The House passed the bills to lower the top income tax rate and business taxes. Meanwhile, a Senate panel approved a bill by state Sen. David Suetterlein to prevent political leaders from manipulating the timing of special elections.
From Cardinal News. By Markus Schmidt. January 24, 2023
RICHMOND – The House of Delegates on Tuesday passed two of Gov. Glenn Youngkin’s signature tax relief proposals, both sponsored by Del. Joe McNamara, R-Roanoke County.
House Bill 2319, which would lower the top income tax rate from currently 5.75% to 5.5% starting in 2024, which Republicans said would save taxpayers more than $1 billion in its first two years, passed the body by a 52-48 party-line vote. Additionally, the bill would raise the standard deduction to $9,000 for single individuals and $18,000 for married couples, saving the average Virginia family earning $75,000 approximately $114 annually.
The second measure, HB 2138, would lower the state’s effective business tax rate from 6% to 5%, saving Virginia businesses about $300 million annually. The bill also allows for new deductions for small businesses, providing an estimated relief of more than $275 million over the next two years, according to House Republicans. It passed by 52-47.
“Virginia isn’t just in a competition for more jobs, we’re in a competition to retain our current residents and to attract others to our commonwealth,” McNamara said. “Americans are more mobile than ever, and if a family decides they can do better for themselves in another state, they will move, as recent Census data illustrates. These long-term tax changes will make Virginia a more attractive choice as people search for a place to live, work, and raise a family.”
Youngkin hailed the legislation as a “major step forward on tax relief” for Virginia families and businesses.
“Virginians are still overtaxed, they deserve to keep more of their hard-earned paychecks, and today’s significant move by the House of Delegates means Virginians are one step closer to additional relief,” Youngkin said in a statement.
The reductions in individual income tax mean 86% of taxpaying Virginians would enjoy the benefits of a lower top tax rate and an additional 14,000 Virginians will pay no state income taxes, Youngkin said, adding that the reduction of tax rates for business would result in lower taxes for about 475,000 resident small business owners and local businesses across the commonwealth.
“Reinvigorating Virginia’s tax structure will help make the commonwealth competitive with other states so that we can compete to win,” Youngkin said. “We proved last year (that) tax cuts don’t have to be a partisan issue.”
Both proposals are now headed to the Senate, where Democrats hold a 22-18 majority. But after working with Republicans in 2022 in providing a historic $4 billion in tax relief – including eliminating the state’s 1.5% of the grocery tax – Democrats are unlikely to support Youngkin’s push for an additional $1 billion in tax cuts for individuals and corporations.
Last week, a Democratic-controlled Senate panel killed Senate Bill 850, sponsored by Sen. David Suetterlein, R-Roanoke County, that would have slashed the remaining 1% of the tax that benefits local governments to fund schools, repealing the tax altogether.
And on Tuesday, House Democrats accused Republicans of “jamming through their tax bills, which benefit big corporations and the wealthy,” while “leaving Virginia families and small businesses in the dust.”
Instead, Democrats said that they have tried to get Republicans to “come to the table” on a plan of their own, one that would “immediately give more relief to the hardworking Virginians” at less cost to funding essential services.
“The Republican tax bill is a giveaway to corporations – which will either mean tax hikes for families or deep cuts to services,” Del. Don Scott, D-Portsmouth, the House minority leader, said in a statement.
“The Democratic tax bill gives cuts to families and provides immediate relief to people feeling soaring costs. That’s because Democrats prioritize families, and Republicans prioritize corporations and the wealthy,” Scott said.