Stopping middle-class tax hike
Published 7:01 am Wednesday, January 16, 2019
House Republicans are offering a responsible plan to stop Governor Ralph Northam’s middle-class tax hike and provide targeted tax relief to middle and low-income Virginians, without costing the state a penny.
The legislation introduced by Delegate Hugo will allow taxpayers to itemize their state taxes regardless of how they file their federal return, increase the state standard deduction across the board, and maintain the important state and local tax (SALT) deduction as it exists today.
This plan will fully implement the federal tax cuts at the state level, protecting a middle-class family that itemizes from what could be roughly a $805 tax increase or providing an additional $115 in tax relief to a family that chooses the standard deduction.
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Our plan will responsibly protect the state’s existing revenue streams and AAA bond rating. Due to the federal tax law and our growing economy, even after providing tax relief the state will still take in more revenue for things like education and transportation.
This stands in clear contrast to Governor Northam’s $1.2 billion tax hike and spending plan. Our plan will return money to hard working taxpayers while Northam’s plan forces families to pay hundreds of dollars in higher taxes and uses that money to drastically increase government spending.
His plan also means that many middle-class families will no longer be able to deduct mortgage interest, property taxes, or health care expenses on their state taxes.
The General Assembly will have to address this tax policy question immediately in order to begin crafting a budget. Unfortunately, the governor’s budget and his $2.2 billion in proposed spending is predicated on a large tax increase. We cannot make responsible spending decisions until we have an agreement on tax relief.
The problem is a technical fix that needs to be made to Virginia law. The federal tax law significantly increased the standard deduction, meaning more Virginia families will take this higher deduction. However, this means instead of itemizing their state taxes many will be stuck with Virginia’s small standard deduction, creating a significantly higher state tax bill.
Instead of making this simple fix, Governor Northam is collecting the tax money and spending it. According to the Virginia Tax Department, over 600,000 tax filers will be hit with this hidden tax increase.
For a married couple that owns a home each making around $55,000 a year, the governor’s plan will mean approximately $800 in higher state taxes depending on how many deductions they claim.
Del. C. Matthew Farris represents Buckingham in the Virginia House of Delegates. His email address is DelMFariss@house.virginia.gov.