With the release last November of Gov. Mark Warner's (D) tax plan for Virginia, area citizens have wondered how the tax plan, which calls for increases in the state's sales tax and cigarette tax as well as the full elimination of the car tax, would trickle down to them. Although the General Assembly doesn't convene until Jan. 14, Del. J. Chapman "Chap" Petersen (D-37th) has been meeting with constituents to get their impressions of the tax plan and Warner's attempts at tax reform.
Among the sentiments he's heard has been the lack of trust toward the state legislature by skeptical voters who believe Northern Virginia won't receive the share of revenue it deserves.
"Do we trust the state to raise money and spend it in an equitable manner, or is Northern Virginia being used like an ATM for the rest of the state?" asked Petersen in an interview. He echoed the feedback he has received from constituents and businesses.
Indeed, the question of trust was among the reasons why area business leaders attended a Jan. 6 breakfast briefing hosted by Petersen on Warner's tax plan.
"I just want to make sure that it's fair," said Myron Boncarosky, who is in the retail business. He said he attended the breakfast because he was interested in taxes.
If passed without major revision, Warner's tax plan includes a hike in the state sales tax from 4.5 percent to 5.5. percent, the repeal of the estate tax for those whose assets are under $10 million, and the modification of the age deduction for seniors, which would make tax deductions for seniors proportionate to their income, vs. the current system of an automatic deduction of $12,000 for those over 65.
The tax plan also calls for the closing of a loophole for businesses that have holding companies in tax-free Delaware in order to avoid paying for taxes in Virginia, and the option for counties to raise the cigarette tax up to 50 cents per pack by 2006, on top of a statewide cigarette tax raise from 2.5 cents to 25 cents.
Two pieces of the tax plan that would have greater impact on Northern Virginia, said Petersen, would be the full elimination of the car tax by 2008 and the creation of an additional income tax bracket for those with incomes over $100,000 a year.
NORTHERN VIRGINIA benefits from the car tax's elimination because the region would get more money from the state, Petersen explained. Northern Virginians lead the state in car sales, and the state makes up to localities the lost revenue from taxpayers.
However, the creation of an additional income tax bracket for those with incomes over $100,000 would impact affluent Northern Virginia. Roughly 48 percent of Fairfax County families, compared with about 8 percent statewide, have incomes over $100,000.
Petersen said the reaction to the tax plan by businesses has been twofold. Businesses have been receptive to the tax plan and the need to raise revenue, but they also wanted to know how the tax plan would impact their business and Northern Virginia.
"People want to know, what's in it for our business, what's in it for our community?" Petersen said.
Petersen stressed that the version of the tax plan he would see in the General Assembly may be different from the one Warner unveiled, because changes to the plan could occur in committee or during debate.
"I think we have a window of opportunity to tackle this problem, and if we don't, we have a train wreck coming," said Teddy Goodson, a Fairfax Realtor who attended the Jan. 6 breakfast.