Presentation to Joint Subcommittee
to Study and Revise
Virginia's State Tax Code


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Author: John H. Bowman, Professor of Economics, Virginia Commonwealth University

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Table of Contents

Personal Income Tax

Key Considerations

Income Tax Relative to Population, Income, & Other Taxes, Selected Years

Personal Income Tax Share of All State Taxes, Selected Years, 1975-2000

Income Tax Level – Three Relative Measures, Selected Years, 1975-2000

Tax Structure Showing Its Age

Income Tax Structure Dated

Failure to Adjust for Inflation Has Altered Effects of Tax Structure

Tax-free Amounts Are Low

1998 Poverty Levels and Tax-free Amounts for Virginia Income Tax

Personal Exemptions and Standard Deductions Below Poverty Levels

Current Tax

Commission’s Recommended Changes in Base Definition

Recommended Rate Changes (Option E2 in Appendix S)

Evaluating the Alternatives

Evaluation Criteria

Illustrative Tax Burdens – Current Tax and Commission Recommendations

Effective Tax Rates (ETRs) Under the Two Structures

Effective Tax Rates – Current Tax for 6 Families Varying by Size & Age

Effective Tax Rates – Option E2 for 6 Families Varying by Size & Age

One Group’s Preference Is Another’s Penalty

Age-based Preferences