by Hans Bader
Lawmakers in both houses of Virginia’s legislature have proposed an estate tax. That’s a tax on what residents own at the time of their death. The proposed tax, set at hefty rates not seen since the 1970s, would affect the inheritances of many middle-class people.
Virginia had an estate tax until July 2007, when the Republican-controlled legislature allowed it to be effectively repealed. But this year, the Democrats took control of both houses of the Virginia legislature. And two Democratic lawmakers promptly proposed reinstating and increasing the estate tax, to a higher level than in 2007.
The tax is contained in two bills: SB 637, proposed by Sen. Scott Surovell, D-Mount Vernon, and HB 736, sponsored by Del. Vivian Watts, D-Alexandria. (The bills would exempt “closely held businesses” to avoid decimating small businesses on the owner’s death.)
The tax is not set to the level of 2006 or 2007, when few American estates were even subject to the death tax, and tax rates were not at their peak. Instead, it would be set as it was back in the 1970’s, when estate taxes were at their most burdensome and affected the largest number of middle-class households. Continue reading
The new spending over the next two years by major category. This is for the smaller $48 billion general fund. No such pie chart was published by the Department of Planning and Budget for the combined $139 billion full budget.
By Steve Haner
The interesting thing is not how Virginia’s overall budget has grown 20% in just two years (seen that number reported anywhere else?) What’s interesting is how many interest groups are openly pushing to make it even larger. The $23 billion increase is not enough!
Just two years ago, in December 2017, Governor Terry McAuliffe dropped in his proposed budget for the budget cycle we are still in, Fiscal Years 2019 and 2020. Before the 2019 General Assembly worked its magic, the baseline two-year total for spending he proposed was $116 billion.
Comparing an apple to an apple (which the political class discourages) the equivalent figure for the budget Governor Ralph Northam published last month is $139 billion, growth of $23 billion or 20%. That is the general fund and the non-general fund combined. It becomes more and more obvious that the non-general fund is the cart pulling this horse. At $90 billion over the next two years, it is almost double the proposed $48 billion general fund. Soon it will be more than double. Continue reading
by Steve Haner
If Bacon’s Rebellion at times has been “Dominion Pravda,” providing a window into that corporate giant’s C suite, our friends at the Virginia Mercury sometimes take the opposite role of “Environmental People’s Daily.”
Its story today is a good example, for what it includes and what it does not. The long, detailed and worthwhile summary of energy and environment issues coming to the 2020 General Assembly has a glaring omission. It makes no reference to the Transportation and Climate Initiative. If anybody could get a straight answer out of the Northam Administration, you’d think it would be Virginia Mercury. The silence is deafening and perhaps significant.
At some point soon somebody has to say something, wouldn’t you think? In others states in the proposed interstate compact, governors are being pinned down, actual TCI bills are pending, legislators are taking positions, coalitions are forming. This will have to happen in Virginia soon if the organizers of TCI want their proposed memorandum of understanding signed by enough states to actually impose the carbon caps and taxes by 2022. Continue reading
by Steve Haner
The Virginia Secretary of Natural Resources will be the sugar daddy for the carbon tax dollars raised from electricity customers, according to pending legislation to fully enroll Virginia in the Regional Greenhouse Gas Initiative (RGGI) next year.
House Bill 20, sponsored by Norfolk Democrat Joe Lindsey, is similar (with some changes) to 2019 legislation which died on a partisan vote when Republicans controlled the General Assembly. Now that power has shifted the bill’s chances of passage are excellent. It has several unusual provisions and may hint at how the related Transportation and Climate Initiative will be implemented in Virginia. Continue reading
By Steve Haner
So far there appear to be about six schemes before the 2020 General Assembly to save the Earth and its inhabitants from the fiery holocaust of climate catastrophe. The one that is going to cost you the most money in the shortest period of time is still missing in action. Finally we have details, but not from anybody in Richmond.
The organizers of the Transportation and Climate Initiative (TCI) met and held a streamed webinar in Washington, D.C. Tuesday, releasing their long-anticipated draft memorandum of understanding and quite a bit more information about the impact of this new carbon car tax. See the slides here. Does a starting bid of 17 cents per gallon on gasoline get your attention? Do not confuse this with the separate proposal from Governor Ralph Northam to add 12 cents onto the existing state excise tax. Continue reading
Click to enlarge image. Data source: USGovernmentRevenue.com
by James A. Bacon
In his budget roll out yesterday Governor Ralph Northam proposed hikes to tobacco and gasoline taxes and a clawback to taxpayer relief fund enacted last year in response to changes in the federal income tax code — an increase in the tax burden well in excess of a half billion dollars a year. (In none of the articles and documents I’ve seen have I been able to locate a full tally — gee, I wonder why.)
In his presentation to the Joint Money Committees of the General Assembly, the governor made a revealing comment.
“Here in Virginia, we pride ourselves on being a low-tax state,” he said. Then, in the context of the tobacco tax, he added, “But it makes no sense to cling to the bottom of the rankings that costs us so much.”
“Cling.” Interesting word choice. At least Northam didn’t refer to taxpayers as “bitter” clingers.
It is true that Virginia has lower-than-average gasoline taxes and the second lowest tax on tobacco products. But the Old Dominion also had the 10th highest income tax collections per capita and 17th highest property taxes, according to the Tax Foundation based on 2012 data. Add it all up, and Virginia’s total state/local tax revenue as a percentage of state income ranked 27th in the country. That’s not a “low” tax state in my book, it’s a “moderate” tax state. Continue reading
In his latest budgetary proposal, Governor Ralph Northam has proposed returning $733 million to Virginia taxpayers… Oh, wait a minute. I guess I misread the announcement. It seems he’s proposing $733 million in new spending to protect the environment and fight climate change.
That’s on top of advocating Virginia’s entry into the Regional Greenhouse Gas Initiative, expected to cost ratepayers multiple billions of dollars over the next decade; mo’ money for a preschool initiative; mo’ money for K-12 education; mo’ money to reduce maternal mortality; mo’ money for Medicaid; and mo’ money for the Virginia Retirement System. Meanwhile, his Secretary of Transportation is pushing for mo’ money for transportation funding, and he has yet to declare his position on the higher education lobby’s clamor for mo’ money.
There’s money for every Democratic Party constituency imaginable. That’s what you get with growing tax revenue and a statehouse controlled by Democrats. The one constituency getting muscled away from the feeding trough is the taxpayer. Elections have consequences.
And what are the middle- and working-class saps who pay the taxes doing about it? They’re mobilizing in defense of gun rights, getting rural and suburban localities to declare themselves Second Amendment sanctuaries.
What????? People, in the grand scheme of things, what is a bigger threat to your way of life? Restrictions on your right to purchase semi-automatic weapons… or higher income taxes, higher electric bills, higher gas taxes, runaway cost of college attendance, and out-of-control increases in the cost of health care? A few more years of going in the direction we’re going, and you won’t be able to afford to buy a semi-automatic rifle!
by James A. Bacon
Bacon’s Rebellion predicted that the change of political power in the General Assembly from red to blue would bring a raft of proposals for tax increases and revenue enhancements.
Because the General Fund is expected to see healthy revenue growth in the next biennial budget, I speculated that the Northam administration and its legislative allies would be restrained in their quest for new money, most likely pushing for sources that were either too opaque to understand (such as changes to tax deductions in response to the federal tax law) or too fragmented and obscure for anyone to notice. But it looks like I was wrong (hardly for the first time). According to WTOP, Secretary of Transportation Shannon Valentine suggested yesterday that the state could raise gas taxes next year.
Without a change to increase the gas tax or some other transportation funding source, the administration projects a decline in funding for road construction and other projects. In a development that takes absolutely no one by surprise, it turns out that fuel-efficiency improvements in Virginia’s automobile fleet are cutting into gasoline tax revenues. Continue reading
Todd Gilbert, House Majority Leader and soon-to-be House Minority Leader: GOP must learn to appeal to suburban voters.
by James A. Bacon
So, the Republicans have wrapped up their annual “Advance” — a retreat at the Omni Homestead resort in Bath County. And if reports of the two newspapers that covered the event are to be believed — one from the Washington Post and one from the Roanoke Times — GOP leaders have absolutely no clue how to become competitive statewide.
Attendees do agree that they got shellacked in the November election, and they share a vague sense that they need to increase their appeal in the suburbs. But their only hope at this point resides in the conviction that Democrats will over-reach with Trump Derangement Syndrome in Washington and enact California-style legislation in Richmond. If voters get buyer’s remorse, they might start voting for Republicans again.
But you can’t defeat something with nothing, and there is no indication in either news account that Republicans gave much thought to what they stood for, other than not being insane. Continue reading
I got enough of importance wrong in yesterday’s post on state income tax policy that a real correction is required, not just a tweak to the existing previous post. Herewith what I know I got wrong:
- As Dick Hall-Sizemore pointed out, correcting me in a comment, the 2019 provision creating a new Taxpayer Relief Fund did not include the additional corporate income tax revenue generated by conforming to federal changes. If I understood that back when I last looked at the language, it certainly had flown my memory by the time I sat down to write Thursday evening. Only excess “windfall” revenue from individual taxpayers was to provide the top line in calculating the new fund balance.
- And in looking at the bottom line, I made a math error on the fiscal impact of two corporate income tax amendments mentioned on that Senate Finance Committee chart. The four-year impact of the GILTI and net interest deduction provisions is about $85 million over four years, not $210 million.
Look what they did here! This Senate Finance Committee slide from November shows only “conformity windfall” revenue from individual provisions, but then deducts individual and corporate tax relief against those totals to shrink the size of the Taxpayer Relief Fund, source of future tax reform. That’s not what the General Assembly ordered. How much corporate “conformity windfall” is missing from the top line of this chart?
By Steve Haner
Sometimes you have to start the victory lap, even if you only get halfway around the track. A year ago, on Bacon’s Rebellion and in Thomas Jefferson Institute for Public Policy organs, I was beating the drum for a proposal to double the state’s standard deduction, the amount of family income exempt from income tax.
When the smoke cleared, the legislature had made a start, increasing the standard deduction for a married couple from the ridiculously greedy (on the Tax Man’s part) $6,000 to a slightly less ludicrous $9,000. This at a time when the federal standard deduction was going to $24,000, meaning the state taxes Virginia middle-income families more far heavily than Uncle Sam. Continue reading
By Don Rippert
Promises, promises. As Virginia’s new Democratic majority in the General Assembly starts to take power, three issues emerge. First, many of the winning Democratic candidates promised deeper and broader social benefits from the state. Expanded Medicaid, more money for K-12, more money for higher education, more money for green initiatives, etc. Second, few of the winning Democratic candidates spent any time describing just how these expanded social benefits would be financed. Politics as usual. Third, regardless of their expressed political philosophy, the vast majority of Virginians do not want to pay higher taxes. What now? Will the Democrats stick with reforms that don’t require new taxes or move into change areas which can only be implemented with “mo’ money”? If the latter, will the Democratic majority transparently raise taxes or engage in opaque budget trickery?
Photo credit: WDBJ 7
by Dick Hall-Sizemore
The voters in one of the most conservative and rural parts of the state recently acted contrary to stereotype and voted to raise their taxes. Furthermore, that action was made possible by legislation sponsored by their Republican delegate in the General Assembly
Halifax County has been wrestling for several years with the issue of replacing the county’s lone high school. The general consensus has been that something needed to be done, either renovation or replacement. The daunting question was the projected cost: $88 to $99 million, depending on the option chosen. The county already had committed (under court order) to incurring substantial debt to substantially renovate the courthouse. Therefore, it was felt that the current tax base could not support the debt needed for the high school project, without a substantial, and politically unlikely, increase in the tax rate. Continue reading
Virginia median owner-occupied house values by census district. Source: StatChat blog. Click to enlarge.
The StatChat blog has published a fascinating map showing the median value of owner-occupied housing across Virginia by census tract. The map appears as part of an essay on the relationship between housing affordability and school quality, which I may blog about later. But in the meantime, I thought the map was worth publishing on its own terms.
There are no huge surprises here — the highest median values occur in Virginia’s major metropolitan areas, most notably Northern Virginia, and values are lowest in depressed rural areas, particularly Southside and Southwest Virginia. (The blog post does not contain a color key indicating what values the colors represent, but you still get an idea of relative values.) Continue reading
Sometimes the tensions and contradictions in our public discourse are summed up with stunning simplicity.
The Richmond Times-Dispatch has been running a series setting out the answers of candidates for local office to a set of standard questions. Today the spotlight was on Hanover County.
The answers of a long-time incumbent on the Board of Supervisors struck me. First, he asserted, “I’ve never voted for a tax rate increase because I think we should only spend within our means.” OK, fair enough. I will let that one go. But, in answer to the question of what issues appear to be the most important to his constituents, he replied, “In my district, people don’t want more housing. It would mean having to pay for more schools and public services. People are also concerned about the lack of broadband and internet service.”
Don’t he and his constituents realize that they don’t have broadband and internet service because there are not enough houses in rural areas to make it worthwhile for cable companies to provide that service? If they don’t want any more houses, then how do they think they are going to get broadband? Should the county subsidize expanding broadband to those areas? Oh, that’s right. They don’t want to raise their tax rate.
— Dick Hall-Sizemore