Taxaginia? Conformity Tax Would Be Number Four

Each of the four tax increases I discussed in this guest column for the Richmond Times-Dispatch today has a strong constituency behind it, and logical arguments in its favor.  Only one is in effect now (the hospital provider taxes), and the other three are merely pending.

Only one of them, amendments to the sales and use tax to apply it to remote sellers, will require specific legislation for that purpose.  The conformity tax hike happens if the 2019 General Assembly fails to stop it, the carbon tax is being imposed by regulation after legislation to stop it was vetoed, and the Medicaid taxes imposed on hospitals are authorized in vague language buried in the state budget with no separate roll call vote.

Would all four really be happening if each required a direct roll call vote in the General Assembly?  A fair question.

This started as a line in a presentation I made October 29 for the Thomas Jefferson Institute for Public Policy, when I mentioned that the state tax increase that results from conformity – if allowed to happen – would be one of three.  At the time I had forgotten the carbon tax at the heart of the Regional Greenhouse Gas Initiative (RGGI), but then a story about it reminded me.  Make that four.

The General Assembly, the Northam Administration, the business community and the voters need to at least focus a bit on the overall picture and own what is happening.  My quite transparent goal is to prevent the big hit, the tax hit to individuals and businesses coming from conformity to the federal taxes.  Conformity is instead an opportunity to make some positive tax reforms.

The newspaper posted the column online yesterday afternoon, and I quickly received an email from a friend inside the administration pushing back on the assertion that the Medicaid provider taxes on hospitals will eventually find their way to patients.  The argument is that the money will replace dollars being imposed on paying patients for uncompensated care, which is certainly how those patients have been paid for to date.

But there is no guarantee in the state budget language that hospitals will now reduce their charges to the rest of us, and the Medicaid expansion goes way beyond paying for those people who were already receiving care.  Hundreds of thousands of people who had been avoiding seeking care at all now have a way to pay, and that was the whole idea in the first place.   Even as I accepted that Virginia should do this (with some reasonable controls which are now in jeopardy), I never doubted it would be expensive.

On Friday it was revealed that the cost will be higher than the General Assembly had been told, even as the first enrollees are still filling out their paperwork, and those Medicaid provider taxes will grow.

The other thing about these four taxes is they are all easy to miss.  Hospital accounting is notoriously byzantine.  Dominion Energy Virginia’s payments for RGGI allocations will be part of your bills (although I hope at least in a separate line).  Few notice now whether sales tax has been added to an online purchase.  This conformity thing has people terribly confused.   The accounting is complicated and the accountability lacking, but all four represent major costs to Virginia’s families and businesses.

The Northam Administration released these estimates of the conformity tax increase in August. They assume full conformity with TCJA with no compensating state policy changes to rates or deductions.


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15 responses to “Taxaginia? Conformity Tax Would Be Number Four

  1. Thank you. Another fine post on this otherwise indecipherable subject called “Conformity Taxing.” Yet again you have pulled back to foliage to expose the snakes covertly at work, sinning in the people’s garden.

    Without you and your efforts, these snakes would be hidden – going about their slick and opaque policies and maneuvers – so called “public servants of the people” taking their constituents money away from them and their families without their knowledge, much less their consent, in ways designed to hide their theft at the very time that they come seeking your vote, telling you everything but the truth about what they are doing to you and your family at that very moment.

    How do citizens rid thieves from their garden?

    • Well, as noted, all of these tax increases are highly popular with somebody. We have met the enemy and it is us…..

      • Fascism and Communism were, and are, highly popular.

        Popularity, small or large, is no excuse.

        “Once we have taken up the word, it is thereafter impossible to turn away: A writer is no detached judge of his countrymen and contemporaries; he is an accomplice to all the evil committed in his country or by his people. And if the tanks of his fatherland have bloodied the pavement of a foreign capital, then rust-colored stains have forever bespattered the writer’s face. And if on some fateful night a trusting Friend is strangled in his sleep—then the palms of the writer bear the bruises from that rope. And if his youthful fellow citizens nonchalantly proclaim the advantages of debauchery over humble toil, if they abandon themselves to drugs, or seize hostages—then this stench too is mingled with the breath of the writer. Have we the insolence to declare that we do not answer for the evils of today’s world?…

        The simple act of an ordinary brave man is not to participate in lies, not to support false actions! His rule: Let that come into the world, let it even reign supreme—only not through me. But it is within the power of writers and artists to do much more: to defeat the lie! For in the struggle with lies art has always triumphed and shall always triumph! Visibly, irrefutably for all! Lies can prevail against much in this world, but never against art…

        One word of truth shall outweigh the whole world.”

        –From speech by Aleksandr Solzhenitsyn to the Swedish Academy on the occasion of his acceptance of the Nobel Prize for Literature.

  2. Well we need RGGI (utility surcharges) like we need a hole in the head, but I believe Conformity to the Federal taxes is the big issue right now.

    The state of New York, I have recently learned, has made the change to allow taxpayers to take the new Federal Standard Deduction, and still itemize deductions for their state tax return. This is what we need too in Virginia, or other fix.

    Seems to me this new Virginia tax burden is falling sqaurely on middle class taxpayers, like me. And most taxpayers simply do not know about it, is the only way the GA/Northam are getting away with it.

    Basically last GA session we got a couple big whacks, one was the utility act pushed through by Dominion, and the other big negative was lack of addressing the Federal Tax Law changes, which was intentional to bring a huge tax increase to Virginia, without asking for a tax increase. I hope it backfires, becuase I favor openness not clandestine changes.

  3. Virginia is well on its way to become New Jersey, high spending and high taxes and, of course, corruption and massive crony capitalism.

    • At least New Jersey has towns, and town halls and mayors and local police forces and Home Rule. All we get for the money is HOA’s. Where is the money all going? (given the savings in Virginia by not having lots of localities and duplicate services in each small town?) I guess the Fairfax Gov’t Center was not cheap .

      • All towns and cities in Virginia have more/better flexibility in Dillon Rules. The counties can get some of them by holding referenda.

        But the HOAs are totally private – no one forces anyone to join one and they have to sign a paper acknowledging that they do know that.

        People have the right to live where they want to live – both city/county and HOA or not HOA. And they have the right to vote.

        What we don’t have that I have supported with vigor is the right of citizens to initiate referenda like many other states have and Virginia refuses to put on the ballot as a Constitutional Amendment.

        Do we know which elected would support that and which do not?

        That is one issue that might make me a one-issue voter…

  4. Or move to Florida like I did…

  5. Yes, TMT, I suspect Tuesday will confirm that Virginia is now firmly established as the southern-most northern state, and not the other way around. Stand by. Ironically a transplant from Wisconsin who chained himself to dead Confederate generals will have played a major role. You cannot make this stuff up.

    And yes, TBill, Virginia could accomplish the carbon reductions without the carbon taxes, but some people want the money to spend on various things like demand reduction programs, payment programs for low-income ratepayers. In other words, more government….

  6. My thoughts exactly, with one addendum. “In other words, more corrupt government, thanks to Virginia’s elected officials.”

  7. re: ” The state of New York, I have recently learned, has made the change to allow taxpayers to take the new Federal Standard Deduction, and still itemize deductions for their state tax return. This is what we need too in Virginia, or other fix”

    yes, indeed – look at the date of those changes:

    “On March 30, [2018] Governor Andrew Cuomo and New York State legislators reached an agreement on the state’s 2018/19 budget, which the governor executed on April 12. This budget bill contains significant provisions passed in response to the federal Tax Cuts and Jobs Act of 2017 (TCJA). It will essentially decouple state tax law from federal tax law and provide state tax relief to individuals adversely affected by the TCJA’s $10,000 federal limitation on state and local tax (SALT) deductions.”

    Virginia could have done that also if those who claim to want to keep taxes low – had actually got off their rumps and did the deed like New York did.

    We hear tell here that NY “abuses” it’s taxpayers compared to Virginia.

    Au Contraire!

  8. In terms of RGGI – compare how RGGI works to essentially recycle taxes collected to demand side conservation… compare that to how Dominion wants to do the grid transformation … I’d take the RGGI any day over what Dominion wants to do.

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