Virginia’s Democratic Governor and Republican lawmakers may be headed for a tax showdown this upcoming legislative session. The question at hand is what to do with new revenues created by the Trump administration's tax cuts.
The tax reform bill passed by Congress may be a tax cut at the federal level, but changes in the code will actually mean higher state income taxes for many families.
Virginia Governor Ralph Northam is asking lawmakers to get behind a budget plan that uses those additional revenues to help pay for raises for teachers, investments in broadband internet, and tax relief for low-income workers.
“They deserve to keep more of their paychecks, one good job should be enough,” said Northam in a presentation to lawmakers.
Northam is calling the revenue an historic opportunity for the state to invest in education and infrastructure. Republicans had sharp responses.
“If you’re going to tax Virginians to the tune of 1.2 billion it certainly is a historic opportunity,” said House Appropriations Chair Chris Jones.
“It’s certainly not a historic opportunity for the middle class. Who I think will feel it very much in their wallets,” added Speaker of the House Kirk Cox.
Republicans say they’ll unveil their own tax plan before the legislative session starts in January.
The choice facing lawmakers is this: give refunds to those taxpayers who will see an increase in state income taxes, or spend that money giving tax credits to low-income earners.
The increase in state income taxes would be felt by a couple making about $130,000 or more a year. The tax credit would go to families making below about $50,000 a year.
Northam kicked off the budget process Tuesday by outline his proposal to members of the General Assembly’s financial committees, all of whom will be up for election next November.
“Virginians are counting on us in the next session to help them,” Northam said. “Their lives and their needs don’t stop because we have an election next November. They need us to work together.”
This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.
