Governor Glenn Younkin has a number of tax-related requests for his Democratic counterparts at the general assembly this session. And his pitch is already getting unlikely support and criticism.
“We need to structurally reform our tax code," said Youngkin during his State of the Commonwealth speech earlier this week. "We can do this by cutting taxes across the board 12% and paying for almost 80% of this by modernizing our tax code."
His tax proposal includes that 12 percent cut in income tax with a .9 percent increase in sales taxes, among other ideas.
In a statement, a spokesperson for the Governor said he'd already given billions back to Virginia taxpayers, and the income tax cut would "empower low-income Virginians" with an increase in the earned income tax credit.
"The net effect of all tax actions signed or currently proposed by Governor Youngkin is to make Virginia’s tax code fairer and more competitive," Youngkin's office said.
But the folks at The Commonwealth Institute, an independent fiscal analysis group that focuses on advancing racial and economic justice, say Youngkin’s plan will end up costing the state’s poorest $44 more a year while Virginia’s wealthiest will pay over $9,600 less.
“The governor's tax plan is asking those with the least to pay more while giving substantial tax credits to the wealthy,“ said Megan Davis, TCI’s tax policy analyst.
Davis noted their assessment did not include Youngkin’s proposed tax on digital services, like your Netflix or Spotify subscription.
Such a new tax something Democratic Delegate Vivian Watts, chair of the House finance committee and long-time tax attorney, is open to. But she wants to add even more “discretionary services” to the list of new taxes. She also wants to create a new tax bracket, collecting a 7% income tax for those making over 600,000. Both efforts, she says, aim to hit a certain kind of Virginia taxpayer.
“More related to ability to pay," Watts told Radio IQ. "That’s what we’re talking about,”
On the Republican side, Southside Senator Bill Stanley has been hesitant to accept any tax increases that impact lower income earners like those in his district. He’s opposed to Youngkin’s sales tax increase, but he’s also reluctant to add new taxable services like Watts has proposed.
“Yeah know, at some point and time you can’t tax the air,” he said.
Still, Watts said the long list of possibly taxable services is long for a reason; she's giving the state's legislative body plenty to compromise on.
"The Governor pointed out Virginia is far too reliant on income tax," she said. "Most states get significantly more from their sales tax. Most states tax a large number of services and Virginia only taxes a couple."
Legislators will have to find a compromise by the end of the session in March.
This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.
