Lawsuit Challenges Virginia’s Metrorail Expansion Taxes

Published June 18, 2010

The Virginia Supreme Court is considering the constitutionality of two tax laws imposing discriminatory property taxes in Fairfax County to fund Metrorail expansion. The court should strike them down, argues a friend-of-the-court-brief by the Tax Foundation.

The case involves the constitutionality of special property taxes in Fairfax County that exempt all residential property. The Tax Foundation brief says the taxes violate Virginia’s Uniformity Clause by disproportionately placing the full tax burden on some properties while the entire tax district receives benefits.

“Special district taxes for benefits from the Metrorail should be imposed uniformly over the taxing district, not arbitrarily on some types of property,” said Tax Foundation Tax Counsel and Director of State Projects Joseph Henchman, who cowrote a report summarizing the amicus curiae brief.

“Such a conclusion is consistent with the Virginia Supreme Court’s previous cases interpreting the Uniformity Clause, the U.S. Supreme Court’s jurisprudence on distributing the tax burden for public benefits, and other state courts’ treatment of uniformity clauses as a strict limitation on legislatures’ power to classify property for tax purposes.,” Henchman added

Strong Legal Precedents
The case at the center of the dispute is FFW Enterprises v. Fairfax County and the Board of Supervisors of Fairfax County.

FFW Enterprises is a commercial property owner in the Tysons Corner region of northern Virginia paying two taxes imposed to fund the Washington, DC region’s Metrorail extension to Tysons Corner and Dulles International Airport.

Virginia’s Uniformity Clause requires all property in the taxable area be uniformly treated as the taxable class. 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 whether the General Assembly may pick and choose among taxpayers to finance local improvements that provide general public benefits. In City of Hampton v. Ins. Co. of North America, the Court held the tax law at issue violated the Uniformity Clause because the law shifted the burden away from some of those who would receive benefits from the tax.

All Should Pay, Brief Argues
The Tax Foundation’s brief argues the uniformity clause requires uniform treatment of taxpayers who stand to benefit from the Metrorail improvements—everyone in the area surrounding the new construction, not just commercial enterprises.

“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 prevents,” said Tax Foundation law clerk Arushi Sharma, who cowrote the report.

“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,” Sharma added.

Natasha Altamirano ([email protected]) is manager of media relations at the Tax Foundation.

Internet Info

Tax Foundation Fiscal Fact No. 233, “Virginia Constitution Requires Uniform Distribution of the Metrorail Tax Burden in Fairfax County”: