- The Washington Times - Friday, May 5, 2006

Gov. Timothy M. Kaine and the state Senate have had a tough time bowling over the argument that Virginia doesn’t need a tax increase to improve its transportation system.

House Republicans say Virginians shouldn’t be asked to pay a tax increase when they are facing skyrocketing gasoline prices, rising heating bills and increased taxes passed in 2004.

Last year, Virginians paid a lower percentage of their income in local and state taxes than four of the five states it borders, according to the Tax Foundation, a District-based nonpartisan tax-research group.

A Census Bureau report shows that the state taxes Virginians pay are slightly less than the national average, and less than all but one of its bordering states.

The most recent study by the Tax Foundation shows that in 2005 the state and local tax burden in Virginia was 9.7 percent of an average annual income. The national average was 10.7 percent in 2005.

“Virginia’s border states are all clumped together right at about the national average, except Tennessee,” said Bill Ahern, a spokesman for the Tax Foundation.

The state and local tax burden in North Carolina was 10.4 percent in 2005, while the tax burden in West Virginia and Kentucky was 10.7 percent. The state and local tax burden in Maryland was 10.8 percent in 2005, the study shows.

The state and local tax burden in Tennessee was 8.7 percent in 2005, according to the foundation.

“[Virginia is] a low tax state despite the recent tax increase,” Mr. Ahern said. “Of course, the people who opposed the [former Virginia Gov. Mark] Warner tax hike were probably the ones who called us up and said, ‘how can the taxes be so low when taxes have rapidly risen in the past two years?’”

“We got some shocked calls,” he said.

Mr. Ahern said the state was able to absorb Mr. Warner’s $1.38 billion tax package of 2004 without jacking up the percentage Virginians pay because of the state’s booming economy.

Curtis S. Dubay, an economist with the foundation, said the calculations try to account for corporate, severance and tourism taxes shouldered by people outside the state.

“Just because a state collects a degree of corporate tax, it doesn’t mean the taxes are born by residents [of that state],” Mr. Dubay said, adding that “other states do a better job of shouldering their tax burden onto tourists” than Virginia.

A census report shows that the average amount paid in state taxes in Virginia in 2005 was $2,103, ranking the state 26th in the nation. North Carolina ranked 25th, with $2,146; Kentucky ranked 23rd, with $2,178; West Virginia ranked 16th, with $2,367; and Maryland ranked 14th, with $2,410. Tennessee ranked 45th, with $1,678.

Today, the Republican-controlled House in Virginia says it’s better to use some of the state’s projected $1.4 billion surplus and money freed up from debt to pay about $1 billion for roads over two years.

Mr. Kaine, a Democrat, and the Republican-controlled Senate say the state needs to create a new pot of money — about $700 million a year — for long-term statewide transportation improvements.

“We can also dismiss the notion that Virginia is a high tax state,” Senate Majority Leader Walter A. Stosch, Glen Allen Republican, wrote in an e-mail to reporters late last month. “We are all entitled to our opinions, but we are not entitled to our own facts. And the plain fact remains that the state and local tax burden is among the lightest in the nation.”

Some say there is a flaw in the foundation’s findings.

They highlight that Virginia’s tax burden is not as heavy as other states percentagewise because Virginians have higher than average income.

Last year, the average income in Virginia jumped 6.2 percent, to $38,390, ranking it seventh-highest in the nation, according to the U.S. Commerce Department’s Bureau of Economic Analysis. Only Maryland has a higher average income, at $41,760.

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