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The debate never strays too far from taxes in this fall’s U.S. Senate race between Republican George Allen and Democrat Tim Kaine.
Allen recently aired a TV commercial accusing Kaine of being a big taxer. The ad highlighted Kaine’s unsuccessful proposals for $4 billion in tax increases when he was governor from 2006 to 2010 and his comment in a Sept. 20 debate that he would be "open" to imposing a minimum federal income tax on all Americans.
Kaine responded to the ad. "The facts are that the tax burden on Virginia families was lower under Tim Kaine than under George Allen," his campaign said in a Sept. 25 news release.
We wondered if the tax burden on families really was lower under Kaine than under Allen, who was governor from 1994 to 1998.
Kaine’s campaign told us they got the numbers from the pro-business Tax Foundation. The organization estimates what residents of each state pay in taxes -- not to just their own state and local governments, but also to others, through hotel, gas and other levies. Take, for example, Northern Virginia residents who work in the Washington. The computations would include state and local taxes the commuters are paying Virginia as well as estimates of sales, restaurant and other levies they pay in Washington.
According to the Tax Foundation, Virginians paid state and local taxes averaging 6.9 percent of their income during Allen’s governorship as compared to 6.7 percent during Kaine’s administration.
We were uncertain what to make of these numbers because neither Kaine nor Allen could control tax rates outside of Virginia when they were governors. So we turned to data that is confined to computing the state levies Virginians pay, as a proportion of their income, to Virginia.
We found two sources: Congressional Quarterly’s annual State Fact Finder; which makes the calculation based on data from the U.S. Census Bureau and Department of Commerce’s Bureau of Economic Analysis; and the Tax Policy Center, whose website allows visitors to build their own tables based on data from the Census Bureau.
The annual data from both groups computes total state tax revenues as a percentage of the total income of Virginians.
Congressional Quarterly’s figures show that during Allen’s governorship, yearly state tax revenues averaged 5.6 percent of all the income earned by Virginians; over Kaine’s term, the average was 5.3 percent.
The Tax Policy Center’s figures show that the average was an identical 5.3 percent during Allen and Kaine’s terms. It should be noted that the center did not have data for the final budget year of Kaine’s term, which began July 1, 2009.
We found an interesting trend in the data from both organizations. The tax burden was stable during the years Allen was in office; ranging from 5.5 percent to 5.6 percent according to the Congressional Quarterly, and 5.2 percent to 5.4 percent according to the Tax Policy Center.
In contrast, the burden was volatile under Kaine, falling from 5.9 percent during his first year in office to 4.6 percent his final year, according to Congressional Quarterly. According to the Tax Policy Center, the burden dropped from 5.6 percent Kaine’s first year to 4.8 percent his third year -- the latest data available.
Economists said the decline, experienced by many states, was caused by the national recession that set in half way through Kaine’s term. "Tax collections shrink faster than income," explained said Scott Drenkard, an economist with the Tax Foundation.
Norton Francis, senior research associate with the Tax Policy Center, said Virginia’s tax revenues declined by 10 percent, as corporate income dropped, real estate sales sagged and consumers reined in spending.
Virginia did not enact major tax cuts during the final years of Kaine’s term. That leaves the recession as best explanation why the tax burden fell, according to Drenkard.
John Knapp, a senior economist and professor emeritus at the University of Virginia’s Weldon Cooper Center for Public Service, said the per capita tax burden is a poor way to measure a governor’s performance.
"Many of the events during a term that affect the denominator (income) are beyond the control of a governor," he said. "This also applies to the numerator (taxes) since a lot of factors affect tax collections in addition to explicit changes in tax rates and tax bases. For example, if the economy deteriorates in response to national and international events, income and sales tax collections will reflect the soft economy."
The figures don’t reflect another important consideration: Allen unsuccessfully sought to cut taxes by $2.1 billion when he was governor, while Kaine unsuccessfully proposed $4 billion in tax increases.
Finally, we should note that under Allen and Kaine, Virginia was among the 10 states with the lowest tax per capita tax burdens.
Kaine’s campaign said the "tax burden on Virginia families was lower under Tim Kaine than under George Allen."
Raw numbers generally back Kaine, but paint a superficial picture. Kaine did not offer large-scale tax cuts during his term; to the contrary, he unsuccessfully proposed increasing taxes by $4 billion. The smaller burden was caused by shrinking tax revenues coming into the state because of the recession.
Kaine’s statement tries to turn the state’s lost revenue -- caused by no effort of his own -- into an accomplishment. The claim is based on kernels of data that, when put into context, give a different impression. We rate it Mostly False.
Tim Kaine, "Allen knowingly airs false ad, demonstrates he’d further partisan gridlock in Washington," Sept. 25, 2012.
Youtube, "Fairfax Chamber of Commerce / NBC 4 Debate," Sept. 20, 2012.
PolitiFact Virginia, "George Allen says Tim Kaine ‘announced he wants to raise taxes on everyone,’" Sept. 24, 2012.
George Allen, "Accountable," (ad) Sept. 25, 2012.
Tax Foundation, "Virginia State-Local Tax Burden Compared to U.S. Average, 1977-2009," accessed Sept. 26, 2012.
Interview with Scott Drenkard, economist with the Tax Foundation, Oct. 1, 2012.
CQ Press, State Fact Finder, 1996-2012 editions.
Tax Policy Center, State & Local Government Finance Data Query System, accessed Oct. 3, 2012.
Interview with Norton Francis, senior research associate in state and local finance with the Tax Policy Center, Oct. 3, 2012.
PolitiFact Virginia, "George Allen says he cut $600 million in taxes as governor," March 9, 2012.
PolitiFact Virginia, "George Allen says Tim Kaine proposed $6 billion in tax increases while governor," April 16, 2011.
Emails from John Knapp, senior economist, professor emeritus and editor of The Virginia News Letter at the Center for Economic and Policy Studies, University of Virginia Weldon Cooper Center for Public Service, Oct. 3 and Oct. 8, 2012.
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