“Tax reform is not a big issue in the 2007 General Assembly, but Virginia’s tax code is still regressive,” said Denise Smith, a member of the VOP Tax Reform Strategy Committee.

“It still puts too much of the responsibility of financing the Commonwealth’s core services on low- and middle-income earners. And VOP is going to keep bringing that message to the Commonwealth’s decision makers,” Smith said.

There is one tax proposal before the legislature this year.

“The Virginia Organizing Project wholeheartedly supports Governor Tim Kaine’s proposal announced on December 15, 2006, to raise the filing threshold for low-income Virginians,” said VOP Chairperson Jay Johnson. This action, if adopted by the General Assembly, would help eliminate the income tax liability for more than 300,000 Virginians, according to the Governor’s presentation to the legislative “money” committees.

Unfortunately, most observers believe that significant tax reform will not happen during the 2007 General Assembly, a short session with a focus on issues for November’s elections. However, the VOP Tax Reform Strategy Committee continues to reach out to key legislators and officials in the Kaine Administration for more meaningful tax reform in the future.

During the 2006 legislative session, Virginia’s transportation woes were the main focus and tax reform was not discussed. But the VOP Tax Reform Strategy Committee, with help from great national resources like the Institute for Tax and Economic Policy (ITEP), has been pressing forward.

The Strategy Committee has been working strategically to make VOP’s tax reform proposal attractive to legislators willing to make Virginia’s tax code more equitable and modern. With the help of ITEP, the Committee has developed a working draft that proposes a more targeted “Working Families Tax Credit” to offset the regressive nature of the sales tax.

This Working Families Tax Credit would be targeted to single filers and those who are married and filing jointly. For single filers, the tax credit would be phased out between $30,000 to $40,000 of earned income, and for those married filing jointly, it would be phased out between $60,000 to $70,000 of earned income. The tax credit would be $120 per person and per dependent.

The core elements of VOP’s tax reform proposal still remain the same: increasing the standard deduction to $4,500 for single filers, to $9,000 for married filers; increasing the personal exemption to $2,500 per person; and, creating realistic state tax rates and brackets that are updated for 21st Century Virginia.

If VOP’s tax reform proposal is fully implemented, the bottom 95 percent of Virginia’s state taxpayers will benefit from a tax cut. The top 5 percent would pay a modest increase in state income taxes that would be partially offset by an increase in their itemized deductions on their federal income tax returns.

“Tax fairness matters to every Virginian,” said David Shreve, also a member of the VOP Tax Reform Strategy Committee, “and we will be looking for opportunities to educate the citizens of Virginia on tax fairness, equity, and shared responsibility based on ability to pay, during the 2007 General Assembly session and into the upcoming election cycle.”