An effort by House Republicans to grant emergency tax relief to Virginians failed Monday after a majority of the Democratic Caucus voted down the measure to immediately conform the state tax code to the changes made to federal law by the Tax Cuts and Jobs Act (TCJA). A plan to put additional revenue in a Taxpayer Relief Fund “lockbox” in order to provide tax relief under separate legislation also failed due to opposition party votes.
The vote fell short of the 80 needed to be passed.
The Democratic delegates voting against the bill were: Hala Ayala (D-Prince William), Lamont Bagby (D-Henrico), Jeff Bourne (D-Richmond), Betsy Carr (D-Richmond), Jennifer Carroll-Foy (D-Stafford), Lee Carter (D-Manassas), Eileen Filler-Corn (D-Fairfax), Wendy Gooditis (D-Loudoun), Elizabeth Guzman (D-Fauquier), Stephen Heretick (D-Portsmouth), Charniele Herring (D-Alexandria), Patrick Hope (D-Arlington), Chris Hurst (D-Radford), Jay Jones (Norfolk), Mark Keam (D-Fairfax), Kaye Kory (D-Fairfax), Mark Levine (Alexandria), Joseph Lindsey (Norfolk), Alfonso Lopez (D-Arlington), Mike Mullin (D-Williamsburg), Kenneth Plum (D-Fairfax), Cia Price (D-Hampton), Sam Rasoul (D-Roanoke), David Reid (D-Loudoun), Debra Rodman (D-Henrico), Marcus Simon (D-Falls Church), Rip Sullivan (D-Fairfax), David Toscano (D-Charlottesville), Kathy Tran (D-Fairfax), Cheryl Turpin (D-Virginia Beach), Rosalyn Tyler (D-Brunswick), Skyler VanValkenburg (D-Henrico), Jeion Ward (D-Hampton), and Vivian Watts (D-Fairfax).
Following the vote, Speaker of the House Kirk Cox (R-Colonial Heights) said in a press release, “All 51 House Republicans are united behind a plan to guarantee $950 million in tax relief while also ensuring a smooth tax filing season, and we will proceed tomorrow to do this even without the emergency clause.”
In tomorrow’s session on Bank Street in Richmond, the measure to provide tax relief will be advanced without an emergency clause, making it effective July 1, even though that is after tax season is complete.
“Conformity is critically important for Virginia taxpayers to file timely and I’m disappointed that some of my colleagues voted against allowing this emergency legislation to proceed immediately,” said House Finance Chairman Lee Ware (R-Powhatan). “We will continue to work toward a solution that conforms our tax code as is necessary while also passing a bill to ensure taxpayers get tax relief.”
“The plan advanced by the House of Delegates to this point was the responsible step to ensure that tax refunds can immediately be processed while still protecting the money that rightfully belongs to taxpayers,” House Appropriations Chairman Chris Jones (R-Suffolk) added. “It’s unfortunate that some of our Democratic colleagues blocked the House from reaching the 80 vote threshold necessary to pass this bill as emergency legislation.”
The two-bill legislative package would direct $950 million into a taxpayer relief fund to provide assistance to those impacted by the federal tax code changes.
H.B. 2529, sponsored by Delegate Tim Hugo (R-Clifton), allows taxpayers to itemize regardless of how they pay their federal taxes, increases the standard deduction from $3,000 to $4,000 for individuals, and from $6,000 to $8,000 for married couples. Moreover, additional revenues arising from strong economic growth and other sources would be directed towards the Commonwealth’s Tax Policy Fund to be used for tax relief beginning in 2020.
The legislation also leaves in place the current state and local property tax (SALT) deduction instead of capping it at $10,000, includes a number of technical corrections, removes a drafting error on mortgage interest deductions, and includes the “GILTI” subtraction to prevent a new tax on foreign income for businesses which are located in Virginia.
Republicans have said this tax relief would not cost the state “one penny,” leaving ample revenue available to fund pay raises for teachers and other government services.
The proposal would provide $575 million in immediate tax relief for the next year, while still allowing for revenue growth. Current projections show the GOP-led effort will result in $37 million more in state revenue next fiscal year.
H.B. 2355, introduced by Delegate Jones – supported by all 51 Republicans and 13 Democrats – would advance Virginia’s tax conformity to December 31, 2019, while directing $952 million in revenue from the changes towards the taxpayer relief fund for next year. This provision would capture 100 percent of the limited-time tax relief made available through the TCJA.
The enactment would apply to taxable years beginning on and after January 1, 2018.
Republicans continue to be unified behind the plan, making tax relief and opposition to tax increases a priority for the legislative session. Democrats, on the other hand, remain committed to embattled Governor Ralph Northam’s tax plan, providing no relief to middle-class Virginians and $2.2 billion in new state spending.