Virginia ranks middle of the pack in several tax burden categories: Report

Virginia ranks middle of the pack in several tax burden categories: Report

Virginia finished around the middle of the pack in several categories of tax burden, according to the Tax Foundation’s annual “Facts and Figures” report released last week.

On average, residents of the commonwealth have to work until April 16 before they’ve earned enough money to pay all of their federal, state and local taxes for the year, according to numbers from the 2019 calendar year. This places the state 30th compared to other states and the District of Columbia. Although it was worse than the median, it was equal to the average date for all Americans.

Although federal taxes contribute substantially to this ranking, Tax Foundation Policy Analyst Janelle Cammenga told The Center Square there are several ways state lawmakers can reduce the burden.

“While there is not a lot states can do about the federal portion of this burden, they can still strive to be as competitive as possible in the areas they can control,” Cammenga said. “…Virginia is in the middle of the pack in a number of respects, so a move to lower rates in major categories like individual or corporate income taxes would help the state to stand out.”

One category in which Virginia ranked toward the middle was its overall business tax burden. As of numbers from July 1, 2020, this burden was ranked 26th best for businesses. The commonwealth performed better than the median in sales and corporate tax, but was brought toward the middle because of high unemployment insurance taxes on businesses and high individual income taxes.

The commonwealth ranked 27th highest in state tax collections per capita at $3,080 based on Fiscal 2019 numbers and 24th highest in state and local tax collections per capita at $4,994 based on Fiscal 2018 numbers.

“Especially over the last few years Virginia is becoming one of the higher-tax states,” Stephen Haner, a senior fellow for state and local tax policy at the free-market Thomas Jefferson Institute for Public Policy, told The Center Square.

“There has been no major, broad tax increase, but dozens or smaller and more narrow tax increases, which add up without being all that noticeable,” Haner said. “Virginia took advantage of federal tax changes to increase state revenue, when other states tried to match the federal tax cuts. Significant local tax [increases] have also been approved or are coming. The bottom line is that businesses which are tax-sensitive will go elsewhere.”

Again, near the middle, Virginia ranked 28th highest in its effective tax rate on property taxes as a percentage of owner-occupied housing value. Its cigarette tax was one of the lowest in the country at 60 cents per pack as of Jan. 1, 2021 and 30th highest in the gas tax.

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