we get when all is said and done may be some mix of the three.

We can trace the roots of the Senate/Governor proposal back to the economic theory which dominated the period from the Great Depression up to the Reagan Revolution of the early 1980’s, that of John Maynard Keynes. At its heart, Keynesian economics believes that private markets are inherently unstable, moving through extreme periods of boom and bust. The role of government is to curb these excesses by regulating the powerful drive of private business toward profit at any cost, as well as cushioning the effects of economic inequality by providing a social safety net for the poor. Government and business are in a partnership where business is the engine and government is the driver, keeping the train on the tracks and moving forward.

To accomplish that, government has certain public duties — many have to do with the infrastructure that allows business to continue functioning. Education, transportation, public safety, health and welfare all fall under the proper role of government. To accomplish these duties, government needs money, which it gets by raising revenue from all citizens on a more or less equal basis.

Governor Mark Warner and Senator John Chichester each recognized that the core obligations of Virginia state government would need to be cut this year unless some new money was raised. In addition, each of them wanted to provide some degree of tax relief to working families; the Senator fixes the “cliff effect” in the current low-income tax credit and both of them raise the personal exemption and standard deduction to help cut some poverty-level income from the tax base.

Another factor driving both the Governor and the Senate is the danger to Virginia’s AAA bond rating that instability in recent budgets have caused. Over the summer Virginia was put on the bond agencies’ “watch list” for possible downgrading. Losing the AAA bond rating could greatly increase the cost of government.

The poster child for supply-side economics, Milton Friedman, can serve as the economic theorist at the heart of the House Republican tax proposal. Friedman is a proponent of free market capitalism, where the market is left to set its own rules without interference from government regulation. Taxation is the worst form of interference, since it sucks out resources which otherwise would have been used for economic growth. Taxing individual consumers is bad, but taxing business in such a way that you skew the playing field is even worse.

Thus, there is the “No Tax Hike Ever” pledge. Under this theory, taxes are always a bad thing, even if it means the government has to cut services it shouldn’t have been providing anyway. Why? Because they believe the ruthlessness of the market means it will always be more efficient at whatever it does than the government. If the government drops a program and it was really needed, then some private business will take up the task and make money doing it.

After stonewalling on collecting any new revenue whatsoever, the House produced a bill that would eliminate sales tax exemptions for particular commercial and industrial uses. In effect, shipyards, airlines, taxicabs, printers, natural gas and oil companies, the Wallops Island spaceport and trucking companies would have to start paying sales taxes. They refused to call this a tax hike, since it was collecting taxes that normally would have been paid without these special exemptions. This has an internal logic. If we have to have a sales tax, then it should apply to all individuals and businesses equally. Otherwise, the government is messing up the market’s balance again.

The third proposal came from a group of community, church and labor organizations which were less interested in a particular set of economic beliefs than in injecting basic human values into our state’s tax policy. As the author William Greider puts it in his recent book, The Soul of Capitalism, the values of capitalist accumulation and efficiency are threatening to overwhelm the values of human caring and community. These values include demands such as: We must be fair with one another. We must take care of one another. We must seek the best life possible for all members of our community, not just an elite few.

From these values come the three demands of the coalition to reform our state tax system so that it is fairer, adequate to fund the functions of state government and best suited to raise revenue in the current economy. Fundamental to the demand for fairness is the realization that our tax system takes 10 percent of the income of the poorest Virginians and only 6.9 percent of the richest. Our tax system redistributes wealth upwards. At a minimum, human fairness demands that we all pay an equal share of our income to help fund public projects. Also, people below the poverty line should pay little tax at all, since as a society we want their income to increase so that they can provide for the basic needs of their families. Taking more of what little they have is counter-productive.

Second, the coalition sees that state government has an essential role in maintaining the quality of life for its citizens. Without adequate revenue, it cannot do its job. Happily, by meeting the third goal of modernizing the tax system, Virginia can also raise this extra revenue.

By demanding that basic human values take precedence over economic growth at all costs, the community coalition believes that economics should always serve the well-being of human beings rather than vice versa.

Quid pro quoawards should go this year to Senators Thomas Norment and Walter Stosch, who each accepted large campaign donations from corporate PACs and then sponsored legislation which would directly benefit those corporations.

Senator Norment comes in first place. The ironically-named Verizon Good Government Club made a $14,000 donation to him in this last campaign cycle, nearly double what it gave any other legislator (Sen. Richard Saslaw, the Senate Minority Leader, received $7,750.) Sen. Norment turned around and sponsored a bill, apparently written by Verizon.

The Senator also accepted a donation of $11,551 from Dominion PAC, the lobbying arm of Dominion Power Company. This time, his donation was on par with other heavy hitters like House Majority Leader Del. Morgan Griffith, and less than what Dominion gave to Del. Frank Hall (House Minority Leader), Sen. Saslaw, and Sen. Ken Stolle. Nevertheless, Sen. Norment patroned a bill on electric utility restructuring which extends the period of capped rates as Virginia moves toward electric deregulation. The bill short-circuited the argument that some legislators are making that Virginia should entirely re-think the idea of deregulation, considering the chaos it caused in California.

And finally, Senator Stosch sponsored a bill for Phillip Morris, Inc. after accepting a $7,300 donation from Altria, its parent company (Norment appears again with the second highest Altria donation at $4,000.) The bill would have provided a corporate income tax credit based on the number of cigarettes that the business manufactures and exports to a foreign country. Ironically, Phillip Morris only employs 6,800 Virginians while Northrop Grumman, owners of Newport News Shipbuilding, employs 18,000. So we cut the tax break for shipyards and add a new one for making cigarettes.