Tax Foundation Legal Brief: Fairfax County Property Taxes for Metro Extension Violate Virginia Constitution

June 3, 2010

The Virginia Supreme Court should strike down two tax laws that impose discriminatory property taxes in Fairfax County to fund Metrorail expansion, according to a friend-of-the-court-brief we filed earlier this week.

The case involves the constitutionality of special property taxes in Fairfax County that exempt all residential property, which violate Virginia’s Uniformity Clause and disproportionately place the full tax burden on some properties while the entire tax district receives benefits.

FFW Enterprises is a commercial property owner in the Tysons Corner Region of Northern Virginia paying two taxes imposed to fund the Washington, D.C. region’s Metrorail extension to Tysons Corner and Dulles International Airport. Virginia’s Uniformity Clause requires that all property in the taxable area be uniformly treated as the taxable class, but residential property is exempted from the taxes, placing an undue burden on commercial property. Forty-eight states have uniformity requirements in their constitutions or state law.

The case marks the first time since 1947 the Virginia Supreme Court will consider how the General Assembly may pick and choose among taxpayers to finance local improvements that provide general public benefits. In a previous decision, City of Hampton v. Ins. Co. of North America, the Court held that the tax law at issue violated the Uniformity Clause because the law shifted the burden away from those who would benefit from the purpose of the tax.

The Tax Foundation’s brief argues that the clause requires uniform treatment of taxpayers who stand to benefit from the Metrorail improvements – meaning that since the purpose behind the Transportation and District Taxes is to benefit the area surrounding the new construction, a disproportionate tax burden can’t be placed on some types of properties (i.e. only on commercial property) within those benefited districts.

For more, see Tax Foundation Fiscal Fact, No. 233, “Virginia Constitution Requires Uniform Distribution of the Metrorail Tax Burden in Fairfax County” or the full brief.

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