From Del. David Toscano:
DEAL EMERGING ON BUDGET AND TAXES?
February 11, 2019
Amidst all that is happening in Richmond, the legislature continues its work, most recently on the budget. You can see my opening remarks on the budget proposed by the House Appropriations committee here. In my view, although the proposed budget was a good effort, it missed historic opportunities to invest substantially in what Virginians desire and need, from K-12 education to environmental initiatives to affordable housing. I voted against this budget because I believe we can do better.
Instead of recognizing and addressing the regressive burden last year’s federal tax changes placed on our lowest income earners, our Republican colleagues doubled down on the Trump tax scheme, and left working Virginia families at the lowest end of the wage scale to pay the most (proportionally) in state taxes. House Republicans rejected a series of amendments to restore many of the progressive initiatives the Governor had proposed, as well as a Democratic initiative to provide an immediate tax refund to working families. The budget also cut efforts to dedicate funds for coastal resiliency as we fight the effects of global climate change; you can see the debate on this here.
BUDGET AND TAXES TIED TOGETHER
Although the budget bill is typically a piece of legislation separate from the “tax conformity” bill, the two were linked together this year by Republicans who insisted that tax policy changes needed to be included (policy changes that prevent the Governor from investing needed funds into programs that work for Virginia families). Following a vigorous budget debate, discussions commenced to develop a “conformity” compromise that would allow Virginia taxpayers to file their tax returns quickly and without needless complexity, and also provide a tax break to working Virginians. Compromise was especially important because the tax conformity bill, if it is to take effect right away as opposed to July 1, will require a four-fifths majority vote in both the Senate and the House. “Raw political power” of slender majorities will not be enough. For that reason, the proposed compromise includes some provisions which Republicans pushed and others that Democrats supported. The compromise, which could be adopted early as this week, will:
- Conform our state tax code to the federal code, with a few exceptions; this is what we typically do, and will make filing your Virginia taxes easier;
- Raise the Virginia standard deduction by fifty percent, which will provide tax relief to some tax filers, including millions of Virginia taxpayers earning less than $50,000 per year; and
- Provide a one-time tax credit of up to $110 to each taxpayer ($220 to married couples filing jointly), depending on how much income tax you owe or have paid. Although millions of Virginians will receive this benefit, some have criticized it because low-income working families may not receive as much as higher earners. I have been pushing to spread this benefit to as many families as possible, and we will see it this can be included in the measure that passes.
Why does this require four-fifths of each chamber to approve it? Part of the compromise will add an “emergency” designation to the bill, which would allow it to take effect immediately once the governor signs it. Since our state tax returns are due in May, and regular legislation does not become effective until July 1, this designation is essential to ensure that we don’t file our Virginia tax returns in May under one set of rules, and then have to file amended returns because on July 1 the rules change.
An “emergency” bill can only be passed by a four-fifths vote under Virginia’s constitution, and it is not yet clear if there are 80 votes in the House of Delegates for passage. You canwatch the debate on the House of Delegates livestream: we will go into session at noon today.
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