HD35 - Report of the Joint Subcommittee Studying the Simplification of the Virginia Individual Income Tax

  • Published: 1984
  • Author: Joint Subcommittee Studying the Simplification of the Virginia Individual Income Tax
  • Enabling Authority: House Joint Resolution 124 (Regular Session, 1982)

Executive Summary:
The Joint Subcommittee bas spent the last two years studying ways of simplifying the Virginia Individual Income Tax and in .particular the feasibility and desirability of adopting a broad-based income tax with a limited number of deductions and a single flat tax rate. Specifically, the Joint Subcommittee closely studied the impact of replacing the current graduated rate structure with a flat tax rate of 4.75% and providing for a single flat deduction of $4,500 for a single person and $9,000 for a married couple in lieu of the myriad of deductions, exemptions, and credits granted under the existing law. This concept would eliminate the present personal exemptions as well as the standard or intemized deductions.

The Joint Subcommittee believes that a flat rate, broad-based income tax is a very attractive concept which has numerous beneficial features. However, the Joint Subcommittee does not believe that the Commonwealth is ready, at this time, to adopt this tax structure. The Joint Subcommittee does believe that Virginia should continue to study the flat-rate concept and monitor federal developments in the area. The Joint Subcommittee believes the federal government should seriously consider the benefits of this type of tax structure.

Although there are still some questions concerning this concept in the minds of some of the members, the Joint Subcommittee believes this tax structure would simplify the income tax; eliminate bracket creep; encourage production, savings and investment; retain the advantages of utilizing federal AGI as the basis of our tax and continue the advantage of compliance; eliminate or lower the tax liability of low-income, fixed-income, and older Virginians; save administrative and processing expenses; and finally, to a large extent, free Virginia from some of the annual federal changes in the individual income tax.

The Joint Subcommittee strongly recommends this type of tax structure continue to be studied so that Virginia could be in a position to adopt this type of tax when the time becomes appropriate.