High property taxes on equipment especially burdensome for new operations.
A study by the Tax Foundation ranks Virginia
second-best in corporate taxes for mature labor-intensive manufacturing
operations, with an overall tax rate of only 4.3 percent.
The study looks at a select number of model corporations,
both mature and new, and takes into account all business taxes, including
corporate income tax, property tax, sales tax, unemployment insurance, capital
stock sales tax, inventory tax and gross receipt tax.
Across the board, mature firms rank fairly well, coming in No.
7 on sales tax, No. 16 on income tax and unemployment insurance tax, and No. 23
on property tax. However, the state imposes an above-average tax burden on new corporations,
primarily due to a heavy property tax on equipment that is more than double the
national average tax.
Research and development facilities also face above-average
taxes because of Virginia’s sourcing rules and an absence of incentives. The
state is in the minority, imposing a gross receipts tax in addition to its 6.0
percent corporate income tax, and Northern Virginia and Hampton Roads add an
additional 0.7 percent to local sales taxes.
As a whole, the state’s top tax rates include its corporate
income tax of 6.0 percent, individual income tax of 5.75 percent, state sales
of 5.3 percent and an average local sales tax of 0.33 percent.
