Statement of
Stephen D. Haner
Senior Fellow, State and Local Taxes
Thomas Jefferson Institute for Public Policy
On Gubernatorial Candidate Glenn Youngkin’s
Tax Proposal
8/30/2021 -- “Glenn Youngkin’s proposal to double the standard deduction that most Virginia income taxpayers use will remove hundreds of thousands of low-income working Virginians from paying state income tax. This hardly makes their lives tax free, but the income tax was never intended to prove a burden on people earning minimum wage. The federal government gives a working couple a $25,500 standard deduction and moving it to $18,000 in Virginia would be an excellent and overdue reform. For those millions not totally removed from paying income tax, what they continue to pay will be significantly reduced. The lower their income, the more significant the tax cut.
“Virginia’s current $2.6 billion general fund revenue surplus and $400 million transportation revenue surplus were built in large part by tax increases since 2018. After the 2017 federal Tax Cuts and Jobs Act pushed the federal standard deduction so high, millions of Virginians gave up taking state itemized deductions in order to enjoy that higher federal deduction. That one change produced the largest piece of the bonanza of additional state revenue that politicians are now plotting to spend in January. It was a back door, unacknowledged tax hike and it should now be reduced by taking this step with the standard deduction. This is where the money came from so this is how the tax cut should be delivered.
“Changes in sales tax rules, a doubling of the gas tax in much of Virginia, and an unfortunate decision to collect tax on pandemic job-maintenance grants also contributed to the surplus. Youngkin is also correct to end the policy of imposing income tax on the federal Payroll Protection Program and state Rebuild Virginia Grants, something we sought to prevent during the 2021 General Assembly session.”
Contact:
Stephen D. Haner
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