Lawmakers are headed back to Richmond this month to put together a new budget, one that takes into account the new economic situation presented by the pandemic. And, they’ll be considering a number of proposals for raising new revenue.
The top income tax bracket in Virginia is $17,000. So people who make $20,000 a year pay the same tax rate as people who make $20 million a year.
Chris Wodicka at the Commonwealth Institute says lawmakers can adopt a more progressive structure to raise more revenue and meet the shortfall instead of slashing their way out of the crisis, which is what happened during the last downturn.
“Our K-12 schools still have not recovered from those cuts, even a decade later," he says. "Tuition at our public colleges and universities still remains up relative to where we were, and we know that when we make cuts when there are economic slowdowns that those have a way of compounding over time.”
Stephen Haner at the Thomas Jefferson Institute says now is not the time to raise taxes.
“There’s a basic philosophical problem I have; you don’t go around raising taxes in the middle of a recession," Haner explains. "If you want the economy to recover, you don’t raise taxes on businesses. You don’t raise taxes on families.”
Other options for new revenue include restoring Virginia’s estate tax, closing tax avoidance loopholes for corporations and creating a new tax on digital products.