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?
For that matter, nobody can be sure yet just how much money the tax increases already approved by the 2020 regular session will extract from Virginia businesses and individuals. That might also be clearer come August 18. The tobacco and motor fuel tax increases landed hardest on those low income taxpayers the Commonwealth Institute seems most concerned about. Continue reading
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
By Dick Hall-Sizemore
That is how Aubrey Layne, Secretary of Finance, summed up his explanation to the House Appropriations Committee of April’s 15% drop in transportation revenue
All of the major components of the transportation revenue were down in April, but the biggest danger sign was in the motor vehicle sales and use tax. That source is the largest single state source of revenue for the highway maintenance and operation fund and the second largest source for the transportation trust fund. Its revenues in April were down 41% compared to April a year ago.
Despite the sharp drop in April, the year-to-date transportation revenues are still running 5.6% higher than for the comparable period last year, and significantly higher than the 3.3% decrease that had been forecast. However, the Governor’s stay-close-to-home policy, continuation of extensive telecommuting, and social distancing will likely bring the total transportation revenue below last year’s total. Revenues should pick up after July 1, when the increase in the gas tax becomes effective, although the increase will likely be less than was forecast in the session.
The green areas are regional transportation districts where additional fuel taxes are already being collected, 7.6 cents per gallon on gasoline and 7.7 cents per gallon on diesel. Effective July 1 those regional fuel taxes will be imposed in all the other Virginia localities. In combination with the 5 cent per gallon increase in the statewide gasoline tax, the total tax on fuel goes to 28.8 cents on gasoline and 27.9 cents on diesel.
By Steve Haner
First published this morning by the Thomas Jefferson Institute for Public Policy.
The 2020 General Assembly, with its new progressive Democratic majority, passed a host of changes in Virginia tax laws that will begin to hit individuals and businesses in a few weeks on July 1. Because of the COVID-19 economic shutdown, a few amendments were made to the implementation schedule during the reconvened session on April 22, but no tax increase was repealed.
This is a follow up on an earlier report on the sixteen tax bills that passed the regular session. Most are taxes will be buried almost invisibly in various transactions, and their phased imposition will also keep many taxpayers from noticing them.
July 1, 2020
The statewide tax on gasoline increases from 16.2 cents per gallon to 21.2 cents per gallon (a 31% increase) and is no longer tied going forward to the rise or fall of wholesale cost. Continue reading
The rise and fall of Virginia’s unemployment insurance tax, per worker, in response to the 2008-2009 recession. The COVID-19 recession, just starting, is likely to set new records for amount of tax and the length of time those elevated taxes are imposed. This chart includes the average (not maximum) base tax, an additional $16 fund builder tax, and a pool tax imposed on everybody who pays to compensate for employers who default. Source: Virginia Employment Commission.
By Steve Haner
This first appeared in today’s Richmond Times-Dispatch and has also been distributed by the Thomas Jefferson Institute for Public Policy.
America’s and Virginia’s unemployment insurance program – born of the Great Depression and the Social Security Act of 1935 – may be another casualty of the COVID-19 pandemic. The virus has mutated unemployment insurance into a form not financially sustainable.
Each state has its own unemployment insurance trust fund, financed by taxes on employers and steadily growing in good times. The last time the Virginia Employment Commission publicly reported on our fund’s status, almost a year ago, it projected a balance of $1.3 billion by the end of 2019. Continue reading
by Steve Haner
There were various factual debates over my post on tax payments yesterday, and these updates are worth special attention. A morning conversation with a certified public accounting familiar with Virginia taxes brought to light the following:
- If you fail to file a state return by May 1, the six-month extension truly is automatic. Your return is not considered “late” until November. The state doesn’t care. You don’t need to request the extension.
- If by June 1 the state has received tax payments either equal to what you paid for 2018, or 90% of your eventual 2019 liability, there is no penalty assessed once your return is settled.
- The issue of interest on late payments will be addressed at the Reconvened General Assembly session on April 22, and it can take action to relieve taxpayers of that concern during this crisis. Our debate may have spurred an announcement on that before the day is done.
- You do not need to have filed a federal tax return to file your state return, should you choose to. If owed a refund by the state, while owing an additional payment to the feds, file the state return now and the federal return in July. It creates no problem for the state.
- Virginia is just weeks away from the end of its fiscal year June 30 and is constitutionally barred from deficit spending. Even the General Assembly could not have authorized a delay in the payment deadline beyond June 30 without risking a major financial default. As I’ve been saying with regard to businesses and government, cash flow is crucial.
By Steve Haner
The latest complaint against the Northam Administration’s response to the COVID-19 pandemic is failing to provide adequate state tax relief. The complaint comes from the Tax Foundation and surfaced in a news report in Wednesday’s Fredericksburg Free Lance-Star. The Richmond Times-Dispatch has now chimed in with an editorial.
Apparently most other states have matched the new (and temporary) federal income tax filing deadline of July 15 rather than April 15. Virginia has delayed the deadline for paying any taxes still owed for 2019 from May 1 to June 1. But the 2019 income tax returns are still due on May 1, and the common complaint is that since Virginia taxes are based on your federal adjusted gross income, you need to know your federal AGI figure to file.
“Virginia has done the least to help taxpayers with delayed filings or delayed payments than any other state,” said Jared Walczak, director of state tax policy with the Tax Foundation.
Walczak said although Virginia requires that state tax returns be filed by May 1, the payment deadline has been extended until June 1. But even with an extension on tax payments, Walczak said interest starts to accrue on the amount you owe.
“Virginia is the only state in the nation that is doing that,” said Walczak. “Everywhere else, there is at least some relief on both filing and payment deadlines.”
Statue of Gov. Harry F. Byrd on the state capitol grounds.
By Peter Galuszka
Right-wingers in Virginia have been apoplectic for months that Democrats finally captured the General Assembly after years of Republican control.
They also were enraged that the legislature this winter passed a number of reforms that would draw Virginia into the 21st Century such raising the minimum wage, boosting collective bargaining, tightening rules on carbon pollution and raising taxes for cigarettes, a deadly product.
Now such conservatives are using the COVID-19 pandemic as an excuse to throttle or delay such needed reforms. They have banded into groups such as the Coalition fort a Strong Virginia Economy. They have used the Virginia Municipal League’s complaints against the reforms, claiming they cost too much, as a way to derail new measures.
According to the left-leaning blog site Blue Virginia, one of the more extreme advocates for scrambling changes is Dave LaRock, a far-right Republican delegate from Loudoun County. A pronounced gay-basher, LaRock wants to squelch all of the reforms made by the more progressive General Assembly. Continue reading
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by James A. Bacon
It is obvious to some people that COVID-19’s body blow to the economy will have a devastating impact on state/local government finances. Old Dominion University professors Ron Carlee and Robert McNab have estimated that local governments in Hampton Roads are losing at least $16 million a month in local taxes, while local governments across the state are losing $60 million monthly or more. And the blood-letting is getting worse.
Hotel occupancy and revenues were only 80% of normal levels in early March. By the end of the month, the estimate, revenues were running only 20%. Sales, business-license, hotel & motel, restaurant & food taxes comprise a “vulnerable” category of local government revenue amounting to $637 million in Hampton Roads and $2.9 billion statewide.
Unlike the federal government, the professors write, state and local governments must balance their budgets (unless, I might add, they engage in hidden deficit spending like running up unfunded pension liabilities and falling behind in building and infrastructure maintenance). “It’s not time to panic,” they write in the Richmond Times-Dispatch, “it’s time to prepare.”
Some local governments are acting proactively. Fairfax County and Chesterfield County are among those slashing budgets — including next year’s — in anticipation of declining revenues. Remarkably, Chesterfield is anticipating a decline in revenue sources funneled through the state even though Governor Northam and General Assembly budget writers have yet to re-work the budget passed earlier this year before the full dimensions of the COVID-19 crisis were apparent. Continue reading
My first post in two weeks. What the heck, I should join the parade and give a bunch of advice to our beleaguered Governor which he is likely to ignore. This first appeared today in the Fredericksburg Free Lance-Star. It has one of those annoying “take a survey” paywalls, but in this case asks a question we should all answer. Try it.
By Steve Haner
The assumptions underlying the most contentious debates of the 2020 General Assembly session are gone. Sixty days ago, activists were arguing that this was a rising economy and state government should mandate raising workers to a higher level.
This is a now sinking economy, and the General Assembly’s actions have piled bricks on the life rafts that workers in the commonwealth will need to survive.
The priority now is containing the spread of this respiratory virus, but soon it becomes reviving an economy that has come to a near stop. Nobody knows when or where unemployment will peak, but this is starting to look more like 1929 than 2009.
Gov. Ralph Northam’s lasting legacy will not be his response to the virus, but the speed of the following recovery. Continue reading
By Steve Haner
What will this year’s General Assembly cost you in taxes? Here are at least 16 bills approved by the 2020 General Assembly that create or raise taxes on Virginians or authorize a local government to do so. No one told Virginians at the start of session that major tax increases were coming, and there is little recognition of what has now happened. It is time to tally the bill.
If anybody would or could run the fiscal projections on these 16 tax bills, they might combine into a major tax hike comparable to those in 2004 and 2013. Over several years this will cost families or businesses billions of dollars, but most will be collected by wholesalers (cigarettes and fuel) or too deeply buried on receipts to see. Assessments on business eventually get passed down to the customer: you. Continue reading