BRADENTON, Fla. - Virginia's general fund revenue collections dropped by 20.7% in May compared to May 2013, the largest such decline in 13 years.
Categories showing the largest declines were individual non-withholding, the corporate income tax, and taxes on wills, suits, deeds, and contracts, state officials said June 12.
On a year-to-date basis, total revenue collections were down 1.6% through May. The annual forecast anticipated 1% growth.
May is a significant month for general fund revenue collections because individual income tax returns for income earned in 2013 were due May 1. May's collections also consist of those from upper income individuals where a significant portion of their income is based on capital gains.
"It now appears that the uncertainty of federal tax policy resulting 'fiscal cliff' in December 2012 [and] January 2013 shifted more capital gains from 2013 into 2012 than expected, lowering the amount of capital gains that would otherwise be realized in 2013," said Gov. Terry McAuliffe. "Accordingly, Virginia like many other states that have income taxes are now seeing declining revenues from capital gains."
According to the Rockefeller Institute for Government, nearly every state with a broad-based income tax saw declines in personal income tax returns as taxpayers shifted income to tax year 2012 from tax year 2013 to minimize federal tax liability.
"As we predicted in previous reports, tax returns on 2013 income that were filed in April show large and widespread declines, likely due to declines in capital gains and other investment income as many taxpayers took actions to minimize their expected federal tax liability as certain federal income tax rates were set to rise on January 1, 2013," the institute said in a June 12 report.
Other tax revenue sources also declined in Virginia.
Collections of payroll withholding taxes fell 5.4% in May; there was one less deposit day compared to the previous year, officials said.
Corporate income tax collections decreased by 33.2%, sales and use taxes fell by 1.6%, and recordation taxes from real estate transactions were down 27.3% as home sales and refinancing activity remained weak.
On a year-to-date basis, payroll withholding taxes, which are 63% of general fund revenues, increased 2.5%. Sales tax collections, which are 18% of general fund revenues, declined by 4.5%.
