Competing Tax Plans

Both candidates for Virginia Governor this year, Lt. Gov Tim Kaine(D), and former AG Jerry Kilgore(R) have competing plans to deal with problem of the skyrocketing property taxes that voters are paying on their homes. What are the plans?

Tim Kaine would allow localities to exempt 20% of the value of a home from the property tax. This means that homeowners could see their tax bill cut by 20%, while leaving the tax on business property the same level. As this is not a requirement, localities could opt not to do this. I expect that many smaller communities that need to lure more business into their area would not take advantage of this opportunity. But communities with a vibrant business base already that are suffering from population density (like vote rich Northern Virginia for one), would leap at the possibility to lower homeowner rates while leaving business rates fixed.

Kilgore's plan would cap assessments at 5% annually except for when a house is bought or sold, or when improvements are made on the house. Kilgore calls this his personal guarantee of tax relief. This would strap localities for funds because one of their chief means of raising revenue would be severely limited. Kilgore says that Kaine's plan does not take into account the root of the problem, which is escalating property assessments. But Kilgore's own plan completely misses the point. The reason that property assessments are rising so dramatically is because of market forces, specifically the low mortgage rate that we currently enjoy. Kilgore would be deliberately interfering in the housing market to artificially lower prices. This tactic has a name: Rent Control.

It turns out though, that most localities are wary of both Kaine and Kilgore's tax plans. Consider this recent article in the Roanoke Times.

I think we have some work to do here to change the minds of our local officials. We need to be sending out Letters to the Editor to every major paper in the state framing this issue. Kilgore's tax plan equals Rent Control, while Kaine's tax plan equals empowering localities. If the debate can be framed this way, Kaine will have won a significant constituency that will hamstring Kilgore's attempt to woo the low tax crowd.