For Virginia taxpayers, tax relief is on the way.
The steady stream of scandal surrounding embattled Virginia Governor Ralph Northam appears to have taken its toll on the Democratic leader’s resolve, culminating in an early morning surrender to the GOP on taxes and spending.
After months of fiscal battles, the governor announced he would abandon his plan to pass a $1.2 billion tax hike on 600,000 middle class taxpayers, which he used as the basis for $2.2 billion in proposed spending increases.
The plan would allow the Commonwealth to begin processing tax returns as filing season continues.
Between the abortion controversy and the governor’s blackface scandal, it appears Northam has run out of political capital to push his tax hike in a critical election year, where all 140 members of Virginia’s House of Delegates and state Senate are on the ballot.
Public polling shows the governor’s tax hike to be unpopular with voters. As recently as December, 59% of voters supported the GOP’s plan for tax relief, with only 29% preferring Northam’s plan to raise taxes and spend the money, according to numbers from the Thomas Jefferson Institute for Public Policy.
The tax relief plan, announced jointly by House and Senate Republicans, would provide nearly $1 billion in tax relief to over 4 million Virginians.
Under the plan, Virginia’s standard deduction would be increased by 50%, rising from $3000 to $4500 for individuals, and from $6000 to $9000 for couples. This provision would primarily benefit lower and middle income taxpayers, as the benefit applies across the board, and only 6.5% of filers with incomes over $200,000 itemize, according to IRS statistics.
The Richmond Times-Dispatch editorial board had previously written that “Gov. Northam’s tax plan wallops the middle class.”
The GOP plan would provide additional tax refunds of $110 for individuals and $220 for couples, in October of 2019, totaling $420 million in tax relief.
According to the plan’s details, 70% of all rebates will go to taxpayers making $100,000 or less.
The plan would also preserve existing state law on the deductibility of state and local taxes (SALT).
With Northam’s announcement this morning, Republican leaders said they have delivered on a key promise to return all $976 million of monies from the Tax Cuts and Jobs Act (TCJA) to Virginia taxpayers.
Despite providing tax relief, House Republicans were also able to secure a 5% pay raise for teachers, which will be included in the final budget.
“Under Republican leadership, the House and Senate have agreed to the most significant tax relief package in the Commonwealth in at least 15 years,” said House Speaker Kirk Cox (R-Colonial Heights). “Since last August, our two chambers have been united in our efforts to ensure that additional revenue from federal tax changes was sent back where it belongs, to the taxpayers.”
“Every Virginian who pays personal income taxes will see lower taxes under our plan,” added Senate Majority Leader Tommy Norment (R-Williamsburg). “When fully implemented, we will return nearly $1 billion to the hardworking taxpayers of Virginia. This is simple, direct, and tangible tax relief. We are pleased to work so efficiently with the Speaker, Chairmen Hugo, Ware, and Jones, and our Democratic colleagues, to complete our work on this important issue so expeditiously.”
“It gives me great pleasure to be part of this bicameral effort to provide meaningful tax relief to the people of Virginia,” said House Finance Committee Chairman R. Lee Ware (R-Powhatan). “The proposition for the General Assembly this year was simple. Do we spend taxpayer money or give it back? The legislation we’re advancing today provides an unmistakable answer: we are giving it back.”
“This is a fiscally responsible approach to tax relief that will safeguard our state’s prestigious AAA bond rating and still ensure that there is sufficient revenue to make targeted investments in our core priorities,” noted Senator Emmett Hanger (R-Augusta), Co-Chairman of the Senate Finance Committee.
“From the outset, the House and Senate have both been committed to ensuring that Virginians were not stuck paying higher taxes after changes to federal tax law took effect this year,” added Delegate Tim Hugo (R-Clifton), who carried the legislation in the House. “We have not only accomplished that, but we are also sending back nearly $1 billion in tax relief.”
The repercussions for November’s elections could be decisive.
By failing to deliver on a signature promise for the legislative session, Northam and Democratic allies have no record of success with which to motivate the party’s base. Instead, the governor has been forced to abandon an unpopular proposal in hopes of his party facing one fewer controversy with voters in the fall.
Adding to the Democratic failures this year were a complete defeat of all gun control legislation in the House, as well as the highly-publicized failure of Delegate Kathy Tran’s (D-Springfield) 40 week abortion bill, backed by Northam, which ignited a backlash against Democrats and resulted in a fellow medical school student of Northam’s surfacing the racist photo from his college yearbook.
The failure is a setback for House Democrats under Minority Leader Eileen Filler-Corn (D-Springfield) who at one point claimed there was no tax hike in the governor’s budget plan.
Politifact Virginia rated Filler-Corn’s statement “mostly false.”
Added to the sexual assault allegations swirling against Lieutenant Governor Justin Fairfax, as well as an admission of wearing blackface from Attorney General Mark Herring, Democrats appear to be in disarray as the legislature begins wrapping up the 2019 session post-crossover.
The General Assembly is expected to vote on the legislation shortly and send it to Governor Northam’s desk for his approval.