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About Taxes in Virginia

A bit of background

Taxes have been around as long as there have been governments. Taxes were a fact of life in Ancient Egypt, Mesopotamia, and Rome. You'll find references to taxes in the Bible, and in medieval legends.

In America, disputes over taxes played a part in our declaring our independence from Great Britain in 1776. In the earliest days of the United States, under the Articles of Confederation, the national government didn’t levy taxes; individual states, including Virginia, taxed their citizens, then gave money to the national government. The United States Constitution was ratified in 1788, replacing the Articles of Confederation. The Constitution gave taxing power to the Congress. The earliest U.S. taxes included tariffs (taxes on imports) and excise taxes (direct taxes on a certain types of commodities).

In 1913, the states ratified the 16th Amendment to the United States Constitution authorizing federal income taxes. On October 1, 1913, President Wilson signed into law an income tax of 1 percent of individual income over $3,000 ($4,000 for married couples). This tax was administered by the Bureau of Internal Revenue, which became the Internal Revenue Service in the 1950s. The IRS administers most federal taxes today.

Taxation in Virginia dates back almost to the founding of the Colony at Jamestown. Virginia farmers were taxed for the support of the public granaries as early as the 1620s, at the rate of one bushel of corn per year. Virginia has had an individual income tax since before the Civil War, though the law has been modified many times since then. The Virginia Department of Taxation was created in 1927 to administer most state taxes, a job we continue to do today. A few state taxes are administered by other agencies, such as the Department of Motor Vehicles and the Alcoholic Beverage Control Board.

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Why do we need them?

"Taxes are what we pay for a civilized society." – Justice Oliver Wendell Holmes

People expect their governments to do things like fixing the roads, building schools, etc. Taxes are the way governments raise the money they need to do the things the people want done.

In Virginia, the majority of tax dollars collected go to education. In 2008, Virginia spent almost $16 billion on education, with almost $12 billion going to schools and programs serving grades K-12. After education, the places that receive the most tax dollars are health programs, followed by public safety (police, firefighters, etc.).

The tax code can also be used to encourage people and businesses to do certain things. For example, let’s say that WXY Company is trying to decide where to build their new factory. Virginia may offer the company a break on its taxes if the factory is built here.

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Where do they come from?

The Department administers Virginia’s tax laws. This means that we create forms and systems to let people file and pay their taxes, we help them file, we collect the money, and we interpret and enforce the law. We don’t, however, write the laws – we don’t create taxes, we don’t raise or lower them, we don’t decide what is exempt from taxes. In Virginia, only elected governmental bodies can impose taxes – this means primarily the General Assembly.

New taxes, or changes to existing ones, are proposed by either a delegate or a senator as a bill in his or her respective house (the House of Delegates or the Senate). The bill is then assigned to a committee (often the Finance Committee) and sometimes a sub-committee, where it is discussed, debated, and sometimes changed. A lot of bills come to a halt at this point because the committee decides that this isn’t something that Virginia wants to do right now. Bills that aren’t stopped in committee are sent to the floor of the House or Senate, where they are once again debated, discussed, possibly amended, and ultimately voted on. If a bill fails, that’s that. If it passes, though, it crosses over to the other house where the process begins again.

If either side fails to pass a bill, it is done, at least for that session. If both sides pass it, there may still be another hurdle to overcome. Many bills are passed by the House and the Senate as is. These can be sent to the Governor. Some bills are passed by both houses, but the versions look very different from each other. When this happens, the House will ask the Senate if they will accept the House’s version, and vice versa. When they do, the bill can move on. If they don’t, often the bill will go into conference.

A conference committee is made up of members from both the House and the Senate. They sit down and try to work out the differences between the two versions of the bill. If they do, the conference version goes to both houses for approval. If this conference version is agreed to, it goes to the next step.

Once the House and Senate are both happy with the bill, it goes to the Governor. The Governor has several options: if he mostly likes the bill, but would like to see some changes, he can send it back to the General Assembly with some recommendations for changes. The General Assembly decides whether or not it will accept those changes. Once that decision is made, either way, it goes back to the Governor.

If the Governor likes the bill, he signs it, and it becomes law.

If the Governor doesn’t like the bill, he can reject it. This is called a veto. Vetoed bills go back to the General Assembly, where the Assembly has the option of voting to override the veto. This isn’t easy; you have to have enough votes to do so. If they don’t, the bill fails. If, however, the General Assembly votes to override the veto, the bill also becomes law.

Once a tax bill becomes a law, it comes to the Department to administer.

It takes a lot for a bill to become law. When the General Assembly is in session, you may enjoy watching your representatives in action. You can visit the House and Senate chambers in person in Richmond. House and Senate sessions are also streamed live on their websites. Senate sessions are also broadcast on some television stations throughout Virginia.

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Last Updated 7/17/2012 8:12

 

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