Until mentioned in the Governor’s news release, I was quite unaware that a local income tax option existed. According to the Code of Virginia:
The Counties of Arlington, Fairfax, Loudoun, and Prince William, and the Cities of Alexandria, Fairfax, Falls Church, Manassas, Manassas Park, Norfolk, and Virginia Beach hereby authorized to levy a local income tax at any increment of one-quarter percent up to a maximum rate of one percent upon the Virginia taxable income
The tax, once approved by referendum of the local voters, would have applied to residents of the localties. This provision was dated in 1989 yet none of the localities has exercised the option. I suspect that has something to do with the reluctance of our local elected officials to impose taxes. The other thing is that this local option has a sunset provision of 5 years after the date of enactment. That makes it a relatively short term option.
I have often thought that a local income tax made sense. For one, it would reduce the reliance on real estate taxes that the localities have. And, if you recall the go-go 1990s, a lot of money flowed into the state treasury because of income but that money didn’t necessarily make its way back to the localities. As I read the code sections, the money generated would be returned to the localities.
Of course, I had envisioned the tax being based on where you work as opposed to where you live. That implementation is what I have seen in other states, since jobs tend to be in one place while people work in another. In Hampton Roads, for example, I think that would benefit Norfolk.
So my question is this: would you support or oppose a local income tax?
VIVIAN J. PAIGE | All Politics is Local 
Toss the sunset out (that just kills planning), convince me that the money stays here *and* that it could be spent as the locality pleased, I’d be in.
The Code actually lays out the mechanism for collecting the tax and remitting it to the localities.
Right, but even if the locality raises the money, that doesn’t necessarily mean we’d be able to spend it as we pleased (see, e.g., Arlington’s repeated and failed attempts to provide equality in benefits over the years).
A local income tax is not a solution I’d reach for first, but I think that – short of a significant change in leadership in Richmond – it’s one that NoVA will have to start looking at.
I agree with MB on this one. The tax money should not go through the state government at all (that’s just wasteful bureaucracy), and the localities should be able to spend it as they see fit. (I may not agree with what MB wants to spend the money one, but that is why we have states and localities, so that different things can be tried different places, and people can live in places that suit them.)
However, the reason we do not have a local income tax, I thought, was that the car tax was supposed to provide that local income. I do not want both an income tax and a car tax, any more than I would support a federal consumption tax without a repeal of the Sixteenth Amendment.
If Norfolk were to impose an income tax on income earned here regardless of where you live, (I live in Chesapeake) that would be taxation without representation, would it not?
I already pay 4X the property tax rate on my business equipment as homeowners pay, in addition to the BPOL tax, and I have no say in how much tax is assessed or how it is spent. If Norfolk were to add an income tax as well, I think that would be the last straw. I’d close this practice and reopen where I vote. I suspect many businesses would do the same, relocating to nearby cities without an income tax.
Give it 10 years and Norfolk would be nothing but government offices and housing projects.
I’m not necessarily sure I agree that it’s wasteful bureaucracy if the state’s revenue agents who are charged with assessing the state income tax also assess a local income tax. If the local government is responsible for collecting and enforcing a local income tax, that would mean you have three government revenue services (federal, state, and local) doing the same job–assessing, collecting, and enforcing payment on the same individual’s income tax. I’m all for making sure the localities get to spend the money the way they want, but surely we’ve duplicated this process enough times already?
As for the tax itself, I’m agnostic. One way or another, the city is going to get the money it needs to keep running, so I’m going to pay whatever method they use. I suppose an income tax beats worrying about how much our assessed home values will be arbitrarily increased each year.
Mouse – I’ve never heard anything about the car tax being in lieu of a local income tax.
Don – I threw out my opinion on the way I’ve seen the tax implemented in other areas. NYC, for example, or Cleveland. That is not the way the code is written.
anon – I agree that it’s not wasteful to have the state – which is already in the business of collecting income taxes – to collect the local tax. I believe that is the way that the other states handle it.
Vivian — do many localities have both an income tax and a car tax?
For transportation, I don’t care for the idea. I would prefer that the taxes more directly relate to transportation. I like the idea of user fees too. I think it is important that people appreciate the cost of the transportation infrastructure they use. That will help all of us make informed decisions about how we choose to live and how we plan our communities.
But as a source for general county revenues, I think it is a good idea. It would be nice if the counties had a more diverse taxation structure rather than relying so heavily on real estate taxes. Up in NoVA that has forced many of the counties to increase the rate to keep up with falling real estate prices. I would like us to get rid of personal property tax and maybe an local option on the income tax could help us do that. Also, PPT seems like a bad idea because your tax base is depreciating every year (or at least I think it would on a net basis factoring in new purchases).
I still think a rent tax is the way to go.
Mouse – the car tax is not something that I see a lot of in other states. However, most of them do not labor under the Dillon Rule. And most of them have higher income tax rates than VA has.
tx2vadem – I didn’t mean that the income tax should be used for transportation. I was thinking in much more general terms.
NO!! NO, NO, NO, NO, NO, NO, !!!!NNNOOOO!!!!
Good grief, NO!!! Have you completely lost your mind, Viv? If Virginia beach imposes an income tax, I move to Chesapeake. If all Chesapeake does, I move to Moyock. If something this idiotic is even discussed in N.C., I move to New Hampshire, where the citizenry would likely burn down the town hall before a local income tax would be imposed. And If I would vacate Tidewater, you can bet many, many others would do so as well. Probably before I would make it out of town.
Wanna turn the seven cities into the seven ghost towns? Go ahead with an idea like this. It’s a guarantee. You think the regional tax rip-off and the abusive driver fees…
(abusive cop scams is a more accurate name for that debacle, but I digress)
…fell hard and fast? This idea would fall like a stone, as Tidewater empties and property values plummet.