Gov. Timothy M. Kaine's office is offering some historical perspective on his proposal to boost the state's income tax 1 percent to offset the $950 million a year spent on the car tax.
Here's the detail straight from the governor, and remember that these are answers from the folks who are advocating the increase:
- When was the last time the state income tax was increased?
The last time the state income tax was increased was 1972 when the 5.75% rate was added for income over $12,000 annually. (The $12,000 figure was increased to $17,000 in the late 1980s.) The corporate tax rate was also increased from 5% to the current 6%. Before 1972 the last increase was when the 5% rate was added in 1948.
The proposed maximum income tax rate of 6.75% (the current maximum of 5.75% + the 1% surcharge) would still rank Virginia favorably among states that have a state income tax rate. Neighboring state income tax rates include:
- MD, 9.23%
- Washington DC, 8.5%
- NC, 7.75%
- KY, 6.76%
- WV, 6.5%
- TN, 6.0% (on interest and dividends only)
- By how much in dollar figures would the average family see their income tax bill increase with a 1% surtax?
The increase in income tax liability is dependent on a person's taxable income. Some families with low income will experience only a small dollar increase, while the impact will be larger for those with higher incomes. Citizens will more broadly benefit as a result of a more diversified local revenue stream that avoids deeper cuts to public education, public safety, etc.