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How to go about providing tax relief to Virginians is a major budget sticking point


Lawmakers will be returning to the Capitol Monday to finish balancing the books and finalizing a budget. But, serious divisions remain.

Most budget cycles have lawmakers fighting over dwindling returns. This year is different, though, because the state is flush with cash and they get to decide how to spend a record surplus. House Republicans want to double the standard deduction, a move that Stephen Haner at the Thomas Jefferson Institute says will make Virginia more competitive.

"There are 19 states that have a larger standard deduction than Virginia," Haner explains. "Now, it's not all of them. It's about half of the states that have an income tax. It's states we compete with, and the other states we compete with like Texas and Florida have no income tax at all. People who are placing investments in Virginia, they pay attention to how much tax their employees are going to have to pay."

But doubling the standard deduction won't help those most in need, says Ashley Kenneth at the Commonwealth Institute. She agrees with Senate Democrats who want to make the earned income tax credit fully refundable.

"On average, a refundable EITC would mean about $500 in the pocket of families who need it the most," Kenneth says. "To put that in perspective, that's enough to pay the water bill for about seven months. Or to buy roughly six months worth of diapers for a newborn child. Or fill up the gas tank 10 times if you're driving a small car."

The difference between the House budget and the Senate budget is $3 billion — $2 billion of that is the cost of doubling the standard deduction, so it's the biggest point of disagreement between House Republicans and Senate Democrats.

This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.

Michael Pope is an author and journalist who lives in Old Town Alexandria.