Governor Brings His Tax Proposal to Mclean

Governor Brings His Tax Proposal to Mclean

Warner scheduled at Dolley Madison Library on Friday, Jan. 23

Warner’s Tax Proposal

•Increases the sales tax on consumer from 4.5 to 5.5 percent; lowers the tax on food from 4 to 2.5 percent

•Increases income tax for those who earn more than $100,000 for individuals [about $200,000 for couples] from 5.75 to 6.75 percent; raises the threshold on income tax from $5,000 to $7,000 for individuals and from $8,000 to $14,000 for couples

•Raises the personal exemption from $800 to $1,000 and the standard deduction for individuals from $3,000 to $4,000

•Increases the tax on a pack of cigarettes from 2.5 cents, the lowest in the nation, to 25 cents, with local governments empowered to raise it another 50 cents.

•Eliminates the car tax on the first $20,000 of value

•Repeals estate tax for estates of less than $10 million and for all estates classified as working farms or small businesses.

•Mean tests the age deduction for those over 65; “Grandfathers” those who reach 65 before law takes effect.

Gov. Mark Warner (D) will be in McLean at 9:30 a.m. on Friday, Jan. 23, to explain his proposal for overhauling what he, and other public officials, says is an antiquated tax code.

By coming to McLean, Warner walks into a vortex of potential resistance to the measure, which would raise income taxes for individuals who earn more than $100,000 and couples with a combined income of $200,000 or more. Most of the 7 percent of those it would affect live in Northern Virginia.

The public is invited to hear Warner speak on what he called the “radioactive” issue of tax reform at 9:30 a.m. in a lower-level meeting room at the Dolley Madison Public Library. The room seats 65 people with standing room available for up to 110, said Jan Periello, president of the McLean Citizens Association (MCA), the sponsor of Warner’s visit.

Virginia budgets cover a two-year period, and Warner’s proposal accompanies the start of that biennial process, with the state staring at a predicted shortfall of $1.2 billion even with no new programs.

“On this, there is no disagreement,” he said in an address to the Fairfax Chamber of Commerce at the Wolf Trap Education Center last month. “Recent tradition has been to punt it to the next governor,” he said.

His tax proposal, he said, is the third phase in a lengthy process to update Virginia’s business processes and make them more professional.

After a “fiscal meltdown” in the mid-1990s as the cost of government-mandated programs increased and Virginia lost $6 billion in revenue, Warner said, his administration moved the state through a period of reform by instituting a professional management plan, cutting jobs, curtailing some programs and ferreting out unnecessary expenses in others. Warner said the price the state pays for light bulbs dropped from 37 to 23 cents, and “I still have the scars from the DMV [Department of Motor Vehicles] cuts.”

Now the challenge is “how to have a system that is fair to pay for core services and still cut spending to meet revenue.

“I’ve paid too much of a price to go back to the old way of doing business. ... You’ve got to keep the pressure on.”

With program cuts and common-sense solutions exhausted, Warner said, “The income tax is going to be on the table.”

Virginia has a “disproportionate reliance” on revenue from the state income tax, Warner said. “Higher-income residents pay a lower rate than other states,” he said, while “low- and middle-income residents pay more.”

Former Dranesville District supervisor Stuart Mendelsohn, now an attorney for Piper Rudnick in Reston and a longtime member of the Chamber of Commerce board of directors, asked Warner how he justifies asking Northern Virginians to pay higher income taxes.

“Less than 7 percent of the population will pay more than 30 percent of the increase” in taxes, Mendelsohn said.

“We get 20 cents on the dollar” back from the state for the taxes that come from Northern Virginia, Mendelsohn said. “We already get the lowest percent [of return] in the state.

“If this makes sense to you, I would ask you to be engaged,” Warner told Chamber members.

“It’s now going to be up to, I think particularly, the business community. Let’s help Virginia realize its full potential.”

At least one MCA member said she relishes the prospect of Warner’s visit, even in a small basement room at the library. Although the Alden Theater, which seats 380, is unreserved on Friday morning and could accommodate anyone who wants to hear Warner speak, the governor's office preferred the smaller room, Periello said.

“I think everybody should hear [Warner's presentation],” said Adrienne Whyte, who recently resigned from her post as chair of the MCA’s Planning and Zoning Committee.

“[The proposal] is a disproportionate burden on Northern Virginia.

“Where do people think all those people making $100,000 a year live? They live here.

“I think this is going to be a fascinating battle,” she said. “Yes, most people support increasing cigarette and gasoline taxes.

“But when you get into sales taxes and income taxes, it’s going to be brutal,” she said.