Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 31, 1994 TAG: 9408010051
SECTION: VIRGINIA PAGE: B6 EDITION: METRO
SOURCE: Associated Press
DATELINE: RICHMOND LENGTH: Medium
But state Sen. Joseph Gartlan Jr.'s arguments had little effect as the bill passed July 8 with only two dissenting votes.
= r ``I'm fending off calls from all the irate retirees,'' said Gartlan, a 68-year-old Fairfax County Democrat.
``Senior groups, particularly up here where there are so many of them, are a potent political force. I don't know whether I've absolutely washed away my political career with that vote,'' he said.
Gartlan still defends his argument that making Virginia a retirees' haven is not good for the state.
``The aggregate burden of their income tax exemptions, the real-estate tax exemptions and some other perks associated with age add up to a considerable revenue deflection that essentially ups the price of the state services to every other taxpayer,'' he said.
A legislative analysis showed Virginia offered some of the nation's most generous tax breaks for seniors even before passage of the bill that gives refunds to federal retirees who were taxed illegally, higher pension benefits to state workers and a larger tax deduction to virtually all retirees.
``There are other states that have no income tax, but I don't believe there are any other states that have as big a disparity between old and young,'' said Bill Strauss, a McLean writer who studies generational issues.
Legislators who supported the bill pointed out that a tax revision passed in the 1980s benefited younger taxpayers. Gov. George Allen also has promised more tax relief for younger Virginians.
Under the new tax break, taxpayers age 62 to 64 will get a $6,000 deduction and those 65 and older will get a $12,000 deduction in addition to the standard deduction and personal exemptions. Beginning in 1996, a single taxpayer age 65 or older will be able to deduct a total of $16,600, compared with $4,600 for those younger than 62.
In addition, nearly all Virginia cities and counties offer a real-estate tax break to lower-income residents age 65 and older. A handful also offer personal-property and vehicle-license tax breaks.
``This is an expression of political power and preferences,'' said John L. Knapp, business and economic research director at the University of Virginia's Cooper Center for Public Service.
``If you have low-income people, they're not restricted to the elderly. One can make a case that the elderly poor may be better off with Medicare and other programs for the elderly,'' he said. But Knapp noted it would be more expensive to expand the local tax breaks to all low-income residents.
John Gist, an economic analyst with the American Association of Retired Persons, said it is hard to determine which states offer the best tax climate for retirees.
Some states without income taxes, for example, impose high sales taxes, he said.
He also said tax policies may not always attract retirees.
``I don't think too many people are flocking to South Dakota because they have no income tax. That's just one thing that enters into it,'' Gist said.
But some retirees are looking at state and local taxes as they decide where to move, said Jude Hunt, who researches tax policies for 50 Plus Pre-Retirement Services in New York.
One concern is protecting pensions from taxation by the state where the retirees formerly worked, she said.
About 13 states, but not Virginia, try to tax pensions of retirees who have moved to another state, she said. A few other states are moving to enact laws to protect newly arrived retirees from being taxed by their former home states, she said.
Still, she said, choosing a state to retire in solely on the basis of its tax policies is probably not a good idea.
``One year a state will have great benefits, and the next year they've totally wiped out those benefits,'' Hunt said. ``It's catch as catch can.''
by CNB