Tax on Paycheck Protection Program Grants
The General Assembly session deadlines require final decisions on various revenue bills before the final budget bill is adopted, in theory keeping the two issues separate. What is good tax policy should not be driven by the need or greed of the appropriators.
But the conference committee overseeing the final decision on how much of the Paycheck Protection Program Grants will be taxed is dominated by appropriators, including the chairs of the both the House and Senate budget panels. The Senate’s proposal to allow $100,000 of PPP grants to be tax free produces less revenue, so the House’s position of allowing only $25,000 to be tax free meant the House budget includes another $70 million in spending.
The announcement that the state’s economy continues to hum and produce additional revenue, adding $730 million more in the General Fund, would allow for the Senate position to prevail without the need to cut the existing House budget. But the pressure remains to tax more and spend more, with Governor Ralph Northam raising expectations even higher with a late proposal for fatter employee raises. Continue reading