Category Archives: Taxes

Only Part of the Gas Tax Would Be Suspended

by Steve Haner

The gas tax in Virginia today is 33.8 cents per gallon and the diesel tax is 34.7 cents per gallon.  The fresh proposal from Governor Glenn Youngkin (R) for a 90-day suspension of those taxes does not eliminate Virginia’s full fuel tax bite.  The oft-ignored wholesale tax will remain while only the retail tax goes away.

Bacon’s Rebellion has plowed this ground before.  The Division of Motor Vehicles’ posted information on taxes remains intentionally misleading, listing the retail taxes in one place and mentioning the wholesale taxes somewhere else.   These taxes are also set up by different sections of the Code of Virginia.  Youngkin’s proposal would amend only one of those Code sections. Continue reading

Fuel Costs Explode on Dominion Bills in July

by Steve Haner

Are you enjoying paying more for gasoline? Have you noticed how that works its way through and inflates the price of just about everything else you buy? The other shoe drops in July when Dominion Energy Virginia increases its prices to reflect the rising cost of fuel. It will also spread more inflation virus throughout the economy.

The cost of fuel and purchased electricity is a separate charge, designated Rider A, on every monthly electric bill, residential and commercial. The annual fluctuations are usually small, and can go either way, but the increase this time will hit everybody hard and may hold for years. (Here is the case file.) Continue reading

Reject the Cut, Help the Students

by Chris Braunlich

Cruise over to the website of Cristo Rey Richmond High School, and you’ll learn that all of the students there are from low-income families.

You’ll also read about scores of national and local partnerships, providing hundreds of work-study opportunities to teach students the art and science of working in an office environment and the soft skills of communications, customer service, office etiquette, and team building – the sort of skills employers highly value and that make young people highly employable.

What you won’t learn is that those positive programs – and the future of their scholars — may now be in severe jeopardy.

The school came to Virginia because of the Education Improvement Scholarship Tax Credit (EISTC), a program offering donors to qualified scholarship programs serving low and moderate income children a 65% state tax credit. Last year, more than $600,000 in scholarships helped Cristo Rey serve students who needed a better educational placement, and whose family incomes come in at less than $65,000 for a family of four. Continue reading

You Just Paid More RGGI Tax, Virginians

Six RGGI auctions have reaped Virginia $378 million.

by Steve Haner

Last week Virginia collected another $76 million in carbon tax dollars through the ongoing Regional Greenhouse Gas Initiative allowance auction. That was the sixth such sale since Virginia joined RGGI, and the state’s total tax take is now $378 million in 18 months.

Do not for one minute allow yourself to be fooled into thinking this money is not coming out of the pockets of Virginia’s citizens or businesses. Do not fall for the ploy Dominion Energy Virginia is attempting by claiming it will charge it off to “base rates.” The pea is still under your walnut shell.  Continue reading

School Choice Tax Credits Reduced in New Budget

by Steve Haner

The famous phrase about no one’s life, liberty or property being safe while the legislature sits probably arose after somebody got burned by an out-of-control conference committee. It just happened again to Virginia’s private schools, who had a popular scholarship tax credit program chopped Wednesday.

The Education Improvement Scholarship Tax Credit (EISTC) is available for donations to support free or reduced tuition for the lowest income Virginia students, those who otherwise would never have a way into a private school. It dates back to Governor Bob McDonnell (R).  Continue reading

Sales Tax On Groceries With Us Through Christmas

The food tax will still be with us for Thanksgiving and Christmas?

by Steve Haner

Everybody eats. With all the money sloshing around the Virginia treasury for the General Assembly to play with, it is hard to see the logic in continuing the state sales tax on groceries an additional six months, delaying that particular tax cut until January 1.

The inflation on everything at the grocery store means more tax revenue is coming in from that source than was expected when the initial budget was prepared last year. If they had allowed the tax cut effective July 1 rather than January 1, inflation on other items people buy (restaurant meals, furniture, electronics, clothing, non-food items) would protect the state’s spending in full (necessities and niceties.)  Continue reading

Details on Real Estate Assessments and the Property Tax

by Dick Hall-Sizemore

I am following up on James Sherlock’s article on local property taxes.

In Article X, sections 1 and 2, the state constitution requires that all property be taxed at fair market value. There are exceptions, but those are not relevant to this discussion. So, there you have it. Unless the constitution is amended, localities must tax property at fair market value.

State law recognizes the impracticality of assessments keeping up with fair market value on a continual basis.

One of the main reasons that assessments lag behind market value on a statewide basis is the varying frequency of reassessments by localities. State law requires cities to reassess every two years, except that cities with a population less than 30,000 can use a four-year reassessment cycle. For counties, the law allows them to go four years between reassessments, except for counties with a population under 50,000 , and the counties of Augusta and Bedford, which are allowed a five-year or six-year cycle. Continue reading

Home Price Volatility and Virginia Property Taxes

Case-Schiller Home Price Index – National

by James C. Sherlock

Housing prices have more than doubled since 2012, reflecting shortages of supply and the resulting speculation. The increasing slope of those curves above is not comforting.

Prices have soared over 20% in a year. Mortgage rates are up. What could possibly happen next? Most can figure that out.

But this article is about the effects on local government property taxes of what most predict will be extreme volatility in the housing market going forward.

How are Virginia real property taxes adjusted to mitigate the effects on both property owner tax bills and government receipts in this boom and very likely bust cycle?

We’ll look at the law. Continue reading

Progress: Standard Deduction Up 166% since 2018

by Steve Haner

First published today by the Thomas Jefferson Institute for Public Policy.

Do not be surprised if, by the time the next Virginia General Assembly elections roll around, the Democrats who are now complaining about the level of tax relief in the pending budget compromise switch positions, and campaign as champions of the deal.

The two key elements – a substantial increase in the standard deduction for income tax filers and a cut in sales and use tax on groceries for everybody – are ideas with long and bipartisan histories. Only the reluctance of previous governors and General Assemblies to part with the revenue stood in their way. Both are logical, populist reforms many Democrats had also championed in the past.

The Thomas Jefferson Institute has long been an advocate for a higher standard deduction, and the proposed 78% increase from $4,500 to $8,000 per person (up to $16,000 for a couple) falls just short of the recommended 100% increase.  Remember, as recently as tax year 2018 it was only $3,000 (or $6,000 per couple) and raising it in 2019 was also a major recommendation of ours that was adopted.

This new amount will apply to this tax year. So in two steps over three years, the standard deduction has risen by $10,000 for a working couple. That 166% increase saves most of them $575 per year. Continue reading

Talking Out of Both Sides of Their Mouths

Route of proposed Coalfields Expressway

by Dick Hall-Sizemore

While perusing today’s edition of the Roanoke Times, I ran across an article that astounded me.  It concerned a meeting recently in Southwest Virginia about the Coalfields Expressway.  I remembered hearing about this proposed highway many, many years ago and thought that it had been dismissed as a pipe dream.  It turns out that the idea (and hope) is still alive.

The Coalfields Expressway would be a 115-mile federal four-lane, divided highway running from the intersection of I-64 and I-77 near Beckley, West Virginia to U.S. Rt. 23 in Pound, in Wise County.  West Virginia has opened 15 miles of its 66-mile portion of the proposed highway and another 21 miles are in various stages of construction or planning.  Virginia has begun constructing 7 miles of its 50-mile portion.  That stretch overlaps with Rt. 460, linking Grundy to Kentucky.  The cost of the Virginia portion is estimated at over $3 billion. Continue reading

Virginia Slides Lower in ALEC Economic Rankings

American Legislative Exchange Council rated Virginia 30th out of 50 states using these three measures of economic performance over ten years. Click for larger view.

by Steve Haner

First published earlier today by the Thomas Jefferson Institute for Public Policy.

As measured by the American Legislative Exchange Council (ALEC), Virginia’s economic outlook has continued its precipitous drop and now barely ranks in the top half among the American states, 24th out of 50. A decade ago it was in the top five, ranking third in 2011 and 2012 and fifth in 2013.

Using three direct measures of actual economic performance, gross domestic product and job growth and population out migration, ALEC placed Virginia 30th among the 50 states over the past decade. Neighboring North Carolina, on the other hand, ranked 12th in recent economic performance and second in economic outlook.

Virginia’s number 24 ranking in the annual “Rich States, Poor States” outlook comparison will be dismissed by some as less important than other indicators of competitiveness, including the ultimate bragging point of being number one in the last CNBC ranking of best states for business. But the downward trend is dramatic, Virginia having ranked 17th last year and dropping seven places in this survey. Continue reading

The Monetary Rape of Middle-Class Retirees

by James A. Bacon

This past year saw one of the greatest redistributions of wealth in U.S. history. People are upset by the 8.5% increase in inflation, but they’re not nearly as upset as they should be.

Wage earners, especially lower-income wage earners, have every right to be irate. Their hourly pay has increased, but not nearly as rapidly as the Consumer Price Index, and far less than those components of the CPI such as food, housing and gasoline that comprise a major share of their household budgets. Many were living paycheck to paycheck before the onset of inflation. Now they’re drowning.

Retirees ought to be enraged. Inflation is more devastating by far to their financial security than taxes. A retiree family with a middle-class standard of living might pay, say, $20,000 a year in federal taxes. But if they have a $1 million nest egg in 401(k), IRA and other investments, an 8.5% inflation rate pillages $85,000 from their net worth.

Who are the beneficiaries of inflation? Borrowers — homeowners with a mortgage, consumers with credit card debt, motorists paying off notes on their cars, corporations that have taken advantage of Federal Reserve Bank-engineered low interest rates to leverage their balance sheets, and, of course, the biggest borrower on the face of the planet… the U.S. federal government. Continue reading

A Bag Of Oranges and Gas Tax Posturing

by Steve Haner

The bag of mandarin oranges that was $4.99 last week was $5.99 this morning. Fruit trees aren’t getting raises – that is the impact of fuel prices, the cost to ship them to Virginia.

As I’m fuming and pushing my cart to the next inflated item, the phone pings to announce an email. Could relief for gas prices be on the way? is the teaser headline from Virginia Mercury, with its lead story this morning a straight-faced discussion of the truly comedic proposal yesterday by House Democrats. They offer Virginia car owners a one-time $50 payment ($100 for a two-car family) in lieu of actually lowering the fuel taxes, as Governor Glenn Youngkin has proposed. Continue reading

Virginia Budget Deal Stalled as Democrats Demand $3B in Increased Spending

by Shaun Kenney

Just to illustrate how fanatically out of touch Senate Democrats are as they frantically try to spend $3 billion on more government, check out State Senator Scott Surovell (D-Fairfax) on Twitter as he blasts Governor Glenn Youngkin’s proposal for gasoline tax relief:

Remember — we are sitting on a $3bn surplus fueled by COVID relief dollars and not by any metric of economic success. Yet Senate Democrats continue to lean into the hammock of so-called budget cuts as they continue to shove money into the maw of state government for the sake of producing mediocre results. Continue reading

Tell Me Again. Why Are Virginia Taxes So Bad?

by Dick Hall-Sizemore

I have taxes on my mind.  It is sort of hard not to be thinking a lot about taxes these days. I just finished compiling my tax returns (yes, I realize that I am a procrastinator). The Governor is telling me that the state taxes me too much and he wants to give some of it back and lower my future taxes. Many folks on this blog also say that my state taxes are too high.

I must admit that I have not paid a great deal of attention to the details of my state tax returns in recent years. I just plugged the numbers into Turbotax and whatever return it spit out, I filed and paid what I owed or got the refund it said I was due, whichever was the case. (You have to admit; that state form produced by the electronic tax filing programs is not easy to follow without a program.)

This year, with all the talk about taxes swirling about, I decided to pay more attention to the details of Virginia’s income tax provisions. I found that they are not nearly as bad as the Governor and others make out. At least not for retirees, like me. Continue reading