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Republicans outline tax plan ahead of session

(WHSV)
Published: Jan. 4, 2019 at 6:08 PM EST
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Virginia Republicans outlined a tax plan Friday that would lead to lower state tax bills for thousands of taxpayers but said the window to get a deal done is closing fast.

It's a deadline that's setting up a potential game of chicken with Democratic Gov. Ralph Northam that could make filing state tax returns significantly more complicated and costly if no deal is reached.

House Republican leaders released details of their plan Friday, a few days ahead of the start of the legislative session. The plan would allow taxpayers to itemize their state taxes even if they take the federal standard deduction — which is currently not allowed — while also increasing the amount of the state's standard deduction. Those changes would apply to the 2019 tax year, and taxpayers who itemize their deductions could take a one-time deduction on their 2018 taxes.

“Today is an important day as we introduce a plan that does exactly what we have all promised our constituents we would do while serving them in Richmond,” said Speaker Kirk Cox (R-Colonial Heights). “We are offering a responsible plan to stop Governor Ralph Northam’s middle-class tax hike and provide targeted tax relief to middle and low income Virginians while protecting the state’s AAA bond rating.”

Changes in federal tax law are set to provide Virginia with multibillion-dollar windfall if state tax rates and deductions go unchanged. The federal tax overhaul slashed tax rates but also put new limits how businesses can account for losses and what kind of deductions individuals can take — changes projected to boost state tax revenues.

Northam wants use the extra money to increase spending in certain areas, give tax breaks to families making less than about $50,000 a year, and pad the state's reserves. Republicans said the money belongs with the taxpayers, and said their proposal would "protect" 600,000 middle-class tax filers from a "hidden tax increase."

"Our proposal keeps more money in the pockets of Virginians without costing the state one penny," said GOP Del. Tim Hugo.

But the policy debate is complicated by whether to the state tax code should match the federal tax law's new definitions of income. Traditionally, lawmakers pass the so-called "conformity" legislation every year with little fuss even though it's considered emergency legislation that needs 80 percent approval in both chambers to pass.

Northam and Virginia's accountants have said this year should be no different and urged the GOP-led General Assembly to pass conformity legislation as quickly as possible — separate from any other tax policy debate.

Emily Walker, a lobbyist for the Virginia Society Certified Public Accounts, said taxpayers and tax preparers need clarity as tax season approaches. She said if tax conformity legislation isn't passed early in the session, it will require significant more work to fill out state tax returns properly.

"If you don't find a way to do conformity, tax season is going to be very complicated, delayed and potentially expensive for taxpayers," she said.

Republicans said Friday they are well aware of the need for conformity legislation but said the issue has to be resolved at the same time as other tax issues. They urged Northam to work with them quickly in order to finalize a deal.

Northam's administration said it was open to working with Republicans to find a compromise, but said trying to use the conformity legislation issue as leverage to force their tax plan through won't work.

"That's a bad calculation on their part," said Secretary of Finance Aubrey Layne.

 

 

Virginia Republicans' proposed tax hand-out to the super rich is wrong for the Commonwealth

VA GOP tax cut for wealthy Virginians would lead to underfunding of education, transportation, broadband, and other important public needs

Richmond, VA – Earlier this afternoon, Virginia House Republicans unveiled a set of reckless tax proposals that would shortchange education, transportation, and public safety needs in order to further enrich the wealthiest Virginians. 

The contrast between the Democratic priorities for the 2019 legislative session and today’s Republican super-rich tax giveaway could not be clearer. Governor Northam has rolled out fiscally responsible avenues to provide critical new investments in K-12 public education, including increased wages for teachers. Governor Northam also presented a plan to expand broadband access to all Virginiansincrease financial aid opportunities for college studentsmake fixes to I-81 that have been needed for a generation, all while enhancing Virginia’s financial reserves.

Today’s Republican tax giveaway to the rich would put this all at risk. Virginia Republicans would rather use this opportunity to further line the pockets of the wealthy while abandoning funding for Virginia’s children, teachers, roads, and infrastructure.

DPVA Communications Director Jake Rubenstein released the following statement regarding the Republicans' reckless tax cut out for wealthy Virginians. 

“It’s clear - Governor Northam and Democrats in Virginia are committed to responsibly investing in public education, transportation and access to quality affordable health care while providing tax relief to those that need it the most. Republicans today made clear that investing in Virginia's public schools, roads and future isn't more important than a Trump-style tax cut for the wealthy.”

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