Yesterday, the Richmond Times-Dispatch published an article titled “GOP takes control of tax debate in Va. House, kills governor’s plan” in which they cover our tax conformity bill, our plan to bring middle class tax relief to hard working Virginians, and our ability to stop Governor Northam’s hidden middle class tax increase.
Below are a few excerpts from the article, followed by the full story.
“On the first day of tax season, House Republicans seized control of the debate over Virginia tax policy on their side of the Capitol.”
“The GOP majority on the House Finance Committee also voted to conform Virginia’s tax code to the provisions of the federal Tax Cuts and Jobs Act, which would allow the state to issue refunds to taxpayers who began filing their 2018 tax returns on Monday.”
“But a new proposal would tie conformity to creation of a Taxpayer Relief Fund. It would prevent Northam or the General Assembly from spending an estimated $950 million in additional income tax revenue in the two-year budget cycle that began July 1, including $375 million that taxpayers will pay this year on last year’s income.
“We’re not spending a nickel of this,” said House Appropriations Chairman Chris Jones, R-Suffolk.
His proposal would require the tax department to submit a plan by Aug. 1 on how to give the additional tax revenues in the proposed fund back to the Virginians who paid them.”
| GOP takes control of tax debate in Va. House, kills governor’s plan On the first day of tax season, House Republicans seized control of the debate over Virginia tax policy on their side of the Capitol. They pushed bills through committee to set aside any revenue windfall from federal tax reform and allow taxpayers to define taxable income differently on their state and federal returns. They also killed a Democratic proposal that would have given a portion of an anticipated tax windfall from federal reforms to lower-earning working families. The GOP majority on the House Finance Committee also voted to conform Virginia’s tax code to the provisions of the federal Tax Cuts and Jobs Act, which would allow the state to issue refunds to taxpayers who began filing their 2018 tax returns on Monday. “Importantly, conformity moves forward,” said Finance Chairman Lee Ware, R-Powhatan, in a speech on the House floor. Gov. Ralph Northam had urged the Republican leaders to adopt conformity legislation on an emergency basis before debating how much of an anticipated $1.2 billion tax windfall to spend or send back to those taxpayers who will pay more to the state because of federal tax reforms. Taxpayer Relief Fund But a new proposal would tie conformity to creation of a Taxpayer Relief Fund. It would prevent Northam or the General Assembly from spending an estimated $950 million in additional income tax revenue in the two-year budget cycle that began July 1, including $375 million that taxpayers will pay this year on last year’s income. “We’re not spending a nickel of this,” said House Appropriations Chairman Chris Jones, R-Suffolk. His proposal would require the tax department to submit a plan by Aug. 1 on how to give the additional tax revenues in the proposed fund back to the Virginians who paid them. For taxpayers who began filing returns this week, timely refunds will depend on passage of the bill by 80 percent of the members in each chamber, with the Senate’s preferred approach to tax policy still unclear. Emergency legislation can take effect immediately upon a governor’s signature, but requires approval by 80 percent of each chamber. Del. Joseph McNamara, R-Roanoke County, an accountant elected late last year who favors immediate conformity, observed, “I’m not sure we’re going to get to 80 percent on any bill that decides where the revenues are going to go.” Hugo’s bill Committee Republicans also approved legislation on a party-line vote sponsored by Del. Tim Hugo, R-Fairfax, chairman of the House Republican Caucus, that he said is “getting money back to the taxpayers who are paying the money now.” Not so, said Del. Vivian Watts, D-Fairfax, a longtime member of the Finance Committee. She produced a chart that shows 40 percent of the projected higher taxes being paid by people earning less than $50,000 a year, who would receive just 18 percent of the benefit under Hugo’s bill. Watts said Virginians earning more than $125,000 a year would pay 25 percent of the taxes while receiving 34 percent of the benefit, and people earning between $50,000 and $125,000 paying 35 percent of the taxes and getting 47 percent of the benefit. “We have a major gap of who would have the highest [tax] increase getting no relief from this bill … while in the middle range, you are giving benefits to those who aren’t going to be paying more in Virginia taxes,” she said. Further, Watts said the state would lose its ability to rely on the IRS to audit tax returns by allowing taxpayers to itemize on their state returns even if they claim the standard deduction on their federal taxes to take advantage of changes in the federal tax law. “This is opening the door to any kind of fraud,” she said. “You can put anything you want down as a deduction and we won’t have any audit trail.” Hugo reminded the committee that Virginia relies on the honesty of its taxpayers. “We have a voluntary tax system in America, and it works,” he said. “It works because we trust Virginians.” Secretary of Finance Aubrey Layne said the governor does not take a position on Hugo’s proposal or Jones’ proposal to create a taxpayer relief fund and set aside any additional revenue until policymakers decide how to send it back. “It is more complex for taxpayers,” Layne said of Hugo’s proposal, endorsed by House Speaker Kirk Cox, R-Colonial Heights. Northam’s plan defeated Layne said Northam supports passage of tax conformity on an emergency basis to help taxpayers who are filing tax returns now, as well the proposal he made in August to return a portion of any windfall to working families to receive a refund of the Earned Income Tax Credit that they didn’t use to cover their tax liability. The Finance Committee killed a bill proposed by Del. Ken Plum, D-Fairfax, that would have carried out the governor’s plan at an estimated cost of $216 million in this biennium. Plum said the bill would return money to taxpayers while acting as “a kind of equalizer” for lower-income families who received less benefit under the U.S. law, which cut the Earned Income Tax Credit at the federal level. Currently, Virginia law allows the refund of unused tax credits for motion picture production, agricultural best management practices, and research and development. All of the votes but one fell along party lines between 12 Republicans and 10 Democrats on the committee under the shadow of legislative elections in November. After amending Jones’ original bill on a party-line vote, the committee voted 9-4 to approve the legislation, with nine Democrats abstaining. Voting “no” were three conservative Republicans — Dels. Kathy Byron of Bedford; Mark Cole of Spotsylvania; and Nick Freitas of Culpeper — and a self-proclaimed Democratic Socialist, Del. Lee Carter, D-Manassas. |