James Thomas: It’s Time for Tax Reform in Virginia

James Thomas | Candidate for House of Delegates

For too many families in Virginia, particularly Northern Virginia, the overall cost of living and the stresses incurred from historic pressures of inflation have made it difficult to live in the Commonwealth. The numbers don’t lie; for nine straight years, Virginia has seen a net out-migration. That means more individuals and families are choosing to leave the Commonwealth than stay, and the deficit is only increasing. Most of this loss is from Northern Virginia, and for the first time, it seems those making the move are working-age adults, not retirees. 

Now, the reasons for this migration out of Virginia vary; however, we know that the most significant contributing factor is the overall cost of living—the ability to afford basic staples such as housing, food, and fuel. Here in Northern Virginia, the daily grind of traffic, expansion of EZ Pass lanes, increases in toll road fees, considerable spikes in real estate taxes, and a rise in personal property taxes on vehicles for many continue to make it challenging to live and raise a family in Virginia. Everywhere you turn, there is some new or increased tax, toll, or fee. So much so Virginia’s General Fund now has an estimated surplus of over $5 billion.

Many in the Commonwealth don’t realize that in addition to taking a hit with inflation, they are paying more in state income tax because the current tax code is not indexed to inflation. In a report issued by Virginia’s Joint Legislative Audit and Review Commission, the Commission points out that state income taxes “have far outpaced median income because income brackets have not been changed since 1990.” As described by the Thomas Jefferson Institute for Public Policy, “Thanks to inflation, state income taxes owed by a median filer have increased 173 percent since 1990, while that same taxpayer’s actual income increased only 108 percent.” Virginia is one of a handful of states that does not have some form of inflation indexing to its tax brackets. 

The impact is felt across the entire economic spectrum, but those at the lower end of the income band feel the most strain. Since Virginia’s state income tax bracket structure has not been revised since 1990, nearly everyone has seen an automatic income tax increase, while many taxpayers are being taxed at the highest rate of 5.75%—including those earning more than $17,000. So, whether you make $500,000 or $17,000, you pay the highest tax rate. 

While there have been reports, studies, and commissions that have looked at the tax code in Virginia, more needs to be done by the General Assembly to provide genuine and sustained relief for every single taxpayer in the Commonwealth. Now is the time to conduct a comprehensive review of our current tax structure to ensure we have a fair tax code that generates the necessary revenue to fully fund and make strategic investments in our government services, schools, law enforcement, and infrastructure while also making sure that we decrease the financial burden on families—focusing on creating a diverse and dynamic economy. 

Making bold and essential changes will help individuals and families have the financial freedom to make the best decisions for themselves and increase the potential for new and existing businesses to invest in the Commonwealth, creating new sources of revenue rather than over-taxing citizens. 

Everything should be on the table and up for debate; we deserve nothing less from our elected officials. One idea that should seriously be considered in this comprehensive review is the state-wide elimination of personal property tax on vehicles, better known as the “car tax.” The car tax is hugely burdensome to most individuals and families—particularly those who can least afford it and have no alternative mode of transportation. Of the 27 states that impose a personal property tax on vehicles, Virginia is at or near the highest rate. While eliminating the car tax has been attempted previously, there is a unique opportunity for members on both sides of the aisle to come together to provide comprehensive, tangible solutions to improve the lives of every single person and move Virginia forward. 

For the General Assembly to fully understand the budget needs of the Commonwealth and the revenue required to fund it, the entire state government and covered agencies should be required to conduct a bi-annual audit. Not only is it necessary for lawmakers to understand where taxpayer money is going and how efficient and effective the government is with our hard-earned money, but it will also increase transparency for every taxpayer and state and local entity to fully understand how the money collected by the state is being spent. 

For many, these ideas and discussions will be a breath of fresh air and undoubtedly worth the conversation and debate. I believe it’s the least the voters deserve to ensure we can move Virginia forward.

James Thomas is a candidate running for Virginia House of Delegates in the 10th District, which includes Kings Park West, Fairfax Station, Clifton, and Centreville. This article first appeared in the Fairfax County Times on September 22, 2023.

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