Virginia@: An opportunity to make a difference ...

Dear Fellow Virginian,

We don’t often do this, but we’re asking you to read this through and take action when you get to the end. Doing so is important. Here’s why:

When Congress changes the tax laws, Virginia frequently follows suit. That is why we are called a “conformity” state.

But if “conformity” will cost state government money (and leave that money in the hands of taxpayers), Virginia “deconforms.” That way, state government gets more.

Well … here we go again.

In 2019, when Congress approved the Tax Cuts and Jobs Act, Virginia picked and chose what to follow. The General Assembly refused to double the standard deduction for families as the federal government did. And Virginia did not match Congress’ cut in corporate income tax rates for employers. That way, Virginia kept much of the $2.8 billion windfall in state taxes.

Income tax collections are now soaring. This, on top of more than 24 smaller tax hikes during Ralph Northam’s term.

Now, Virginia is doing it again. This is an opportunity for you to say “No.” This time, as few as 21 of 100 delegates or 8 of 39 state senators can force a change.

Here is the issue:

More than 100,000 Virginia businesses took Paycheck Protection Act loans from the federal government. They used these loans to keep Virginians employed, to make certain paychecks kept flowing to employees’ families, to keep their employees off unemployment and off welfare.

Keeping Virginians working is better then throwing them out of work.

Congress’ view: A business taking that PPP loan and keeping its payroll and other spending intact gets to convert the loan to a tax-free grant. And in December, Congress voted to allow those businesses to still deduct those expenses.

This kept a lot of businesses out of the red. Kept them alive. Kept their employees employed. Kept billions of dollars circulating through other businesses.

But Governor Northam’s view is: “What belongs to the state is the state’s, and what’s yours is negotiable.”

He introduced legislation refusing those expenses as deductions, taxing them all. The bills are Senate Bill 1146 and House Bill 1935. Denying the deductions effectively taxes the PPP receipts, to the tune of $500 million over two years.

After pushback from the Thomas Jefferson Institute and others, he proposed instead to tax only some of those expenses: Those of the bigger employers (who actually employ more people).

My friend, this is a decisive pivot point in policy: Does Virginia continue to go down the road of turning into a high tax state, punishing its people and its employers even in the midst of a pandemic?

Or does Virginia return to the pro-business, lower tax policies of prior years, not so long ago. Virginia used to pride itself on being a conformity state, following federal tax rules to provide uniformity and simplicity. Congress created PPP as an emergency response to a flash recession, and it worked. If it is tax free at the federal level, that should be Virginia’s policy, too.

This question separates conservatives from liberals, people who see employers as heroes from those who see them as targets. Not long ago Republicans and Democrats competed to do the best job of stimulating the economy. Legislators on both sides of the aisle should be appalled at the idea of taxing these job-saving grants.

Take action now: Contact your Delegate and Senator. Tell them the employers who took these loans to keep their employees working, who did what was asked and saw those loans forgiven, should not get a surprise tax bill from Governor Northam. Make specific reference to Senate Bill 1146 and House Bill 1935.

You can find out the contact information for your Delegate and Senator is by clicking here.

Don’t miss this opportunity to make a difference.