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Virginia income tax dependence cited in report

By WTOP Staff

MICHAEL FELBERBAUM
AP Business Writer

RICHMOND, Va. (AP) — A report by the investment rating agency Standard & Poor’s says the income gap is undermining budgets in Virginia and other states.

The S&P report released Monday says Virginia is among the 10 states most reliant on income tax revenues. It concludes that income inequality is contributing to slower economic growth in the U.S. and as a result, states are facing rising tensions over whether to raise taxes or cut spending to balance their budgets.

The report says that average annual state revenue growth fell to 5 percent, from 10 percent, from 1980 to 2011. At the same time, the top 1 percent of earners doubled their share of total income.

Virginia saw average annual tax revenue growth has slowed to around 3.6 percent per year since 2000.

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