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By MARY K. BLEWITT
Arundel Newspapers Richmond Bureau ^ RICHMOND — Northern Virginia legislators feared that their constituents would be the big losers under a plan proposed by Gov. Gerald L. Baliles that would eliminate state taxes on all retirement benefits of less than $16,000 a year.
The governor's proposal was introduced Monday, April 24, at the start of a special session of the General Assembly called to remove a flaw in Virginia law.
On March 28 the U.S. Supreme Court decided the case of Davis v. Michigan. The court ruled that taxing federal retirees while exempting state and local retirees is unjust.
To remedy the inconsistency, Baliles proposed establishing a new $16,000 retirement income threshold for all retirees, both public and private, age 55 years or older.
The governor’s plan would also remove existing exemptions for state and local retirement benefits, and repeal a current age credit.
Under the plan, social security would remain untaxed. “With this approach, for the first time, four of five Virginians receiving retirement income will not pay state income tax on that income,” said the governor.
“In forming my proposal,” Baliles told the Assembly, "I have been guided by one overriding principle: fairness.”
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