Category Archives: Taxes

New Youngkin Tax Cuts Total $7 Billion By 2028

Governor Youngkin’s major tax proposals and how much they save taxpayers. Source: Secretary of Finance. Click for larger view.

by Steve Haner

The set of Virginia tax changes Governor Glenn Youngkin (R) has baked into his proposed 2023 budget amendments is far more extensive and involves substantially more tax relief than the descriptions he offered in his December 15 presentation. Continue reading

Youngkin Delivers Early Christmas Gift

by Barbara Hollingsworth

(This column was first published by the Thomas Jefferson Institute for Public Policy.)

Virginians received an early Christmas present this year. For four years, the Thomas Jefferson Institute for Public Policy has been strongly urging state officials in Virginia to lighten what has become a steadily increasing tax burden on residents and businesses in the commonwealth by enacting tax cuts and tax reform.

On December 15, during his appearance before the joint Senate and House of Delegates Finance and Appropriations Committees, Governor Glenn Youngkin took bold steps to do just that. The governor announced his plan to “accelerate” the state government’s transformation based on what he said was “driving better outcomes for less money.”

In his budget amendments to the 2022-2024 biennial state budget delivered to the General Assembly’s “money committees,” Youngkin proposed cutting taxes on Virginians by a billion dollars – in addition to the $4 billion tax relief bill he signed earlier this year.

Youngkin told legislators that the state, which is running a large surplus, can afford the tax cuts despite his acknowledgement that a national recession is looming. “Our carefully planned budget balances spending priorities and tax cuts, with roughly $1 billion … conditioned on meeting our 2023 revenue forecast,” Youngkin told state lawmakers.

The governor wants to “finish the job of doubling the standard deduction” for state income tax filers, a long-time policy objective of the TJIPP. He also wants to reduce the individual income tax rate for the highest income bracket to 5.5% and eliminate state income taxes on military retirement pay. Youngkin said that these individual income tax reductions will save Virginians $700 million per year.

Under the governor’s plan, the corporate income tax rate for businesses would also be reduced from 6% to 5%, “the first step toward the ultimate goal of 4 percent at the end of our administration.” For small businesses, Youngkin is proposing a 10% Qualified Business Income Deduction. These measures, if approved by the General Assembly, would total $450 million in business tax relief annually. Continue reading

RGGI Tax, On Path to Repeal, Reaches $524 Million

Virginia’s two year take of carbon taxes under RGGI. RGGI table.

by Steve Haner

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

The tax on each ton of carbon dioxide emitted by Virginia electricity plants dropped to below $13 a ton in the most recent sale of CO2 allowances conducted by the Regional Greenhouse Gas Initiative (RGGI). That meant Virginia collected only $71 million in tax revenue for the fourth quarter, the lowest amount of the four auctions in 2022. Continue reading

JLARC Agrees: Index Virginia Taxes to Inflation

by Barbara Hollingsworth

Inflation is eroding the value of each dollar earned by Virginians, making it harder for them to afford decent housing, put food on the table and educate their children. But what many Virginians don’t know is that they have also been paying more in state income taxes while their real income has declined because the commonwealth’s tax code is not indexed to inflation.

A new report by Virginia’s Joint Legislative Audit and Review Commission (JLARC) points out that state income taxes in the commonwealth “have far outpaced median income, because income brackets have not been changed since 1990.”

Thanks to inflation, state income taxes owed by a median filer have increased 173% since 1990, while that same taxpayer’s actual income increased only 108%. Continue reading

Virginia Business Tax Ranking Falls Again

Source: Tax Foundation

Virginia continues its long side in tax competitiveness this year with a No. 26 ranking in the Tax Foundation’s “2023 State Business Tax Climate Index.” That’s a decline from 25th place last year, 24th place in 2021, and 23rd place in 2020. As recently as 2017, Virginia’s business tax climate ranked 16th.

After eight years of political dominance by Democrats, Virginia has been transmogrifying slowly into New Jersey, which ranks 50th in the country on business taxes. It’s hardly a surprise that the Old Dominion’s middle-of-the-pack tax policy and dramatic fall-off in worker freedom (from A+ to C, according to the Commonwealth Foundation) has coincided with domestic population out-migration and sub-par economic growth over the decade.

On the other hand, Virginians can console themselves that the Commonwealth ranked No. 1 in Site Selection Magazine’s 2022 Business Climate ranking based on key site-location criteria selected by site-selection executives. Workforce skills was the top criterion, while workforce development resources and… wait, what?… tax climate were tied for the second most important factor. Continue reading

Ungrateful Citizens of Fairfax County

Fairfax County Board of Supervisors Chair Jeff McKay credit

by James C. Sherlock

Jeff McKay, Chairman of the Fairfax County Board of Supervisors,  can’t catch a break.

Violent crime is up. The Fairfax County Police Chief has declared a police emergency for staffing.

There has been a fairly brutal back and forth up there about who is responsible and who is or is not working to fix it.

Fairfax County Commonwealth’s Attorney Steve Descano, a George Soros acolyte, apparently has missed the news about the crime wave. His website emphasizes the reforms he has initiated since 2020. Understandably, he is not anxious to link those reforms to the crime wave. Take a look. You will be able to do it for him.

But this story is about Chairman McKay. After a big ruckus, he has moved on from crime and police shortages.

A recent story relates that he blames a lot of unsolved problems in Fairfax County — or what he assesses as problems — on the Dillon Rule. He chafes under its restrictions. He wants an exemption from that rule to make Fairfax County a city-state.

Not quite by the way, he wants authority to levy a local income tax.

Seriously. Continue reading

Map of the Day: Corporate Tax Rates

Why does Virginia have such an also-ran economy? Perhaps one reason, among many, is that its combined state and local corporate tax rate is higher than that of 24 other states. We’re not hostile to business like, say, Illinois or New Jersey, but we’re not welcoming either. — JAB

Next Virginia Tax Reform: Index for Inflation

by Barbara Hollingsworth

Most Virginians are painfully aware ­­­­that it’s becoming much more difficult to make ends meet. Prices for fo­­­­od, housing, gasoline and other necessities have soared. Inflation hit a 40-year high of 9.1 percent in June, the largest yearly increase since January 1982. And a recent study from the University of Iowa found that a typical American had to pay $669 more for basic living expenses than they did just two years ago.

All while the Commonwealth of Virginia was pocketing $2 billion in “surplus” revenue that was not anticipated and therefore not included in the two-year $165 billion state budget the General Assembly passed earlier this year. Most of that windfall was the result of the Federal Reserve’s monetary inflation, which made the prices of consumer staples soar because there were suddenly a lot more dollars chasing the same amount of goods and services.

But inflation had another unwelcome effect. It also pushed Virginia taxpayers into higher tax brackets despite the fact that their actual living standards went down, not up.

Governor Glenn Youngkin wants to set aside $400 million for tax relief in his revised budget, which he will present to the state legislature in December. But that’s less than a quarter of the total surplus. The budget signed by Youngkin also includes $450 million to pay for potential cost overruns on the commonwealth’s capital projects due to … you guessed it …. inflation. Continue reading

Richmond Tax Assessments: Through the Roof

by Jon Baliles

One story you will be hearing about and living through in the next week or so (if you live in the City) is that the new assessment notifications are arriving in people’s mailboxes. And they are literally though the roof.

Some areas are up from 18% in the Westover Hills area and Scott’s Addition to 20% increases in the East End, to 41% in the Fan. Sales of homes in the last year are running super high which is driving valuations.

Richie McKeithen, Richmond City Assessor, says:

Richmond is seeing an influx of people moving here from New York, DC and Philadelphia. The normal vacancy rate for homes in the city is usually between 15% and 20%. Right now, it’s around 1%.

And they’re coming here, and they’re buying property, and they have resources to buy properties at a higher value than what we have them assessed for.

Continue reading

What Surplus? Virginia Doesn’t Allow Surpluses!

Secretary of Finance Stephen Cumming’s slide showing most of the final surge of unexpected revenue before June 30 came from payments from business owners and investors. Click for larger view.

by Steve Haner

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

Does last week’s glowing report on Virginia’s state tax collections presage additional tax relief for struggling families? The first question is, was the news really glowing? Continue reading

Map of the Day: Fiscal Stress

The Commission on Local Government has published its 2022 update on the fiscal condition of Virginia localities. No surprises here — the same geographical patterns hold as in the past. The most stressed localities are uniformly cities, and the most stressed are small cities. The least stressed are counties in Northern Virginia and on the metropolitan fringe of Richmond. Two remarkable outliers, Bath and Highland counties, seem to be in great shape relatively speaking. View the report for details of your jurisdiction.

Of greatest interest is the change in revenue capacity between 2019 and 2020, the latest year covered. The biggest winner: Sussex County, with a gain of 14.5%. The biggest loser: Prince George County, with a loss of 4.o%. Continue reading

Turbocharged: Fairfax Car Tax Burden

A 2020 Rav4.

by Bill Tracy

Fairfax County just mailed out its 2022 Car Tax bills, and the tax increase is substantial.

The Board of Supervisors granted us a 15% discount off of the inflated 2022 Blue Book vehicle values. That’s nice, but it looks like the Board failed to mention that the car tax was increasing for a second reason: the “subsidy” was reduced for the first $20k value of the car.

Here are some car tax facts for my personal vehicle.

Base Case last year (2021):
Bill’s 2020 RAV4 Value 2021: $ 23,725
    Tax Before Relief: $1,084
    Tax Relief/Subsidy (under $20k Value): $525
    Net Car Tax Owed 2021: $558  Continue reading

Too Much Money for Roads?!?

by Dick Hall-Sizemore

Although gas prices have receded substantially from the levels that sent everyone into a tizzy earlier this  year, Governor Youngkin has not given up on his proposal to lower gas taxes.  Now, however, his rationale for the cut is different.

According to veteran reporter Dave Ress, in an article that appeared in the Richmond Times-Dispatch, the Governor told a group of supporters in Virginia Beach recently that the gas tax should be decreased because it brings in too much money for the state transportation fund. The governor said that some level of tax needed to be retained as a use fee.

If the governor really believes that the state brings in too much money for the transportation fund, it seems strange that he let go unchallenged the General Assembly’s budget proposals to use $554 million in general fund appropriation to fund highway and bridge construction projects as follows:

  • Widen I-64 between the Bottoms Bridge exit in New Kent to James City County–$539 million (Item 447.10, Chap. 1 (HB 29) and Items 452 and 485, Chap. 2 (HB 30))
  • Extend Nimmo Parkway, Virginia Beach–$10,000,000 (Item 447.10, Chap. 1 (HB 29))
  • Replacement of Robert O. Norris Bridge–$5,000,000 (Item 452, Chap. 2 (HB30))

Continue reading

Need a New Corset? You’re in Luck!

by Kerry Dougherty

Got a gangster in your family? How about a dominatrix? An altar boy?

Well, good news for all of them. Starting today and running through Sunday at midnight they can buy items they desperately need like bandanas, corsets and altar outfits. All without paying Virginia sales tax.

Yep, it’s the commonwealth’s annual Sales Tax Holiday weekend. Actually, it’s the “combined” sales tax holiday. A few years ago Richmond merged the spring “Hurricane Preparedness” tax break with August’s “Back to School” event, turning this into an extravagant weekend that allows you to shop anywhere from Home Depot to Victoria’s Secret. Tax free.

Combining the two holidays was smart. As someone who’s lived in hurricane country since 1984, I can tell you that absolutely no one shops for batteries, generators or even toilet paper until they see Jim Cantore lashed to a telephone pole in front of their house. Continue reading

Blacks Don’t Always Think the Way White Cultural Elites Think They Do

by James A. Bacon

Governor Glenn Youngkin’s popularity in Virginia was the top-line story from a new Virginia Commonwealth University poll. The survey, published yesterday, found that 49% of Virginians polled approve of his job as governor compared to 38% who disapprove. It’s not surprising to see his popularity holding up so well. Virginians tend to be favorably disposed toward governors not caught up in scandal, and Youngkin is no exception.

The more interesting data from the poll was buried in the VCU press release. Two points stand out: attitudes of Blacks toward taxes, and attitudes of Whites toward Historically Black Colleges and Universities (HBCUs).

Leaving the plantation on taxes. Youngkin’s tax cut on gas is more popular among African-Americans than the electorate as a whole. The three-month elimination of the motor vehicles fuel tax garnered a 58% approval rating from all Virginians but 76% from Blacks. (Elimination of the state portion of the grocery tax was broadly popular across the partisan divide, with seven out of ten Virginians in favor. VCU did not break out the results for Blacks on that question.) Continue reading