Teilnehmerstand und Aktivitäten 2006 20. März 2006 Vera Wiehe.
FAIR REVENUES FOR VIRGINIA’S FUTURE MEG WIEHE STATE TAX POLICY DIRECTOR INSTITUTE ON TAXATION AND...
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Transcript of FAIR REVENUES FOR VIRGINIA’S FUTURE MEG WIEHE STATE TAX POLICY DIRECTOR INSTITUTE ON TAXATION AND...
FAIR REVENUES FOR VIRGINIA’S FUTURE
MEG WIEHE
STATE TAX POLICY D IRECTORINSTI TUTE ON TAXATION AND ECONOMIC POLICY ( I TEP)
Inform + Engage Policy SummitThe Commonwealth Institute
Virginia’s Tax System is …
OutdatedOutdated
Narrow
Upside Down
Lowest 20%
Second 20%
Middle 20%
Fourth 20%
Next 15% Next 4% Top 1%0%
2%
4%
6%
8%
10% 9.0%8.6% 8.5% 8.1%
7.1%6.8%
5.0%
1.1%2.5% 3.3% 3.7%
3.9% 4.2%
4.2%
5.2%1.9% 1.2%
0.5%
1.8%
Property Taxes Sales & Excise Taxes Income TaxesTotal Effective Tax Rate
Who Pays Taxes in Virginia?
Ideas to Fix Virginia’s Broken Tax System
• Broaden the base of the personal income tax , strengthen progressive rate structure and enact refundable credits to offset sales and property taxes paid by low-income families.
• Broaden the base of the sales tax to capture a greater share of economic activity
• Close corporate tax loopholes and review tax-code spending
Virginia's Outdated Tax Brackets Subject Far More Taxpayers to Top Income Tax Rate Than in Previous Years
1990 20140%
20%
40%
60%
80%
100%
38%
63%
% o
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To
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Ta
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ate
Tax Rate—$ 3,000$ 2%
3,001$ 5,000$ 3%5,001$ 17,000$ 5%
17,001$ and more 5.75%
Tax Bracket
More Progressive Rate Structure
Tax Rate—$ 3,000$ 2%
3,001$ 5,000$ 3%5,001$ 17,000$ 5%
17,001$ 50,000$ 5.5%50,001$ 200,000$ 6%
200,001$ and more 6.5%
Tax Bracket Less than 2% of taxpayers would pay the Top Rate under this proposed rate structure which on its own would raise more than $200m.
Impact of Current EITC
Low 20% 2nd 20% Mid 20% 4th 20% Next 15% Next 4% Top 1%0%
2%
4%
6%
8%
10%
9.0%8.6% 8.5%
8.1%
7.1%6.8%
5.0%
9.1% 8.9%8.6%
Tax Distribution without current EITC
Current Tax Distribution
Impact of Making VA’s EITC Refundable
Low 20% 2nd 20% Mid 20% 4th 20% Next 15% Next 4% Top 1%0%
2%
4%
6%
8%
10%
7.8%8.3% 8.5%
8.1%
7.1%6.8%
5.0%
↓1.1%↓0.3%
Tax Offset by Expanded EITC
New Tax Distribution after expanded EITC