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Republican Senate candidate George Allen recently accused Democratic opponent Tim Kaine of being a tax hiker, even on people of modest means.
During a July 21 debate in Hot Springs, Allen criticized Kaine for "actually proposing tax increases that would be hitting people earning as little as $17,000 a year."
We checked to see if Kaine, who was governor from 2006 to 2010, really did try to raise taxes on people at that income level.
The Allen campaign, in a website post, backed Allen’s statement by citing news articles about a proposal Kaine unveiled in December 2009 as part of his farewell biennial budget proposal for 2010-2012. Kaine called for adding a 1 percent income tax surcharge and giving all proceeds to localities in return for them scrapping the car tax they levy on personal vehicles.
Legislators in 1998 adopted a five-year plan to phase out the personal property tax on most cars and reimburse localities for their lost revenues. But the program was more expensive than anticipated and legislators eventually capped the state reimbursement at $950 million a year. The remaining share is paid by vehicle owners.
Ending the car tax would mean the state wouldn’t have to provide the annual $950 million payment to localities, Kaine said in a speech to the General Assembly’s money committees. Kaine wanted to use the savings to help balance the state’s recession-wracked budget.
News articles from the time said Kaine’s policy would raise the maximum state income tax rate from 5.75 percent to 6.75 percent. That maximum rate applies to all taxable income above $17,000 after deductions and exemptions are taken into account.
The state charges gradually higher income tax rates up to that level. Virginia puts a 2 percent levy on the first $3,000 of taxable income, 3 percent of the next $2,000, 5 percent on the next $12,000 and then 5.75 percent on all taxable income above $17,000.
The bill advancing Kaine’s proposal did not say the added tax would only be levied on taxable income of $17,000 or more. The added 1 percent surtax would have pertained to all income levels, according to Joel Davison, a spokesman for the Virginia Department of Finance.
Virginia does not require individuals with a state adjusted income below $11,950 and married couples with a state adjusted income below $23,900 to pay state income taxes. So they wouldn’t have been affected by the tax increase.
Kaine’s proposal was killed by the General Assembly.
It should be noted that some people earning $17,000 would have benefitted from Kaine’s plan if their savings from the elimination of the car tax outstripped their increased income tax. There are no estimates of the number of Virginians who would fallen into this category, but we suspect it would be a small group. Here’s why:
For starters, we can eliminate those who didn’t own cars.
Now, let’s consider those who did own vehicles. A single filer with no children earning $17,000 would have a taxable income of $13,070 after taking the standard deduction and exemption. A 1 percent income tax increase for that person would come to almost $131 a year.
The car levy paid by that person would depend on where he or she lived because each locality sets it own tax rate based on the assessed value of the vehicle. In Richmond, a person wouldn’t pay a $131 levy unless they had a car worth about $9,000. In rural Henry County, a vehicle would have to be valued at about $17,500 to merit a $131 tax.
Allen said that Kaine proposed a tax increase that would have affected people earning "as little as $17,000 a year." Not everyone at that level would have paid more under Kaine’s plan, but it’s a safe bet that large number of them would have seen their overall tax bill rise.
We rate Allen’s statement True.
Kaine for Virginia, "Full VBA debate," July 21, 2012. (Allen’s statement is nearly 33 minutes into the debate.)
George Allen for U.S. Senate, "Virginia Bar Association Debate and PolitiFact," July 24, 2012.
Commonwealth Institute for Fiscal Analysis, "Bridging the gap," December 22, 2009.
Legislative Information System, "S.B. 543," January 13, 2010.
Virginia Department of Taxation, "S.B. 543 2010 Fiscal Impact Statement," January 24, 2010.
The Washington Post, "Virginia governor proposes and income tax increase," December 19, 2009.
The Virginian-Pilot, "Bid to raise income tax goes to House," January 20, 2010.
Interview with Joel Davison, spokesman for the Virginia Department of Finance, July 31, 2012.
E-mail from Joel Davison, August 1, 2012.
The Shad Plank, "Virginia income tax detail from Kaine’s office …" December 18, 2009.
Richmond Times-Dispatch, "House rejects Kaine’s proposed tax-increase plan," January 22, 2010.
Richmond Times-Dispatch, "Kaine proposes 1 percent rise in state income tax," December 19, 2009.
Richmond Times-Dispatch, "GOP forces vote on Kaine’s proposed tax increase," January 19, 2010.
PolitiFact Virginia, "Del. Englin says cashier and rich hedge fund manager pay same income tax rate," January 20, 2012.
Virginia Governor’s Office, "Governor Kaine unveils proposed biennial budget for 2010-2012," December 18, 2009.
Richmond City Department of Finance, "Individual (vehicle) personal property tax FAQs," accessed July 31, 2012.
University of Virginia’s Weldon Cooper Service for Public Service, "Virginia local tax rates, 2011," Tables 9.3 and 9.4, accessed August 2, 2012.
Interview with Linda Love, commissioner of the revenue for Henry County, August 2, 2012.
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