Bacon's Rebellion

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Virginia State/Local Tax Take: 30th in Country

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by

James A. Bacon
in

alcatrazOne parting shot before the Bacon family departs on spring vacation to a destination very relevant to the smart growth…

The Tax Foundation has published its updated ranking of states where state and local taxes took the greatest share of state income in 2011. No surprise, New York ranked at the top with a grab of 12.1%. New Jersey, Connecticut and California followed in the next three spots.

Virginia ranked 30th. State and local taxes took 9.2% of income in 2011. That’s actually an improvement from the previous two years, when taxes took 9.6% (in 2010) and 9.7% (in 2009). The numbers should change for the worse when 2012 data is considered — that’s the year the McDonnell transportation tax hikes went into effect. Still, Virginia state/local taxes likely will remain within a narrow band of 9.0% to 10.% where, according to Tax Foundation figures, it has stayed since 1977.

Hopefully, we can dispense with the nonsense that Virginia is a “low tax” state that starves its public sector. We’re not out of control like the aforementioned big tax-and-spenders but we’re well within the middle of the pack, with very small percentages differentiating us from those immediately above and below.

— JAB

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15 responses to “Virginia State/Local Tax Take: 30th in Country”

  1. larryg Avatar
    larryg

    we also depart for our annual Spring Break settlement pattern trip which is far different from Bacon’s as we will be camping out of canoes.. which after several days has a charm of it’s own and makes one realize just how much we take for granted in our normal “roofed” settlement patterns…

    by the way, I never thought that Va was a “low tax” state but given the states that rank lower than us – most are not very appealing… unless everything else is not important and the only thing that is – is low taxes.

    what is the lowest tax state with the best schools or is that an oxymoron?

  2. Breckinridge Avatar
    Breckinridge

    My wife teaches private school and Spring Break was long ago. The extremely high incomes in Northern Virginia skew this annual survey substantially because our income tax is flat. But I agree it will be interesting to see what happens when the 2013 transportation tax hikes kick in.

    The 2004 tax increase was caused by the faux “no car tax” scheme. The 2013 tax increase was caused by reliance on the inflation-immune gas tax for roads. Medicaid will cause the next one, expansion or not.

  3. larryg Avatar
    larryg

    has there ever been any estimate of how much more each of us will pay in fuel taxes?

    the problem with MedicAid – is not MedicAid. It’s our own inability to deal with Virginia’s issues ourselves so we divert attention to the Feds and blame them.

    there is no excuse for Virginia choosing to neglect the health care needs of it’s own population when by doing so – we kill ourselves financially.

    we worry about the cost to us of increased fuel taxes.

    do we ever calculate how much health care for the indigent and uninsured costs us?

    the fuel tax is a gnat on a dogs butt compared to the MedicAid costs in the budget.

  4. DJRippert Avatar
    DJRippert

    Just wrapped up a week of business in Sydney, Australia. Sydney is a mixed bag on the human development front. Yes, it’s walkable. Yes, it’s beautiful. However, it is frighteningly expensive. I was invited to two private homes in two different neighborhoods. Nice but modest homes in Arlington-like settings. Those homes cost perhaps three times what they would cost in Arlington.

    Spoke to a man who is an IT executive who drives an hour-and-a-half to and from work each day. He said he can’t afford to live in the city. Prefers the semi-rural life in the exurbs.

    General consensus is that a combination of in-migration from job depleted rural areas and real estate purchases by rich non-Australian Asians have driven up housing prices. Much talk of a bubble and possible popping of the bubble.

    The general consensus in Sydney is that the smart growth effort has failed and must be repealed:

    http://www.newgeography.com/content/003574-sydney-abandon-radical-urban-containment-policy

    Sorry, Jim but it seems supply and demand refuse to take a holiday just because the smart growth coalition sent them a free cruise package.

    Jim will find a mini-Sydney happening in the City of SanFrancisco. In this case an influx of young techies with jobs in Silicon Valley is driving up real estate prices much to the consternation of those who have lived in the city for decades. The clash is getting more and more hostile and represents what America will experience if smart growth / new urbanist philosophy ever really takes hold. Of course the ageing hippies from Haight Asbury have their way of protesting New Urbanist takeovers while the Bloods and Crips in other cities may use different methods to show their distaste for gentrification.

    Meanwhile, Silicon Valley continues to be an epicenter of both economic dynamism and sprawl. Jim should visit California’s second largest city – San Jose – as well as the site of the new Apple mega-headquarters in Cupertino, the leafy and very expensive Woodside (hint: eat at Buck’s), the quaint university town of Palo Alto and the grittier areas between San Mateo and the southern city limits of San Francisco. Even with all that, he still won’t have seen Oakland, Oakland hills, the East Bay, etc.

    Declaring Silicon Valley to have any one human settlement pattern is just as silly as declaring Northern Virginia to have any human one settlement pattern. However, smart growthers and new urbanists need simplifying assumptions to keep their observably failed ideas alive and “good city / bad suburb” is one of their favorites.

    Jim should also take a long look at the mass transit system and the capacity of both US 101 and 280. Remembering that Silicon Valley was fruit orchards not too long ago the amount of investment that California has made in the transportation infrastructure of Silicon Valley is quite impressive. Of course Jim would have told those knuckleheads in California that bigger roads don’t alleviate congestion and that mass transit is just another subsidy. For the last 20 years Jim would have been predicting the imminent collapse of this sprawl laden area. The good people of Silicon Valley will just smile when they hear these theories. They are Californians after all. When an East Coaster comes to tell them how badly they are living while still paying sky high taxes that impoverish them they just smile and nod. They shake hands with the easterner as he gets into his rented Geo to drive back to San Francisco for the flight to Richmond. Then they get in their Maseratis and drive home.

    1. larryg Avatar
      larryg

      excellent commentary DJ.

      I”m waiting with baited breath to hear Jim report back that yet another urban location has Nazi planners that use exclusionary zoning to jack up housing prices and cause income disparities!

      I think it’s time for the Bacon’s to schedule their next Spring Break trip to a Nebraska Farm town and report back!

      by the way DJ – have you ever visited Perth, Australia? it’s supposed to be the most remote city on earth and a mix of English and Asian cultures.

    2. James A. Bacon Avatar
      James A. Bacon

      Don, your observations of other cities are always interesting, and I’ll refrain from making great generalities about Silicon Valley until I’ve seen it. However, it does get frustrating to come behind you and correct massive representations of my thinking.

      Yes, I do consider myself a proponent of Smart Growth but there are many brands and flavors of Smart Growth. I have NEVER advocated urban growth boundaries. And I have always been acutely aware of what happens to housing prices when you restrict the supply of new housing in economically succcessful regions (read my next post).

      I am confident that the situation in Sydney is as you describe it. I also suspect that the people who enacted the policies that created that situation pursued policies of the dirigiste variety that I would find abhorrent.

      1. DJRippert Avatar
        DJRippert

        Jim –

        When you and Ed Risse supported the clear edge tax plan you supported urban growth boundaries.

        You want unimproved land within the clear edge to be heavily taxed. Meanwhile, you want improved land outside the clear edge to be heavily taxed.

        That sure sounds like an economic form of urban growth boundary to me.

        1. James A. Bacon Avatar
          James A. Bacon

          Good memory. You *were* paying attention. I would say two things. First, the Henry George land tax regime would be a “soft” growth boundary, not a “hard” one. But I’ll have to backtrack on my claim that I NEVER supported urban growth boundaries in any way, shape or form. (Wow, admitting that Rippert was right about something — that goes down hard. I hope to live long enough to see Rippert admit he was wrong about something!!)

          Second, while I did dabble with the idea several years ago and still find it attractive from an abstract, conceptual point of view, my views have evolved. My main concern is that any form of growth boundary would restrict the supply of developable property. As long as developers paid their location-variable costs, any form of urban growth boundary is probably not a good idea. As long as people are willing to pay their location-variable costs, they should be able to build where they want.

  5. larryg Avatar
    larryg

    re: ” policies that created that situation pursued policies of the dirigiste variety”

    are there ANY cities on the planet that do not practice dirigiste?

    sounds so very “Agenda 21” ish

    1. James A. Bacon Avatar
      James A. Bacon

      So, any criticism that state-local government engages in excess regulation is now relegated to the “anti-Agenda 21” dust bin? … Either you support the status quo or you’re a right-wing nut job?

      1. larryg Avatar
        larryg

        nope. but using it as a generic canard without distinguishing it – compare and contrasting would help with a more information specification other than that whipping out the anti-govt card …whenever.

  6. TBill Avatar
    TBill

    Interesting topic. I assume — please correct me if I am wrong — NoVA has a relatively high regional local tax rate and presumably it’s getting worse. I certainly perceive it’s a mistake to consider NoVA to be a low tax haven. I personally perceive NoVA is medium on taxes, with a trajectory toward becoming a high tax region (maybe like NJ where we came from).

    One VA local tax burden I am studying (and have prepared a detailed analysis) is the VA Car Tax. I estimate the VA Car Tax is now at approaching 20% Total 10-yr rate for an average new car $32000 in some NoVA localities. That’s $6400 taxes for a new car vs. $1920 taxes for the same car in MD. In my analysis, I am adding all taxes (sales tax + annual car tax). I am arguing the high Car Tax may start to hurt the auto business in VA, and it makes buying a more expensive car (eg; hybrid/diesel) much less attractive here. I estimate the incremental car tax on the extra cost of a hybrid or diesel is 20-40% depending on the relative blue book values of the non-hybrid base case used in the comparison.

    Now someone tell me: NoVA is a low tax region? – I don’t think so – but I could be getting a bad perception due to my current focus on the Car Tax issue.

    1. James A. Bacon Avatar
      James A. Bacon

      TBill, I’d like to see your analysis of the car tax, if you are inclined to share it. Email me with details at jabacon[at]baconsreellion.com,

      1. TBill Avatar
        TBill

        Thank you James…should be in your inbox

    2. James A. Bacon Avatar
      James A. Bacon

      TBill, I’d be interested to see your analysis of the car tax, if you are inclined to share it. You can email me at jabacon[at]dev.baconsrebellion.com.

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