- The Washington Times - Wednesday, March 17, 2004

Virginia’s budget impasse boils down to one key issue: whether to raise taxes.

The House has stood firm on not raising taxes, while the Senate and Gov. Mark Warner have sought to raise a variety of taxes, including those on sales, cigarettes and income.

According to an analysis by The Washington Times, a family of four earning $100,000 a year would pay $764.25 more each year under Mr. Warner’s budget and $837.25 more under the Senate’s plan.

The analysis assumes that all adults buy a pack of cigarettes a day and spend 10 percent of their annual income on items that fall under the state’s current 4.5 percent sales tax. The analysis does not include deductions, exemptions and proposed reductions in the food tax.

Mr. Warner, a Democrat, has proposed raising $500 million a year by increasing the sales tax from 4.5 percent to 5.5 percent and the cigarette tax the nation’s lowest from 2.5 cents per pack to 25 cents, as well as allowing an additional local tax of up to 50 cents per pack.

The governor also wants to create an income-tax bracket that would impose a 6.25 percent tax on households earning more than $100,000 a year. Currently, all taxpayers pay an income tax of 5.75 percent. Mr. Warner has said under his plan, 65 percent of Virginians would pay less in taxes.

Yesterday, Mr. Warner resubmitted his two-year, $59 billion budget as the General Assembly reconvened for a special session. He called for a special session on Tuesday after lawmakers did not produce a budget during their 60-day legislative session or three-day extension.

Senate Finance Committee Chairman John H. Chichester initially had proposed $2.5 billion in new taxes in a budget that would raise the sales tax to 5.5 percent and increase the cigarette tax to 35 cents per pack.

The Republican senator also sought to increase the income tax for the state’s richest taxpayers, placing a 6.25 percent tax on incomes from $100,000 to $150,000 a year and a 6.5 percent tax on incomes of more than $150,000 a year.

The Senate and the House submitted new plans yesterday.

Senate budget writers dropped a proposed 3.5 cent-per-gallon gasoline tax increase but kept the proposed sales, income and cigarette taxes. Dropping the transportation component reduces the overall Senate two-year budget to about $60 billion still about $2 billion more than the House plan.

Meanwhile, House budget writers endorsed a bill that would remove sales-tax exemptions on several sectors of major industry, including airlines, shipping, railroads and media revenue that was integral to the House’s old $58 billion budget.

Both chambers adjourned last night and were expected to meet again today.

Under The Times’ analysis, a single parent of two earning $20,000 a year would pay $102 more in new taxes under Mr. Warner’s plan and $138 more under the Senate’s plan. A single person earning $30,000 a year would pay $112 more in taxes under the governor’s proposal and $148 more under the Senate’s plan.

A childless couple earning $60,000 a year would pay $224 more in taxes under Mr. Warner’s plan and $297 more under the Senate’s plan, the analysis shows. A childless couple earning $150,001 a year would pay $1,064 more in taxes under Mr. Warner’s plan and $1,512 more under the Senate’s plan, the analysis shows.

The authors of the two tax-increase plans conducted their own studies on how the proposed tax increases would affect taxpayers.

According to Mr. Warner’s analysis, a married couple with one child and two cars, and earning $30,000 a year and renting their home would pay $242 less in taxes in tax year 2005 and $350 less in 2008, when his proposal is fully phased in.

A single parent with one child and one car, earning $30,000 a year and renting a home would pay $125 less in taxes in 2005 and $181 less in 2008, according to the governor’s comparison. A married couple with two children and two cars, earning $175,000 a year and owning a home would pay $283 more in taxes in 2005 and $158 in 2008 under Mr. Warner’s plan.

According to the Senate’s analysis, a family of four earning $90,000 a year would pay $108 more in taxes under its plan. A family of four earning $150,000 a year would pay $294 more in taxes. A family of four that earning $200,000 would pay $689 more in taxes under the Senate’s plan.

Christina Bellantoni in Richmond contributed to this report.

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