July 1, 2010

Letter to Virginia Attorney General Cuccinelli Regarding His Office’s Position in the FFW Property Tax Case

Download Tax Foundation Brief in FFW CaseDownload Henchman to Cuccinelli re FFW Case

08-1521 McDonald v. Chicago (06/28/2010)

PDF Version of this letter

July 1, 2010

Kenneth T. Cuccinelli II
Attorney General of Virginia
Office of the Attorney General
900 East Main Street
Richmond, VA 23219

Dear Attorney General Cuccinelli,

I was disappointed to learn that your office filed a friend-of-the-court brief in opposition to our position in FFW Enterprises v. Fairfax County, pending before the Virginia Supreme Court. As I explain in our brief and other work on the case, the tax at issue violates principles of sound tax policy by perpetuating the myth that “business” can be forced to shoulder disproportionate burdens, even for a project whose benefits will be primarily enjoyed by residents and travelers.

As you know, this case involves newly-enacted special property taxes on property near what will be new Metrorail stations, with the revenue used to help fund the Dulles Metro extension. Such tax-benefit districts are common and justified under a “benefits conferred” approach whereby those who benefit from the spending are those who pay the taxes.

This case is different because Fairfax will impose the taxes only on commercial property. Residents and travelers will benefit at least as much, if not more, from the Dulles Metrorail improvements, so a tax only on commercial landowners within the geographic area surrounding the stations cannot be justified under a “benefits conferred” approach. Special district taxes for benefits from the Metrorail should be imposed uniformly over the taxing district, not arbitrarily on some types of property.

The Virginia Constitution limits policymakers’ discretion in defining taxation categories in this context. Fairfax County and, unfortunately, your brief, argue that because the Uniformity Clause only requires uniformity “among the same class of subjects,” the General Assembly is free to define the class however it wishes and survive any Uniformity Clause challenge. (Your 8-page brief does not even attempt to explain or justify the General Assembly’s arbitrary action against taxpayers, instead pasting a page of text from the trial judge’s opinion musing about possible rationales.)

If such a theory survived constitutional scrutiny, legislative classifications could routinely overburden select groups of private property to finance benefits enjoyed by the broader public. Such classifications could then be prone to a federal takings challenge because as a classification becomes increasingly specific to a certain type of property, a tax based on benefits conferred takes the nature of an arbitrary deprivation of property without due process.

The General Assembly’s chosen route to raise revenues for the Metrorail construction may be administratively and politically convenient, but it creates exactly the type of discriminatory tax classification that the Virginia Constitution was designed to prevent. The General Assembly should not have the power to burden specific types of private property for public benefit under the guise of district-wide taxes. The state, and the state’s Attorney General, has an obligation to protect taxpayers from such arbitrary actions.

Should you be interested in reconsidering your office’s position in this case, I’m happy to be of help.

Yours Very Truly,

Joseph D. Henchman

Tax Counsel & Director of State Projects

Tax Foundation

For more on the FFW case, see here: http://www.taxfoundation.org/legacy/show/26381.html

The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.


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