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State Tax Proposals Would Make Virginia’s Tax System More Fair

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by the Commonwealth Institute The 2020 General Assembly session offers an opportunity for state lawmakers to substantially boost investments into critical areas while also making...

Virginia School Board Members Weigh Tax Authority

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Waynesboro High School photo 130203WaynesboroHighSchool_zpsb2f61365.gifIt isn't a formal proposal just yet, but it could move that direction at the September Legislative Advocacy Conference of the Virginia School Board Association (VBSA). Under the radar, school board members are questioning whether the Virginia Constitution allows the legislature to grant tax authority to school districts.

In a number of conversations that began during the McDonnell administration's efforts to strangle the budget in order to boast fiscal austerity and have intensified as the effects have manifest, school board members across the Virginia have floated concepts of revenue generation to meet shortfalls that are starving maintenance and operational funding. Because there is no standard for engineering studies and no requirement to maintain a maintenance reserve, there is no practical measure of unfunded liabilities. In the short run, that masks the accumulating real deficit.  

Same-Sex Couples Aren’t the Only Ones Injured

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 photo RS_Same_Sex_Marriage_zpsc0c8c064.jpg The litigants in Norfolk are same-sex couples, but in the end the discrimination will result in inequitable application of the law that places many opposite-sex couples at a financial disadvantage. Such will be the consequence of the twisted effort by Virginia homophobes to socially engineer human behavior by unconstitutional edict.

For all the whining about Attorney General Herring's position regarding defense of a patently unconstitutional scar on the Virginia Constitution, he never mitigated enforcement. Not one single same-sex couple has been issued a marriage license in Virginia while we wait for the law to be struck. The opinions of both his predecessors regarding the effects of the law remain in force; for now. But consider this. When the marriages of same-sex couples are inevitably recognized in Virginia, those couples will have an option that other married couples will not: filing their Virginia income tax returns with the most advantageous filing status.

Based upon an opinion by then Attorney General McDonnell and guidance from former Attorney General Ken Cuccinelli, the Virginia Department of Taxation does not allow same-sex married couples to file joint income tax returns even though they must use the status on their federal tax returns. Everyone else must. What was (and currently remains) an undue burden on same-sex couples (the requirement to construct fictional federal income tax returns to calculate Virginia income taxes) transforms to an advantage; consistent with federal policy after the Supreme Court DOMA decision, married same-sex couples will likely be allowed to choose the filing status that is to their advantage for the years when they were prohibited from using a married filing status.

So my advice to Virginia's married same-sex couples: if filing using a status other than married is to your tax advantage, file this year's return soon, before the stay on yesterday's ruling is removed; after that, you'll be like everyone else. Then for the three years prior to this, recalculate your Virginia tax returns to determine if you should file amendments, in the same way you should have with your federal returns last year. How the Department of Taxation will handle these amendments could be a bit more complicated, so stand by for guidance.

For other married couples, you just won't have equal treatment under the law. You might want to send the bill to Senators Marshall and Newman who spearheaded the amendment or those George Allen strategists who supported it in an underhanded effort to save his bacon.