Category Archives: Taxes

Floyd Judge Ponders Order to Return RGGI Tax

Posted on February 19, 2024 by | 26 comments

The states in the Regional Greenhouse Gas Initiative tax compact before Virginia withdrew.

By Steve Haner

A circuit court judge in Floyd County may soon order Virginia to rejoin the Regional Greenhouse Gas Initiative and to reimpose the related carbon tax on Virginia’s electricity consumers.

Judge Kenneth “Mike” Fleenor Jr. ruled earlier this month that a suit seeking reinstatement of RGGI could continue and held a hearing on February 5 on the question of “immediate relief.”  The plaintiff, a group of energy efficiency and insulation contractors using the RGGI tax dollars for their programs, has claimed it will suffer immediate and irreparable harm unless Virginia returns to collecting a carbon tax on coal and natural gas used by utilities. Continue reading →

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Posted in Courts and law, Energy, General Assembly, Taxes, Utilities

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Analog Tax Policy is Harmful in a Digital World

Posted on February 12, 2024 by | 53 comments

By Chris Braunlich

To many, testifying before a government committee conjures visions of the drama surrounding the McCarthy, Watergate, or Zuckerberg hearings.

In Virginia, not so much.  Faced with processing more than 2,600 bills in 60 days, the legislature conducts hearings that are often more of a kabuki dance, while backstage choreographers figure out the next steps.  Speakers are frequently limited to one minute and sometimes committee chairs simply ask the roomful of citizen and professional lobbyists to stand in support or opposition to a bill.  It is rarely deep and incisive content.

But these hearings are ideal opportunities to test the waters, grab a headline, position your bill for the future, ask a question directly of a bill’s sponsor, or determine where your adversaries are coming from. Continue reading →

53 Comments

Posted in Business and Economy, General Assembly, Taxes

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The Case for an RVA Meals Tax Amnesty

Posted on February 9, 2024 by | 22 comments

Richmond City Hall

by Jon Baliles

Today we are posting a special edition featuring an email from former restaurateur Brad Hemp that he recently sent to City Council about the meals tax fiasco you have probably heard about as a result of seven years of neglect at City Hall. The Mayor raised the meals tax in 2018 to help build new schools and pledged in return he would also help the restaurants. He raised the tax, and three schools were built, but he forgot about helping the restaurants.

Now, here we are, years later, and the only thing coming from City Hall are vacillating and daily changes and pledges to fix the problem on a “case-by-case” basis (in a vain attempt to get the media stories to stop). As someone who lived and breathed the restaurant business (and could teach the Mayor and Council a few things about it), Hemp has some suggestions to fix the mess. The question is, will the Mayor and City Council finally listen and do something?

RVA 5×5 — PREFACE
The best government is almost always the one that listens. It makes it easier for people to enjoy their lives, better their neighborhoods, open or run a business, and have fun. The worst government is almost aways one that pretends to know everything and thus ignores listening to or helping the people by doing things like, just as an example, forcing through a second casino referendum right after the first one lost. Another way to demonstrate bad government is to find straw-man excuses for erroneous billing of residents for personal property, real estate and water, and misapplying payments of meals taxes for restaurants and never notifying anyone when a bill is late while interest and penalties skyrocket. The “leaders” at City Hall say it’s the fault of state code, or the postal service, or bad technology, or the current lunar cycle. Don’t look inward to see if it’s an internal problem, blame it on everyone and everything else. Continue reading →

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Posted in Business and Economy, Economic development, Finance (government), Taxes

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Only Tax Increases Still Pending at Assembly

Posted on February 7, 2024 by | 64 comments

Gov. Glenn Youngkin

By Steve Haner

Governor Glenn Youngkin’s package of proposed tax changes is now stalled in both the Virginia Senate and the House of Delegates. A House subcommittee spiked it Feb. 5 and then dashed other bills imposing major tax increases on higher income Virginians. A full Senate committee refused his bill on Feb. 6.

Of course, anything is possible until the General Assembly adjourns in March, but it seems only two major tax increase proposals are still viable in the 2024 Assembly.  

The first would allow all Virginia cities and counties to add an additional 1% to the sales and use tax within their borders for school spending, if a local referendum approves it. Current law has allowed that in eight counties and one city but this bill would expand that to the entire state. It is advancing in both chambers. 

The second, not usually discussed as a tax hike, is the proposal for a new state trust fund to provide weekly payments to employees taking family or medical leave from work. The bill calls for a payroll tax to fund the benefits but does not specify a tax rate or indicate just how much of an employee’s wage would be taxed. The Virginia Employment Commission based its fiscal estimates on a tax of just under 1%.  

Bills creating this new state-paid family and medical leave benefit program are now in the budget committees of both chambers, and they have until February 18 to reveal their budget amendments. This program could easily become a $1-2 billion annual entitlement. The underlying federal Family and Medical Leave Act (FMLA) provides no income replacement, just up to 12 weeks of job protection for covered absences. Continue reading →

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Posted in General Assembly, Taxes

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Mea Culpa, Bills Targeting UDC Should Fail

Posted on February 2, 2024 by | 77 comments

Is the historical homestead of the Lees of Virginia, Stratford Hall, being stripped of its tax exemptions just because of its connection to one Lee in particular?

By Steve  Haner

Racial animus and revenge are always bad policies. It is now very clear those are the motivations for the bills advancing to strip tax exemptions from legitimate historical and charitable institutions, simply because of connections to the Southern Confederacy. They should die.

The beeping sound you hear is me backing up my truck to prepare for a 180- degree turn. My initial reaction to House Bill 568 was to not really care, but that was based on a cursory reading of the fiscal impact statement. I also forgot the lessons of 40 years of watching the sausage factory and failed to read the bill to the end. Continue reading →

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Posted in Culture wars, General Assembly, Taxes

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Serious Tax Reform Addressing a Serious Problem

Posted on January 22, 2024 by | 49 comments

Chris Braunlich

By Chris Braunlich

The American linguist Yogi Berra once said of a New York City restaurant: “Nobody goes there anymore.  It’s too crowded.”

Overcrowding, however, isn’t what motivates a move to a state (or from a state).  Those decisions are inspired by robust economic activity, jobs for residents, and a pathway for each generation to do better than their parents did.  People move for a job, for higher pay, for lower cost of living, or for a better education. Continue reading →

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Posted in Budgets, Business and Economy, General Assembly, Taxes

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Index Minimum Wage? Do the Tax Code, Too.

Posted on January 19, 2024 by | 110 comments

By Steve Haner

One bill that certainly is heading for Governor Glenn Youngkin’s desk is the increase in the state’s minimum wage to $15 an hour as of two years from now. Both versions, House Bill 1 and Senate Bill 1, raise it to $13.50 for next year, with the $15 level kicking in a year later. Both bills are now out of their first committees.

It was a campaign promise. The Democrats in both chambers coordinated to make it their first bill of the year on both sides. Smart marketing. Soon the Republican governor must decide whether it becomes his first veto, with Republican legislators then having to vote to sustain it or not. Continue reading →

110 Comments

Posted in Business and Economy, General Assembly, Taxes, Unions

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Congratulations, Virginia, You’re Now a High Tax State.

Posted on January 9, 2024 by | 95 comments

States with the highest state-local tax burdens in calendar year 2022.

As the debate plays out over Governor Glenn Youngkin’s tax restructuring plan, which includes $1 billion in tax relief over the next budget biennium, rest assured that the opposition party will attack it as a heartless attack on poor and marginalized Virginians with their illimitable unmet needs. In that context, it is worth remembering Virginia’s slow drift from a lower tax/high-growth state into a high tax/slower growth state over the past three decades, and asking if the higher taxes have made life any better.

According to the Tax Foundation, state and local taxes took 12.5% of Virginia’s net product in calendar year 2022 — the eighth-highest percentage among the 50 states. Within living memory, Virginia’s tax burden was in the second-to-bottom quintile. Today we’re in the top quintile. We’re now officially a high-tax state. Continue reading →

95 Comments

Posted in Economic development, Taxes

How Not To Do Tax Reform. Again.

Posted on January 8, 2024 by | 34 comments

By Steve Haner

According to the Richmond Times-Dispatch, Governor Glenn Youngkin’s administration had its first formal discussion with Virginia’s local governments about eliminating their car tax collections two days after he announced it publicly.

The General Assembly convenes Wednesday and if there is a plan to replace the $2.8 billion in local government revenue raised by that tax source, it has not surfaced. Voters truly detest the local levy, mainly because it is one of the few taxes everybody pays by check or with a credit card, but at this point it is safe to assume the idea is dead in the water. Continue reading →

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Posted in Business and Economy, General Assembly, Taxes

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Richmond’s Meals Tax Disaster

Posted on January 8, 2024 by | 8 comments

Richmond Mayor Levar Stoney

by Jon Baliles

(These reports were published first by RVA 5×5 and are republished here with permission.)

Starting about 25 years ago, Richmond’s restaurant scene began its ascent into the local consciousness as our region’s favorite (and only) professional sport. Offerings expanded and ventured into new directions and opened peoples eyes and expanded our tastes; it drove creative chefs to new heights, and we appeared in list after list of publications that officially put Richmond on the foodie map.

It was also, ironically, not long after that when restaurants became the “Sherpa” of sorts to help fill the city coffers. In 2003, City Council approved a one cent meals tax increase from five cents to six cents to help fund the renovation of Centerstage downtown. Many restauranteurs opposed the funding of an arts center on the backs of their customers by raising the pass through tax to fund one specific project. That deal later was overhauled and refinanced in 2006, but the one cent increase was not repealed as had been promised and it remained on the books as a permanent source of revenue to fund other city needs.

Then fast forward to early 2018 when Mayor Stoney pushed for a 25% increase in the city’s meals tax from six cents to 7.5 cents. It was a highly contentious debate that rightly riled up many restauranteurs who once again saw it as an unfair burden on their businesses alone that made their patrons’ bills higher with each bite and drink. They argued for another funding solution that was fair and spread across the city and not just on their industry. Continue reading →

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Posted in Business and Economy, Taxes

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At Last, Something Bold from Youngkin

Posted on December 20, 2023 by | 100 comments

by James A. Bacon

Governor Glenn Youngkin has always fought for lower taxes, but his proposals — one-time rebates, tinkering with tax schedules — never captured the imagination. Speaking before the House and Senate Finance Committees today, he rolled out two initiatives that you don’t need a tax preparer to understand.

Proposal #1: a 12% cut to state income taxes across all brackets;
Proposal #2: eliminate the car tax.

To offset the cuts, according to the Virginian-Pilot, Youngkin would close the “big tech tax loophole” on digital goods and include those products as part of the sales and use tax base.

Chronic Amazon.com shoppers may take umbrage to that last idea — heck, I guess I’ll have to start paying sales tax on all my audiobook downloads — but it’s hard to argue that shoppers patronizing bricks-and-mortar merchants in Virginia should pay a sales tax while those purchasing digital goods online shouldn’t. It’ll be tough getting anything through the Democratic-dominated General Assembly, but this time Youngkin has a big advantage: Virginians can immediately see what’s in it for them.

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Posted in Taxes

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The Mailman Did It

Posted on December 18, 2023 by | 13 comments

by Jon Baliles

They say bad news comes in threes, and this week is no exception for news from the City of Richmond’s Finance Department. This week wasn’t just raining; it has been a monsoon when it comes to sloppy administrative work, penalties, interest, and deflecting blame.

Madison McNamee with NBC12 filed a story last night that says a number of residents in the West End, all in the same area/street, never received their real estate tax bills and were fined with penalties and interest by the city for untimely payment. The residents on a street just off of Grove Avenue never got their bills and never knew about it until they were sent a hefty late fee with interest, and the residents were told it was the fault of the Postal Service.

Resident Ken Davis is a former Deputy Attorney General who said he always pays his city taxes and has lived in the neighborhood for decades, but got hit with $800 in fees and fines, which he paid immediately. He said under Section 58.1 3916 of Virginia Code that “penalty and interest for failure to file a return or to pay a tax shall not be imposed if such failure was not the fault of the taxpayer.” Continue reading →

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Posted in Efficiency in government, Finance (government), Taxes

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Virginia’s Final (Maybe) RGGI Tax Grab: $97M

Posted on December 9, 2023 by | 23 comments

Virginia’s final (maybe) sale of allowances for power plant carbon emissions produced a record $97.4 million. The price for each permit to emit one ton of carbon dioxide, which is passed to customers, has about doubled in four years.

by Steve Haner

Virginia has participated in its final (for a while anyway) Regional Greenhouse Gas Initiative auction and the proceeds on the carbon tax set a new record, with Virginia collecting more than $97 million in one swoop. The total carbon tax take for the state is just under $828 million in three years.

The clearing price on December 6 reached $14.88 per ton. It would have been higher but the demand for allowances was so high the RGGI organization released some of its “cost containment reserve” or CCR allowances to tamp down the price increase. The news release on the auction is here. A chart showing Virginia’s proceeds over the three years is attached.

Why the record price? Here’s a solid suggestion: Power producers fear another major winter stressing their systems and know full well that wind and solar are unpredictable and unreliable. They are stocking up on allowances to keep our lights on with fossil fuels.

Just four years ago when the Thomas Jefferson Institute of Public Policy produced this explainer on what RGGI was, the “carbon price” was $5.27 a ton and the prediction was Virginia would collect $150 million a year from electricity producers and eventually their customers. “There is no guarantee the price won’t rise,” we noted, and indeed a steadily rising price for carbon emissions is entirely the point of RGGI.

Pushed by Governor Glenn Youngkin (R) the Air Pollution Control Board voted earlier this year to rescind the state regulation that forces Virginia’s larger electric power plants to purchase allowances from RGGI for every ton of coal, natural gas or oil they burn. So far, efforts to reverse that decision in the courts have failed. Continue reading →

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Posted in Energy, Environment, General Assembly, Regulation, Taxes, Utilities

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Tomorrow’s Ballot Question: Will Virginia Become Illinois?

Posted on November 6, 2023 by | 38 comments

by Derrick Max

It was reported last week that billionaire Illinois Governor J.B. Pritzker had made substantial campaign contributions totaling $250,000 to four liberal Democrats running for Virginia State Senate and the Democratic Party of Virginia. These donations, made through Governor Pritzker’s “Think Big America” organization, are the clearest sign yet that the left wants to turn the Commonwealth of Virginia into an Illinois of the East.

Truthfully, the governing philosophies in Illinois and Virginia could not be more different. State and local government spending per capita in Illinois is higher than in Virginia. Illinois has a higher overall tax burden than Virginia, and Illinois has a substantially higher unionization rate than Virginia. In fact, about one in seven workers in Illinois is unionized, while only one in 22 workers in Virginia is unionized. Illinois also has a higher minimum wage than Virginia. So, what does Illinois get with its higher taxes, higher spending, higher minimum wage, and higher unionization? A worse state. Continue reading →

38 Comments

Posted in Elections, Taxes

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Democrats, Judges, and Higher Taxes

Posted on November 6, 2023 by | 2 comments

from Liberty Unyielding 

For generations, Washington State had no state income tax, because of anti-income tax provisions in its state constitution. But the Washington state supreme court recently upheld a classic example of an income tax — a state tax on income from capital gains — by making the absurd argument that a capital gains tax is an “excise tax,” not an income tax. That was nonsense. The IRS and all other states deem capital-gains taxes to be income taxes, because they are levied on the amount of income you make from selling an asset, such as shares of stock or the sale of your home. The state supreme court could not deny this, and seems to have been motivated by racial, rather than legal, considerations, in reaching its ruling. It claimed that Washington’s traditional tax system “perpetuates systemic racism by placing a disproportionate tax burden on BIPOC residents,” who pay a higher fraction of sales taxes than of income or capital gains taxes.

As broadcaster Jason Rantz notes, the state supreme court’s opinion “doesn’t read like a Court decision, but a press release from a pro-tax, anti-capitalist Seattle activist group. But that’s what the Washington State Supreme Court has become.” The state supreme court’s 7-to-2 ruling is in tension with the fact that, as the tax consulting firm RSM notes, “the IRS defines capital gains as income and the Washington capital gains tax relies on federal income tax reporting.”

If other state supreme courts similarly redefine income taxes as excise taxes, that could weaken tax limits contained in other states’ laws, such as Virginia law’s ban on income taxes levied by cities and counties. This Tuesday, Virginia is holding legislative elections. Virginia’s legislature picks the state’s judges, and Democrats are slightly favored to take control of the state legislature. When they last controlled the Virginia legislature, the Democrats expanded and packed the Virginia Court of Appeals. But the Virginia supreme court currently is split 4-to-3 in favor of Republicans. Residents of northern Virginia pay 3.2% less of their income in taxes than residents of neighboring counties in Maryland, because Maryland permits county income taxes, and Virginia doesn’t.

If Democrats win the Virginia elections Tuesday, they could pick judges who uphold taxes at odds with the state constitution. Continue reading →

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Posted in Courts and law, Elections, General Assembly, Taxes

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