Republican leaders call Northam’s tax plan ‘dead on arrival’

Posted at 5:55 PM, Jan 14, 2019
and last updated 2019-01-14 17:55:46-05

RICHMOND, Va – Republican leaders in the House of Delegates said Governor Ralph Northam’s state tax plan is “dead on arrival” and promised their own plan would results in state tax relief for middle income Virginians.

House Majority Leader Todd Gilbert (R-Shenandoah) spoke on the House floor while laying out GOP priorities at the beginning of the 2019 session.

“To be very clear, the Governor’s proposal to increase taxes on those hardworking Virginians is dead on arrival,” Gilbert said, referencing middle income Virginians. “We are not going to participate in that; we are not going to discuss that; that is a non-starter for our caucus; and we’re not going along with it. I just wanted to lay down that marker.”

State tax policy is viewed as the center piece issue facing state legislators this session. Following federal tax cuts in 2017, a quirk in Virginia tax law that requires filers who take the standard deduction on their federal taxes to do so on their state taxes too would generate more than $1 billion of new state revenue, lawmakers said.

Governor Northam has proposed using that windfall to invest in public schools, teacher pay raises, broadband infrastructure, and making the earned income tax credit refundable for an estimated 600,000 low-income Virginians. New state tax revenue from conforming Virginia’s tax code to federal code is a major part of how the Northam administration plans to pay for those investments, which total in the billions of dollars over the years.

“We have a chance this session to provide targeted tax relief to Virginians who aren’t seeing much help from the federal tax changes,” Northam said last week during his State of the Commonwealth address. “Our tax code should work for everyone, not just the highest earners. That’s only fair, but Washington is actually making these disparities worse. In Virginia, we can work together to restore balance and fairness on the state level.”

Republican leaders argue Northam’s proposal would mean a state tax hike for middle income families, and have pitched their own plan that would allow Virginia filers to itemize their state taxes even if they choose to take the standard dedication on their federal taxes, which they say would lower the state tax burden on hundreds of thousands of middle class Virginians by $800.

Monday, Gilbert said taking no action would result in an unintended hike on the state tax bill for Virginia tax payers, and the House GOP is prioritizing raising the state standard deduction and allowing Virginians to itemize their state taxes.

“Those proposals, you would think, having heard the reaction from some, are outlandish. That we would dare protect hardworking people using those mechanisms,” Gilbert said. “I want to be clear about another thing, this is not a tax cut for the rich, as is so often the refrain from opponents of tax relief. Our plan is squarely focused on tax relief to hardworking, middle class families and individuals who power our economy. And something like that, providing that relief for those hardworking people and families, should be a bipartisan place where we can all find common ground.”

In a tweet responding to Gilbert’s speech, Virginia Democrats said Northam “called for us to work together, but @vahousegop is already refusing to come to the table.”

Gilbert said during his speech that his caucus feels there is common ground to find in areas like school safety and supporting state employees.

“I wish we would have heard more about them during the State of the Commonwealth address. We certainly take the Governor at his word that he does want to work with us on these things; we just wish we heard more about it.” Gilbert said.

Republicans hold two seat majorities in both the House of Delegates and State Senate.