Various proposals have been made in recent years to the General Assembly of Virginia for changes in Virginia's tax laws, particularly those relating to corporations which do business both in Virginia and in other states. Feeling that before action should be taken on a matter of such great importance both to the corporations and other businesses affected by these taxes, and upon the State's revenues, the subject should have careful and thorough consideration and the General Assembly should have all pertinent information which could be made available to it, the Assembly adopted, at its 1958 Regular Session, Senate Joint Resolution No. 11 and Senate Joint Resolution No. 51 which directed study of these important matters by the Virginia Advisory Legislative Council.

At its organization meeting, the Committee elected Senator Sydnor as Vice-Chairman. John B. Boatwright, Jr. and G. M. Lapsley served as Secretary and Recording Secretary, respectively, to the Committee.

The Committee held a public hearing which was widely advertised throughout the State at which it solicited the views of business men concerning possible tax changes which might be advantageous. It subsequently formed itself into subcommittees dealing with the three major phases of its study -- the apportionment of corporate income for tax purposes, capital and other taxes as they affect industrial development, and taxation of warehousemen and distributors of products, goods and merchandise. These subcommittees then pursued their several studies in more detail, conferring with those particularly concerned in each field, and reported to the full Committee, which in turn made its report to the Council. The Council, having considered the report of the Committee, now submits the following recommendations, for the reasons hereinafter set forth:

SUMMARY OF RECOMMENDATIONS

1. Virginia should change its present formula for apportionment of corporation income for tax purposes to a three factor formula similar to that in effect in a majority of the other states; and should collect such taxes from all corporations of the classes to which the State income tax law applies where such corporations derive income from Virginia sources.

2. The rate of tax on capital of trades and businesses not otherwise taxed should be reduced from 75¢ to 65¢ on every $100 of actual value.

3. If and when a general retail sales tax is imposed, the State license tax rate applicable to wholesale merchants should be reduced and a limit should also be imposed on the localities' power to levy local license taxes on wholesale merchants.