Category Archives: Taxes

Ready for Taxes on Netflix, NFL Sunday Ticket?

By Steve Haner

After a month of unproductive political theater, Virginia’s leaders will finally sit down like adults and negotiate the budget. Better late than never.  The message is “everything is back on the table,” which leaves the door wide open for the tax increase central to the Democrat’s demands. That deserves a quick no.

At this point, Virginians do not pay sales tax on their Netflix, Disney, or sports streaming package subscriptions. That is what they want to tax now. If you just paid an online vendor to file a tax return, next year a sales tax of up to 6 or 7% will be added to that bill. Likewise, any annual subscription for Microsoft Office or One Drive storage, or for an internet security system, will be taxed.

Substack will be taxed. Some online news and opinion streaming options will probably be protected by the exemption for newspapers, but others will not.  That will be a fun dispute for the Tax Department to broker, one of many new rules to work out.

Did you pay to play that new movie on Amazon using bill credits you had built up? Will tax be added to that, as well? Or will the entire Prime membership trigger a tax? The whole idea is rife with questions and unintended consequences, even more so for the application of the tax to digital goods and services in the business realm.  Taxing business purchases produces the big revenue. Continue reading

Diamonds Aren’t Forever

by Jon Baliles

The entire saga of the development of the Diamond District project in Richmond has come full circle in the last 18 months, as Mayor Levar Stoney, desperate for an economic development win after the failure of his Navy Hill boondoggle and two failed casino referendums, has rounded the bases trying to get a baseball stadium built before the franchise was going to be moved by the powers at Major League Baseball (MLB). Finally scoring a run, however, will come with a cost: $170 million to be exact, because that is how much debt the city will issue  to pay for building the stadium and surrounding infrastructure for the rest of the Diamond District development.

The big news broke last week about the new plan to build the baseball stadium but is also being accompanied by a new financing and development structure and procedures. The announcement unfortunately pre-empted the planned Part 3 of our baseball stadium series, which explained that, at this late date, the only option left to get the stadium built in time and not have MLB yank the franchise was for the city to issue general obligation (G.O.) bonds. That was the only evidence MLB was going to accept to prove the money to build the stadium was actually there and construction could actually begin, because all the talk from the city had been just one missed promise after another, and delay after delay.

The bomb was set to explode and the Mayor and Chief Administrative Officer (CAO) played the last card they had left. They will put the onus of the debt and risk all on the city’s shoulders, issue the debt quickly and get the shovels turning to meet the deadline. But that is not at all how this process began, and it has changed drastically in the many months the city spent dithering. Continue reading

Will Democrats Shut Down State Over Tax Hike?

By Steve Haner

The fight that is about to occur at the Assembly’s reconvened session on Wednesday is entirely about taxes, not about spending.

An analysis of Governor Glenn Youngkin’s proposed compromise budget – done by the Democrats’ favorite financial bean counters, not by conservatives – confirms his budget comes extremely close to the spending levels Democrats approved at the end of the General Assembly.  The gap compared to the $188 billion overall budget is little more than a rounding error. Continue reading

Fairfax Spends More, Teaches Less

by Arthur Purves

(Editor’s note: Arthur Purves, president of the Fairfax County Taxpayers Alliance, addressed the Fairfax County School Board on Feb. 13, 2024. His remarks, with updated numbers, are posted below.)

At church I get to ask students and parents around Vienna about our schools. The feedback is positive, and we appreciate your dedicated teachers and administrators.

However, as FCPS spending goes up, achievement goes down. Over the past 5 years, per-student cost has increased, from $16K to $21K, while SAT scores fell, from 1212 to 1181. Never in half a century have FCPS SAT scores seen such a precipitous decline.

Your crucial failure is in teaching minority students mastery of reading and arithmetic by third grade. Most of our crime is committed by individuals whom the public schools failed to teach reading. The fault is the curriculum and unaccountable administrators,not the students, their race, nor their families. Your budget does not even mention Equal Access to Literacy, which was supposed to replace whole word reading instruction with phonics. Continue reading

Jefferson Institute’s Hit List Bills Mostly Gone

By Derrick Max

Monday was not just the near total solar eclipse in Virginia, but also the deadline for Governor Glenn Youngkin (R) to act on the budget and the remaining bills on his desk. As our Steve Haner wrote, in “Governor’s Budget Compromise Eclipses Fears of Stalemate,” we are generally positive about the approximately 230 budget amendments Governor Youngkin made.

The Governor sacrificed two-thirds of his spending priorities while giving Democrats almost all of theirs. He did this while removing any tax increases from the budget and forgoing all of his recommended tax reforms (reductions). This was more than a good faith offer and should be embraced by any member of the General Assembly, Democrat or Republican, serious about getting a budget compromise passed before the end of the fiscal year.

Just before midnight on Monday, Governor Youngkin acted on the last of the 1,046 bills he had been sent this legislative session. The final tally: he signed 777, proposed amendments for 116, and vetoed 153. He will have a second chance to veto bills where his suggested amendments are rejected.

While I am sure much will be made of the record number of vetoes, Democrats in the General Assembly opted to send a wish list of bills to the Governor that they knew would never get his signature. Nor would some have even passed the muster with previous Democratically controlled General Assemblies or liberal Governors around the country. This is due, in part, to the retirement or defeat of the more moderate members of the Democratic caucuses in the General Assembly. Continue reading

Compromise Budget Can Eclipse Stalemate

Gov. Glenn Youngkin

By Steve Haner

Governor Glenn Youngkin (R) is offering a compromise on the disputed state budget that gives Virginia’s Democratic legislators most of the spending they were initially demanding, especially for local schools and early childhood education. The Governor is also offering a quick path to a resolution that avoids additional months of budget stalemate and political division.

“On a day when Virginians were thrilled to witness an 80% eclipse of the sun, they should also cheer a budget compromise where a Republican governor moved about that far in the direction of meeting the Democrats’ stated goals without added taxes,” stated Derrick Max, President of the Thomas Jefferson Institute. “This is a more than reasonable good faith offer, recognizing that in a divided government, compromise is key.” Continue reading

Proposed Tax for Leave Pay Guaranteed to Grow

From tiny acorns, massive tax-fed government benefit programs grow. Case in point, the pending Virginia paid leave bureaucracy.

By Derrick Max

Sitting on Governor Glenn Youngkin’s desk is a paid family and medical leave bill that would provide eight weeks of paid leave per year for most employees in the Commonwealth. The program would pay employees 80 percent of their weekly salary up to an amount equal to 80 percent of the regional average salary for their qualified leave. Interestingly, teachers, state employees, and constitutional officers are not covered under this program — presumably, these employees already have paid leave benefits and the General Assembly did not want to tax their allies. Continue reading

Time for a Fairfax County Salary Freeze

by Arthur Purves

Local government compensation is better than private sector.

On April 30 the Fairfax County Board of Supervisors will vote on next year’s (FY2025) tax increase. The supervisors have advertised a 7% increase in real estate and car taxes to help pay for $360 million in raises for 38,000 school and county employees.

School raises are 6% and county raises range from 4% to 10%. By comparison, the county says that inflation is 2.5%. For next year, the Fairfax County Board of Supervisors, under Chairman Jeff McKay, is proposing a 7.1% or $618 tax increase for the typical residential household. This is the second largest tax hike in ten years, exceeded only by last year’s 8.9% increase.

Next year’s tax hike is made up of an average 6.5% or $531 increase in the combined real estate and stormwater tax, both of which are based on household assessments, plus a 16% or $87 increase in the car tax.

This continues the supervisors’ quarter-of-a century habit of increasing residential taxes three times faster than household income. They are advertising a 4-cent increase in the real estate tax rate, from $1.13 to $1.17 (includes the 3-cent stormwater tax), on top of a nearly 3% average increase in residential assessments.

Unless they hear from homeowners, the supervisors will probably adopt a rate of $1.16 when they finalize the budget on April 30, in hopes that homeowners will be relieved that the rate increased 3 cents instead of 4 cents. Continue reading

Call the Governor a Spoiled Brat? That’ll Work!

Not a visual that communicates the Democrats are leading an army in this fight. It screams loneliness.

By Steve Haner

A senior Democrat on the Senate Finance Committee just called the Governor of Virginia a spoiled brat, which of course became a headline. Is everybody getting the nonsense out of their systems? It is time for the grown-ups to intervene or we will be stuck in a stupid loop until July.

The state budget as it passed a few weeks ago will not stand. Governor Glenn Youngkin (R) will either impose line-item vetoes that drastically reduce the available revenue, or he will veto the entire $188 billion document. He has sufficient votes behind him to sustain those vetoes.

That Governor Youngkin would never accept an expansion of the sales tax to digital items on its own, without compensating tax reductions of some sort, has been obvious throughout this process. Democrats knew that. Expanding the tax to cover a host of business-to-business transactions, as well, was an intentional act of political arson by the Democrats. They knew all along it would never stand. They are begging for a veto for reasons hard to fathom.

Think back just one year, just one single year. Can anybody imagine Fairfax Democrats Richard Saslaw or Janet Howell building their budget on a tax proposal that has the Northern Virginia technology industry on the warpath? Can you see them proudly touting an effort to, as I put it earlier, kill the digital goose for its golden egg? These are not only not our fathers’ Democrats; these are not 2023’s Democrats. Continue reading

Complex Digital Sales Tax Worthy of Veto

By Steve Haner

Pick any member of the General Assembly at random, stop them in the grocery store for a chat, and quiz them about the digital sales tax they approved a week ago Saturday.  It will quickly become clear that most had no idea what they were voting for when they approved it.

What will the tax add to the cost of your Amazon Prime or Netflix? (For most, 6-7%.) Will the tax be collected on both the monthly fee and on anything extra you download (Yes) Will it add to the cost of preparing your tax to file online, your annual lease for Microsoft programs on your laptop or your security system program? (Yes, most digitally-based services will all be taxable to individuals, and many of them will be taxable to businesses. If you are doing something on a computer or phone that costs money, it is likely to become taxable.) 

Even for a business, if some software package its employees use includes a combination of online services, will it owe tax on the entire package? (Yes, unless the vendor is willing to break apart the bill, which many may refuse to do. That is because of the new language about taxing bundled services.)  If an out of state vendor does not add tax to the invoice, taxpayers will be required to calculate and pay it as a use tax, with auditors ready to pounce if they don’t.   

Think of engineering, law, banking, or medicine.  So many of their processes are now controlled by expensive software, most of which is about to be 6-7% more expensive.  At the shipyard in Newport News, paper blueprints and printed job instructions were replaced with tablets and digital design programs years ago.   Continue reading

Jefferson Institute Lists Bills Youngkin Should Veto

By Derrick Max

We have reached sine die of the 2024 General Assembly legislative session. During this session, over a thousand individual bills and a nearly 500-page biennial budget were sent to the Governor. All of this must be reviewed and acted upon by Governor Glenn Youngkin (R) before the April 17 reconvened session.

There may be hundreds of bills on the Governor’s desk worthy of his veto. Additionally, Democrats inserted partisan policy decisions within the budget in such a way that the Governor may need to veto it in its entirety. As Senator Creigh Deeds (D-Charlottesville) noted in his end-of-session constituent letter: “The budget includes items the Governor does not support, and some of those may be difficult for the Governor to veto because they are woven into the fabric of the budget itself. Speculation is rampant that he may opt to veto the budget, which would set us up for another prolonged budget debate.”

Governor Youngkin should not hesitate to use his veto pen liberally, including on the budget. As former Governor Terry McAuliffe (D) said, “The veto is not a decision I take lightly, but it is a necessary tool to prevent harmful legislation from becoming law. I will continue to stand up for the values and priorities of the people of Virginia by exercising this authority judiciously.” Governor McAuliffe had the highest number of vetoes in recent years when he faced Republican majorities in both chambers, vetoing 49 bills in 2017 alone and 120 during his entire term. Continue reading

The Sausage Factory Taxes the Digital Economy

By Steve Haner

The Virginia General Assembly has now jumped into the brave new world of taxing the digital economy, but the sales tax provisions it adopted in the budget conference report Saturday are not the same ones that appeared in earlier budget versions. The cabal of tax raisers in the secret final negotiation got creative.    Continue reading

Killing the Digital Goose for Its Golden Egg

Jared Walczak of the Tax Foundation

By Steve Haner

The last time the General Assembly made a similar mistake with the Virginia tax code was 20 years ago. It was 2004, and the complaints that business was not “paying its fair share” came from Republicans in the House. They introduced and quickly pushed through a bill that stripped sales tax exemptions from multiple categories of business. Sound familiar?

Twenty years later the only thing that has changed is that the bad idea is now coming from Senate Democrats. The anti-business rhetoric sounds the same. The sales or use taxes of up to 6-7% they seek to impose on business-to-business digital transactions (goods and services) will reach into every Virginia company, large and small. It will simply be passed along in higher prices. The only winners are their out-of-state competitors who have no such taxes in their states. Continue reading

RVA Meals Tax: Practically Poetic Injustice

by Jon Baliles

As noted, two weeks ago City Council approved the change to city code to make sure the city’s Finance Department only applies meals tax payments to the month for which the invoice is submitted. So, no more of the shady practice that had been applying a portion of say, May’s tax payment, to an outstanding balance from April’s bill. The reason that’s a bad idea is that the city could put any account in arrears but the business owner never knew because the city had a practice of not informing the business they were in arrears, which led to the crazy snowballing of interest and penalties that resulted in bills of $37,000, $50,000, and $68,000.

Samuel Veney, the owner of Philly Vegan, who was told by the city he owed $37,000 in penalties and interest, was eloquent and forceful at the City Council podium on February 12th. He implored Council not only to listen, but to hear what he way saying — he wanted to make sure they heard how he was missing time with his children and spending too much time dealing with the city’s screw-ups instead of working at his business. Said Veney:

What we are saying to y’all right now is to take the opportunity to make change happen. It shouldn’t have gotten this far and now that it has you actually have the opportunity to actually make change happen in a better way for our city. Continue reading

A Veto-Proof Local Tax Hike Nearly Approved

Virginia sales tax rates: Light blue, 5.3%, green, 6%, dark blue, 6.3% and yellow 7%. All but the localities in dark blue would be allowed to add another 1% under this pending legislation. Click for larger view.

By Steve Haner

A bill likely to produce $1.6 billion or more in local sales tax increases is moving through the General Assembly with enough bipartisan votes to block any veto from the Governor, but differences remain between the House of Delegates and Senate versions. Continue reading