Category Archives: Taxes

Big Tax-Hike Push Coming

by Chris Saxman

Earlier today I was asked by Virginia Business Magazine what the business community could expect in the 2021 General Assembly Regular Session. I talked about the construct of the short session with a gubernatorial election, House of Delegates staving off primary challenges, bills that were not passed last session, and the prospects of the changing political dynamic should Joe Biden win the presidency armed with a majority in the U.S House and Senate.

That interview will be out in January.

Not a half an hour after that call ended, a job was posted on line that will actually define the 2021 Session “and potentially beyond.”

Ohhh….what’s that you ask?

A tax increase campaign driven by The Commonwealth Institute for Fiscal Analysis Continue reading

Joe Biden, the SALT Cap and Virginia’s Hidden Taxes

by DJ Rippert

SALT of the Earth. The Trump Administration pushed through a change to the US tax code which capped the deduction for State And Local Taxes (SALT) at $10,000 per year. Previously there had been no cap. The imposition of the cap effectively increased the federal taxes paid by high-income earners, especially in high tax states / localities. Given that many high-income, high-tax areas in the U.S .are solidly Democratic, this loophole reduction rankled Democrats in the Congress. Those Democrats have made several unsuccessful attempts to repeal the cap.

Democrats are likely to win the presidency in the upcoming election and may take control of the U.S. Senate as well. If that happens, it is likely that they will make good on their prior efforts to remove the SALT cap. In Virginia, Democrats control the House of Delegates, the Senate and the Governor’s mansion. They have used that control to raise state taxes including the passage of a number of hidden taxes that have been implemented through regulation. If Joe Biden is elected, will the hidden taxes imposed by Virginia’s Democrats put the state’s residents at a disadvantage since they won’t be deductible when the SALT cap is lifted? Continue reading

Energy “PIPP” Proposal Just the TIP of an Iceberg

The initial “PIPP” tax added to Dominion and APCo bills in 2021 may hide the full impact of the program.

By Steve Haner

As the State Corporation Commission prepares to set up Virginia’s first electricity cost shifting program, using a tax on all electric bills to provide discounts to low-income customers, advocates are already pushing to expand and enrich it.

An expert hired by an environmental group argues in testimony that the General Assembly erred when it capped electricity payments from poorer households at 6% of their monthly income if they did not have electric heat, and 10% if they did. Appalachian Voices’ expert wants the SCC to lower the rate to 5% and 8% respectively, greatly increasing the amount of revenue that must be extracted from other customers.  Continue reading

Fairfax Tax Rate the Same, but Tax Burden Up

Fairfax County Board of Taxaholics, er, Supervisors

by Emilio Jaksetic

The massive lockdown triggered by the COVID-19 pandemic has caused many businesses and workers to lose significant amounts of income and forced them into financially precarious situations. Despite the undeniable financial pain and suffering that many businesses, workers, and households are facing, the Fairfax County Board of Supervisors insisted upon another increase in the real estate tax. Ignoring the request of Republican Supervisor Pat Herrity to hold off on the increase, all the Democratic Supervisors decided to stick to their usual taxaholic ways.

Technically, the board did not raise the real estate tax rate itself. Rather it allowed the tax burden to increase by not adjusting the rate — $1.15-per-hundred dollars of assessed value — downward to offset higher property assessments. If board members had wanted to provide meaningful tax relief during the COVID-19 pandemic, they could have “frozen” everyone’s real estate tax bills for 2020 at the same level as their real estate tax bills for 2019.

Everyone in Fairfax County, not just property owners, will feel the painful effects of the real estate tax increase. Continue reading

Is DMV Hiding 26% of Virginia’s Fuel Tax?

DMV Table.  Missing is the additional 7.6 cents per gallon collected in every county and city as a “wholesale tax” but still passed on to consumers. Oversight?

By Steve Haner

The Division of Motor Vehicles website is not honestly reporting fuel taxes in Virginia on that table above. This cannot be an oversight.  Continue reading

Transportation Carbon Tax Debate Starts Again

First published this morning by the Thomas Jefferson Institute for Public Policy.

By Steve Haner

Having imposed a carbon tax on Virginia electricity generation in 2020, the General Assembly starting in January 2021 will consider adding a similar tax on every gallon of gasoline and diesel sold for vehicle use. The Transportation and Climate Initiative, an environmentalist dream for a decade, is finally ready for its close up.

Advocates in the 12-state region that would make up the proposed interstate compact held two webinars in September, one focused on additional modeling on the project and the other discussing all the racially and environmentally just ways they believe states can spend the billions in new taxes.

The new modeling results did not change the basics of the program. TCI is a cap, tax and trade system that imposes a dollars-per-ton cost on the carbon dioxide emissions released by burning the fuels. The tax rate is set by an interstate auction, and the tax itself is imposed on the fuel wholesalers. The amount of fossil fuel emission credits that wholesalers may bid for will be capped and then will shrink a certain percentage every year.  Continue reading

More Evidence that Virginia is Becoming New Jersey….

by James A. Bacon

Governor Ralph Northam is one of seven governors earning an “F” grade for fiscal policy by the Cato Institute in its 2020 “Fiscal Policy Report Card on America’s Governors” report. With that score, he enjoys the company of such gubernatorial luminaries as Governors Phil Murphy of New Jersey, Andrew Cuomo of New York, and J.B. Pritzker of Illinois.

Cato, a libertarian think tank, grades the governors on the basis of seven metrics reflecting taxes and spending during their tenures. Here is Cato’s commentary on Northam: Continue reading

Mass Transit as the Newest Entitlement

by James A. Bacon

Richmond Mayor Levar Stoney has proposed eliminating all transit fares, and in a sign of how far left the City of Richmond’s political center of gravity has moved, his two main competitors in the mayoral race, Kim Gray and Alexsis Rodgers, support the idea.

The city suspended fares during the COVID-19 epidemic, which has coincided with a 20% ridership decline for the GRTC (Greater Richmond Transit Company). Stoney endorsed making the fare cuts permanent as he unveiled a new “equity office” in the Department of Public Works, which will also oversee initiatives relating to pedestrian safety, bike lane development, and transit planning.

Rodgers, who is running as a progressive, criticized Stoney, in effect asking what took him so long. Gray, the most centrist of the candidates, said she supports the free-transit model but added the caveat that she didn’t want to raise taxes or make cuts to other services to achieve it. “At some point,’she said, “this will require a budgetary reckoning.” Continue reading

Coal Severance Tax Credits Obsolete, JLARC Says


by James A. Bacon

Virginia’s coal tax credits are obsolete, cannot forestall the decline of coal mining in the state, and should be eliminated, finds the Joint Legislative Audit and Review Commission in a new report, “Infrastructure and Regional Incentives.”

The state provides two tax credits to encourage coal production: The Coalfield Employment Enhancement Tax Credit and the Virginia Coal Employment and Production Incentive Tax Credit. The two programs have saved coal companies and electricity generators $291.5 million in income taxes between FY 2010 and FY 2018, according to the report on the cost-effectiveness of economic development incentives. But the credits ranked at the bottom of JLARC’s list of incentives based on economic benefits per $1 million in spending.

The  coalfield credit is not needed because Virginia’s remaining mines are competitive with mines in other states based on a labor productivity basis (tons per employee hour), JLARC contends. The credit targeting electricity generators is fast becoming irrelevant when the state is moving towards a 100% renewable electric grid and phasing out its remaining coal-fired power plants. Continue reading

End the Coalfield Boondoggle

Alpha Natural Resources mine facility

By Peter Galuszka

The General Assembly’s auditing watchdog has recommended the elimination of  two coal tax credits that have been a bonanza to Virginia coal companies worth $315 million from 2010 to 2018 but have created only 10 jobs.

The report by the Joint Legislative and Audit and Review Commission (JLARC) studied 16 different tax credits to boost the state’s economy but recommended  only eliminating the ones involving coal production.

Those credits involve the Coalfield Employment Enhancement Tax Credit, formed in 1995, and the Production Incentive Tax Credit, formed in 1986 to help with electricity generation.

Virginia’s coal production peaked in 1990 and has been declining since. In 2000, for instance, it had been 33 million short tons but in 2019, it had dropped to 12 million short tons.

Continue reading

Told You: You Will Cover Those Unpaid Power Bills.

By Steve Haner

If the Virginia General Assembly orders Dominion Energy Virginia to fork over hundreds of millions of dollars in “excess profits” to cover unpaid family utility bills, who is really paying?  We all are, of course.  Don’t say you were not warned.

That apparently is the latest approach to help folks behind on their bills, as reported in this morning’s Richmond Times-Dispatch by Associated Press.  Governor Ralph Northam is proposing a budget amendment to raid the presumed excess cash at Dominion, after legislative efforts to capture it were defeated in the special session.

Legislative manipulation of the regulatory process, bypassing the independent State Corporation Commission, created the opportunity for Virginia’s dominant electric utility to pile up a possible half billion dollars in excess profit.  But the money came from every Dominion customer, a large portion of it from the giant industrial consumers.  Only a small part came from those now behind on their monthly bills.

Some legislators see your electric bill as just another tax to be spent on their priorities, not yours.  Now they want to use it to pay electric bills for customers who have fallen behind due to a recession (again, a recession in part of the government’s making.)  Continue reading

The Trash Tax Returns; Energy Price Hikes Ignored

By Steve Haner

Proving once again how rare are the new ideas, Governor Ralph Northam’s proposed Special Session budget amendments resurrect a possible state-collected solid waste tipping fee, which crashed and burned in 2002 after being successfully tagged a “trash tax.”

The proposal calls for a study to be completed by November 1, laying the groundwork to include the new levy and substantial revenue when the Governor tweaks the budget again before the 2021 Regular Session. When former Governor Mark Warner proposed this, at the Veto Session following the 2002 Regular Session, it would have raised an estimated $75 million annually.

Frankly, what the language calls for (a plan) is something the Northam Administration can just do. By including this directive in the budget document, all the stakeholders are forewarned and forearmed. What’s the plan for the money? “The plan shall include recommendations for the amount and structure of any proposed fee, and recommendations for use of any revenue that may be generated from such fee.”    Continue reading

Northam Asks Legislators: Resist Urge to Spend

Governor Ralph Northam in an almost empty Pocahontas Building committee room, addressing legislators miles away. State photo.

By Steve Haner

Perhaps the most important point about Governor Ralph Northam’s latest Virginia state budget proposal is what he did not recommend. He did not recommend dipping into the state’s current cash reserves to restore spending items which had been frozen. No additional taxes are proposed.

In fact, Secretary of Finance Aubrey Layne told legislators in the budget briefing August 18 that no new budget bill is needed from this month’s special session at all, and the General Assembly could let the current document stand as approved in May until it comes back in January for the full 2021 regular session.

Whether Northam’s cautious, some would say conservative, approach will satisfy the General Assembly or spending advocates will be the story of the special session, at least on the financial front. The run up to the Assembly’s arrival was marked by escalating demands to address issues related to the COVID recession, and general complaints about poverty and income disparity in the Commonwealth.

“We have concentrated on building cash and limiting spending on recurring expenses. That is why I stated we do not need budget action from a financial standpoint. Let’s hope the General Assembly follows suit,” Layne wrote in reply to a question.

That is hardly guaranteed. The frozen spending amounts, more than $2.2 billion, represent some of the highest priorities of legislators (and the Governor himself.)  Most cannot be addressed by using the federal funds provided to respond to the COVID-19 pandemic. They could be funded in part by the more than $1 billion in cash reserves, divided between the official Revenue Stabilization Fund and the more informal Revenue Reserve Fund. Northam left those alone. Continue reading

Taxaginia Reappears As Special Session Looms

Another try at imposing a Virginia estate tax this month?

By Steve Haner

It must be a reflex. Waken or startle a Democrat and they shout, “raise taxes!” Our friends at the Commonwealth Institute for Fiscal Analysis came out Monday with a new list of (mostly old) tax proposals for the August 18 General Assembly special session. It drew the attention of Virginia’s Public Radio in a report this morning.

Keep in mind, it is still unknown (to us anyway) how much (or little) cash the state accumulated to carry forward into the new budget cycle that stated July 1. And nobody outside of state government has seen the new Fiscal Year 2021 and 2022 revenue forecasts, showing the impact of the economic-shutdown-induced recession. We see those August 18. Why wait for actual data before proposing new tax hikes?  Continue reading

How Discount Power For Poor Will Raise Your Bill

By Steve Haner

Virginia’s two major electric utilities estimate that as many as 150,000 of their poorest residential customers will see their monthly bills reduced next year using money extracted from all their other customers on their own power bills.

Appalachian Power Company projects about 30,000 of its low income customers will receive subsidies of $500-$600 per year. Dominion Energy Virginia projects bill subsidies to about 120,000 households of about $750 per year.

Both companies told the State Corporation Commission recently that to pay for this, about $1.12 will be added to the cost of every 1,000 kWh of electricity used by homes, businesses, and industries in Virginia. The cost per kWh is the same for all customer classes, and thus represents a larger percentage price increase for the commercial and industrial users.  Continue reading