Category Archives: Taxes

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 →

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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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Court Blocks Pennsylvania from Joining RGGI

Posted on November 1, 2023 by | 7 comments

The states currently in the Regional Greenhouse Gas Initiative tax compact. Pennsylvania will remain conspicuously absent, and Virginia departs in two months.

by Steve Haner

A state court in Pennsylvania has ruled that the regulatory decision to enroll that state in the Regional Greenhouse Gas Initiative (RGGI) exceeded the authority of state regulators. It ruled RGGI is a tax that could only be lawfully imposed by the legislature.

It was the Republican majority in one of the state’s legislative chambers that brought the legal challenge, so unless or until the political balance changes in that state, a vote to join the interstate carbon dioxide capping program is unlikely.

Adding Pennsylvania would have been a major expansion of the 11-state RGGI compact. Its many fossil fuel power plants would need to buy $400 million or more worth of CO2 allowance credits per year, a third or more than Virginia’s power plants are being taxed.

It is also one of the larger states in the PJM Interconnect regional power marketplace (it is the P) where the power plants do not pay into RGGI, lowering the relative cost of its power when it flows into other PJM states. Virginia electric customers are often using electrons from elsewhere in PJM.

That the money the utilities must pay for operating their fossil fuel plants is a tax is something most RGGI proponents, including those in Virginia, vehemently deny. That was one of the key disputes in the challenge in Pennsylvania, where joining RGGI was a regulatory step initiated by its then-Governor Tom Wolf (D). Continue reading →

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

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Virginia Set to Help Taxpayers for a Change

Posted on November 1, 2023 by | 18 comments

from The Republican Standard

Good news for Virginia taxpayers.

In the coming weeks, several hundred dollars are heading back into the pockets of eligible Virginians. Up to $400 per household will be heading to mailboxes and bank accounts across the Commonwealth thanks to a surplus in the state budget recently signed by Governor Glenn Youngkin.

In a media release issued by his office last week, Governor Youngkin stated.

“As Virginians continue to face inflation and high prices as a direct result of policies out of Washington, D.C., these rebates are an important step going into the holiday season to help Virginians keep more of their hard-earned money for gas, groceries, and essentials.”

NBC4Washington also noted that “the taxation department has an online lookup tool where taxpayers can go to see if they’ll receive a rebate.”

If you enjoy having more control over your own dollars, don’t forget to think about the benefits of having leaders in the state that value the taxpayers as you head to cast your ballot in the state and local elections this year.

Republished with permission from The Republican Standard. 

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Posted in Budgets, Economic development, Taxes

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Voters Will Decide Virginia’s Future Direction

Posted on October 25, 2023 by | 58 comments

by Derrick Max

In two weeks, the people of Virginia will decide on two competing visions for the future of Virginia. Will they elect a General Assembly favoring Governor Glenn Youngkin’s more freedom-oriented policy vision, or will they elect a General Assembly returning the Commonwealth to the statist policy vision of former governors Terry McAuliffe and Ralph Northam?

While much of the current debate in the Commonwealth has focused almost solely on abortion, the number of issues “on the ballot” in this election is much broader and ought to be more closely considered by voters. If readers want a deeper dive into these issues, links to the Thomas Jefferson Institute’s work in these areas are included.

Surpluses are on the ballot in Virginia.

Earlier this year, faced with an historic $5.1 billion surplus, Governor Youngkin and Democrats in the Virginia Senate reached a deal to cut $1.05 billion in taxes and allocate $3.7 billion in new, one-time spending. This $3 in new spending for every $1 in tax cuts is backward.

Budget officials in Virginia just reported that in the first quarter of this fiscal year, surpluses are continuing to be amassed in Richmond. Coupled with the official projections for spending and revenue for the next few years, the next General Assembly will almost certainly be faced with large cash surpluses. Continue reading →

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Posted in Budgets, Education (K-12), Elections, Energy, Taxes

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How Pass Through Tax Rules Raid the U.S. Treasury

Posted on October 24, 2023 by | 23 comments

American Institute of CPA’s map of states with a pass through entity tax rule as of this past July.  Many of those that haven’t have no state income tax anyway.  Click for larger view.

By Steve Haner

When the General Assembly was briefed on the state’s financial status last week, the $412 million in unexpected revenue growth was dismissed as potentially misleading because of some new quirk in Virginia tax law called the Pass Through Entity Tax or PTET.  PTET keeps coming up in these discussions.

Approval of the Pass Through Entity Tax in 2022, with some tweaks to the rules in 2023, has indeed scrambled the state’s financial forecasting. Virginia is one of 36 states now offering this tax strategy.  The Senate Finance and Appropriations Committee got a briefing on it October 17.  Before the boring nuts and bolts, here are the headlines.

First, PTET is popularly seen as a way to undermine the 2017 Tax Cuts and Jobs Act’s limitation on the deductibility of state and local taxes (SALT).  If you seek itemized deductions on a federal tax return, the limit for state and local taxes paid is $10,000.  Now that Virginia and so many other states have adopted PTET, the big loser is the federal government.  PTET adds to the federal deficit. Continue reading →

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

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The High Stakes in Virginia’s Very Close Nov. 7 Election

Posted on October 21, 2023 by | 33 comments

from Liberty Unyielding

Virginia is holding a very close election. The last day to vote is on Tuesday, November 7. If you live in Virginia, you can also vote early, at specified locations, on Monday through Friday, from September 22 to November 3, or on Saturday, October 28 or November 4.

Voters are almost evenly split between Republicans and Democrats. A recent Washington Post poll shows that 47% of likely voters prefer the Democrats, while 45% of likely voters prefer the Republicans.

Republicans and Democrats are tied on the generic ballot, according to recent polls for Cygnal and Yahoo News.

A Founder’s Insight poll shows 45% of Virginia voters plan to vote for the Democrats, and 44% plan to vote for Republicans. A poll by Coefficient shows 41% Virginians plan to vote for the Democrats, while 40% plan to vote for the Republicans.

Control of Virginia’s legislature could be decided by a single vote, like yours if you live in Virginia. In 2017, the pivotal legislative race in Virginia was decided by a coin toss to break a tie, after two candidates got the same number of votes in Virginia’s 94th district. The Republican candidate won that coin toss. His win in that race gave Republicans control of the House of Delegates by a narrow 51-to-49 margin.

The election results may determine whether Virginia cuts taxes or instead raises government spending at a rapid clip. Virginia has a Republican governor, Glenn Youngkin, but the legislature is split between a Democratic-controlled state Senate and a Republican-controlled House of Delegates. The Democratic-controlled Senate has blocked most of the governor’s proposed tax cuts, but it did grudgingly agree to repeal most of the state sales tax on groceries, reducing it from 2.5% to 1%.  Governor Youngkin and Republicans would like to fully eliminatethe grocery tax, while Democrats want to keep the tax so they can spend more taxpayer money. Continue reading →

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Posted in Elections, Energy, General Assembly, Politics, Taxes

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Youngkin Team Cautious Despite Revenue Surge

Posted on October 18, 2023 by | 9 comments

Finance Secretary Cummings showed this chart to legislators this week and noted the deceleration in job growth, citing that as another reason he and Governor Glenn Youngkin remain cautious despite strong revenues. Click for larger view.

by Steve Haner

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

Virginia’s state budget grew 90% in the past decade, far faster than in previous decades. After adjusting for inflation and population changes, spending still jumped 4% each year, a high rate of compound real growth.  At the same time, the state continues to see explosive growth in its revenue, pointing to cash surpluses continuing for some time.

These facts emerged from two presentations to the Virginia General Assembly this week.  The Joint Legislative Audit and Review Commission (JLARC) issued its annual report on state spending growth on Monday.  That same day, Secretary of Finance Stephen Cummings reported on the revenue results from July through September, the first quarter of Fiscal Year 2024.

In just those three months, revenue exceeded the revenue estimates by more than $412 million.  Other months, with larger pots of projected revenue, are still ahead.  Should this revenue trend hold, surpluses similar to the historic surpluses of Fiscal Years 2022 and 2023 could result next June.

During the elections two years ago, Virginia’s flush financial condition was inspiring debates about tax reductions and tax reform.  Some, but not all, of the proposals went on to pass.  But with General Assembly elections just over two weeks away, few candidates in either party are promising more tax reform or reduction efforts in the next session. Continue reading →

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Posted in Budgets, Finance (government), General Assembly, Taxes

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Miyares Seeks Dismissal of Suit to Save RGGI

Posted on September 28, 2023 by | 70 comments

The states currently in the Regional Greenhouse Gas Initiative tax compact.

By Steve Haner

Attorney General Jason Miyares (R) is defending the Virginia Air Pollution Control Board’s decision to exit a multi-state carbon cap and tax compact as within the regulatory agency’s authority. He has also claimed to the circuit court hearing an appeal of that decision that the plaintiffs were not affected by the action directly and thus have no standing to sue.

The four plaintiffs, all associations, filed a 138-page petition in the Circuit Court of Fairfax County in late August. Miyares’ office used just ten pages total for two responses dated September 13. Continue reading →

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Posted in Energy, Environment, Regulation, Taxes

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A Case Against Further Tax Cuts

Posted on September 24, 2023 by | 172 comments

by Dick Hall-Sizemore

After more than a decade of state budget revenue shortfalls and concomitant budget cuts, one would think there would be smiles all round at the news of revenues coming in substantially above the projections, resulting in a healthy general fund surplus. Incongruously, that was not the case.

Republicans seemed to be outraged that the state brought in so much more money than was projected. There were calls to give it back to the taxpayers. It is somewhat curious that these are the folks who often demand that government be run like a business, yet there are no demands that large companies, such as big oil companies, for example, give refunds to their customers when they bring in record profits.

Governor Youngkin, not satisfied with large tax cuts in 2022, wants taxes cut even further. In July, citing the expectation of revenues exceeding the forecast (which was admittedly on the low side), he declared, “There’s no reason why we shouldn’t be able to have a substantial tax reduction.” In his address to the money committees in August, after citing the advances his administration had accomplished with the increased revenues and the challenges still ahead, he announced, “This is our moment to soar.” But, not too high, it would appear, because “we must provide substantial tax relief.” Continue reading →

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Posted in Budgets, General Assembly, Taxes

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Virginia’s “Runaway” Budget Negotiators

Posted on September 14, 2023 by | 4 comments

by Derrick A. Max

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

Fear of commitment is a common theme in Hollywood — where romantic comedies are replete with characters that sidestep long-term commitment primarily out of fear that someone better may come along. Think of Runaway Bride, where Maggie, played by Julia Roberts, keeps running away from her betrothed at the altar out of such fear.

The budget amendments passed last Wednesday with bipartisan support and praise from Governor Youngkin are replete with commitment issues. The approved tax cuts and new spending were written to have very little impact beyond the current budget cycle. Like Maggie, both Governor Youngkin and the Senate Democrats are clearly standing at the budget altar hoping for better options after the November elections. Continue reading →

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Posted in Budgets, Business and Economy, Economic development, Elections, Finance (government), General Assembly, Politics, Taxes

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Youngkin’s Partial Tax Wins are Still Impressive

Posted on September 7, 2023 by | 22 comments

Virginia Gov. Glenn Youngkin (R)

By Steve Haner

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

Governor Glenn Youngkin (R) and the legislators of both parties who have given him at least some of the tax reforms he asked for need to stop being shy and take a real victory lap.  He has been in office less than two years and has diverted $5 billion from tax coffers back to Virginia’s citizens so far, with more to come in 2024 and beyond.

Most of that was approved by the 2022 General Assembly and is now in effect for a second full tax year, but the 2023 General Assembly just sweetened the pot.  The long-delayed budget compromise approved September 6 added more than $1 billion in single-shot refunds and long-term tax cuts. Continue reading →

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

Which Virginia Taxes Have Grown and How Much

Posted on August 25, 2023 by | 39 comments

Click for larger view.

By Steve Haner

What a difference just four years has made in Virginia’s financial condition, with the state’s General Fund tax revenue having increased 31% during the period and its Commonwealth Transportation Fund revenue increasing by almost 36%. This is comparing the annual results for the fiscal years ending June 30, 2023, just released, and the same summary for the year ending June 30, 2019. Continue reading →

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

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Virginia’s Balance Sheet is Embarrassingly Strong

Posted on August 24, 2023 by | 34 comments

Virginia is floating on a sea of unspent cash, but tax relief fails again.

By Steve Haner

“Our balance sheet couldn’t be stronger…this is our moment to soar.”

So said Virginia Governor Glenn Youngkin Wednesday. Every year, our governors come to the legislature to report on the end of the fiscal year financial result, and often they say something like that. They always prefer to bring a happy message over one of caution or doom.

This time, however, it is true. Continue reading →

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Posted in Budgets, General Assembly, Taxes

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Cruise Subsidy More Important Than Tax Relief?

Posted on August 20, 2023 by | 32 comments

What is this cruise ship doing in a story about Virginia’s budget and tax fight? Read and learn.

The Richmond Times-Dispatch has obtained and released the most recent negotiating offer from Democrats in the Senate as the standoff between the two political parties over the state budget continues.  It is contained in an on-line article that doesn’t appear to have made it into the print edition yet. Continue reading →

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

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