Non-Resident Payroll Tax

Territorial protection of jobs, commerce, infrastructure expansion/maintenance, education, and the tax revenue required to provide for all of this has presented a time-now problem requiring attention from all levels of our government.

Florida has a retirement community consisting of 20,000 residents that has created a currency system for use only within the defined boundaries of the community. The ‘community dollars’ are used within the community for the purchase of goods and services, which encourages patronage of community merchants and service providers. This monetary system works because almost all who use it are citizens who live within the community. When faced with the choice of shopping outside of the community, or within the community, the resident understands the reality of how their community patronage is a positive economic factor for all community citizens and merchants when they spend their ‘community dollars’ within their community.

The State of Virginia could take a similar but more radical approach to this problem by creating a state monetary system, let’s call it Commonwealth Currency, or simply implementing a state non-resident payroll tax. All persons working within the State of Virginia, but living outside of the state, would be levied a payroll tax on the money they earn within the state. This same approach could be used, with appropriate political and legislature approval, by cities, towns, and counties within the state. Not only would this encourage citizen residence within the area of employment but it would provide a stimulus to area economies by keeping more earned income within the area of employment.

Giles County is an excellent case example to demonstrate the need for a non-resident payroll tax. The county population is approximately 16,500 and by comparison to other counties in the New River Valley Giles is smaller in population, if not in geographical square miles of area. The tax base is primarily supported by real estate tax and when the need arises for improvements to our infrastructure, or so-called economic development, a considerable tax burden is imposed on county citizens. The county is currently spending an authorized $4 million dollars to assist in site development of the location for the new Carilion Hospital that is scheduled to open in 2010. This money has been made available by way of county taxpayer obligation, although the hospital will not only serve the residents of Giles County but also Monroe and Mercer Counties in West Virginia. The residents of Monroe and Mercer Counties aren’t paying any taxes, or other financial obligations, for construction of the hospital. Furthermore, the new hospital will provide employment for many who live in Monroe and Mercer Counties. Their earned income from working at the new Carilion Hospital will be taken across the West Virginia state line where they live and primarily spent in their home state. Giles County won’t receive any taxes from the earned income of those who work at Carilion and live outside of Giles County, which includes areas other than West Virginia such as Montgomery County, Blacksburg, Christiansburg, Radford, Dublin, Pulaski, Pulaski County, and other neighboring communities. This situation is repeated in every community within the state and is only of significance to those who truly see it for what it is; representation without taxation.

A more blatant example is the employment of the Giles County Administrator and Assistant County Administrator, both of whom not only aren’t residents of Giles County, but they aren’t residents in the State of Virginia. Both of them live in Monroe County, West Virginia and travel to Giles County to manage the affairs of a county in a state where they don’t reside. Their combined annual actual compensation surpasses $200,000 and not one penny of this is taxable by the County of Giles. Their luxury homes are located in West Virginia and Giles County, nor the State of Virginia, receives any real estate tax on their property. None of their personal property is taxable by Giles County or Virginia. As a matter of fact, they have absolutely no personal interest in county education, tax rates, or other Giles County or Virginia civic matters other than maintaining their employment positions at the pleasure of the Giles County Board of Supervisors, not the county citizens. These two individuals are probably the only people who would disagree that their income should be taxable by Giles County, if allowed by state law. A simple fix to this specific problem would be for Giles County to require all county employees to be residents within the County of Giles. This would be fair to everyone and not create any appearance of impropriety on the part of people or government.

So why are these situations allowed to exist without any attempts to protect our individual territories? Laws must be passed, local voices of concern must be spoken or written, elected officials must recognize that citizens support such change, and last but not least bipartisan support must exist within our state government to level the playing field for obtaining a fair amount of tax on earned incomes that are removed from our state, removed from local areas of employment, while those earning the income continue to enjoy their use of state and local infrastructure, personal economic sustenance, and personal tax breaks. All of this change will require substantial work by our elected officials and this fact alone all but guarantees that it will never be done.