Virginia

Youngkin tax cuts face a rough road in the Virginia legislature

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RICHMOND — Democrats in the state Senate on Wednesday slowed Gov. Glenn Youngkin’s proposals for $1 billion in tax cuts, a day after House Republicans approved them.

With the package likely headed for horse-trading and compromise later in the legislature, Youngkin (R) tried the hard sell this week — making campaign-style pitches to garner public support.

On Tuesday, he urged a gathering of small business owners to contact delegates and senators from both parties about the tax cuts. “Communicate with them — email them, call their offices, write them notes,” he said.

“This is our moment because there is more [tax money] return to you,” Youngkin said Monday during a rally at the Weinstein Jewish Community Center in Henrico County, where supporters cheered as he jumped onto a stage to the tune of “Takin’ Care of Business.”

Youngkin proposes $1 billion in tax cuts and increased budget spending

Youngkin and the General Assembly agreed on a $4 billion tax cut package last year, but this year many Democrats say the potential for a nationwide recession makes them wary of moves that would reduce government revenues. Republicans argue that the federal budget, with a projected $3.6 billion in surplus, can afford the cuts even in a downturn.

On Wednesday, the Senate Finance and Appropriations Committee took partisan votes to send most of Youngkin’s proposals to purgatory and assigned them to the same subcommittee that had previously recommended killing them. The measures included:

reducing the corporate tax rate from 6 percent to 5 percent; increasing a small business deduction; increasing the standard deduction for individuals from $8,500 to $9,000 and doubling the amount for married couples filing together; and reducing the upper marginal tax rate from 5.75 percent to 5.5 percent.

The committee also declined to report a bill that would lower the retirement income exemption age requirements for military veterans.

Youngkin warns of recession but promises tax cuts – cautiously

However, senators will revisit all of these issues when mirror legislation comes out of the House.

The pension exemption will go to a vote in the House of Representatives, and the Republican majority approved the other tax cuts on Tuesday.

All cast party votes, with Democrats arguing against tax breaks for the wealthy or corporations. Instead, Del tried. Vivian E. Watts (D-Fairfax) to introduce a replacement law that would further increase the standard deduction for individuals while nullifying the corporate tax cut. She also proposed making the earned income tax credit fully refundable to benefit low-income working families.

Watts called the formula “a responsible response to people’s need for tax breaks — meaningful tax breaks that go where they’re needed most.”

She said in this week’s debate that her measure would cost half as much as Youngkin’s, leaving more money to invest in areas like paying teachers, mental health programs or fully funding K-12 education remains.

Other Democrats argued that it’s wrong to say the state has a budget surplus when things like school funding aren’t addressed.

But del. Joseph P. McNamara (R-Roanoke), who sponsored two of the big tax cut laws, said the state overtaxed residents. “When is enough, enough?” he said during the debate. “Eventually, when the government takes all the money … then the very people that we’re trying to help are the very people that are getting hurt.”

House bills go to the Senate, where Democrats have said they cannot support a corporate tax rate cut but have shown some interest in raising the standard deduction and giving small business owners a break.

“Anything that helps middle-class families — we’re definitely trying to find something,” said Gianni Snidle, a spokesman for the Senate Democratic caucus. “And we’re all for helping our small businesses and making sure they can thrive.”

The details will eventually be worked out by a handful of budget negotiators from both houses later in the meeting, which is due to end on February 25.

Meanwhile, Youngkin plans to keep up the pressure. At Monday’s rally, the governor enlivened a dry political pitch with the stagecraft of a slick campaign spot, standing in front of a giant American flag and bleachers full of young families.

The children and parents held up signs that read, letter by letter, a new slogan for Youngkin: “Compete to Win.” The signs were paid for by Youngkin’s Spirit of Virginia political action committee.

Youngkin urged the crowd to urge their delegates and senators for an additional $1 billion in tax cuts, on top of the $4 billion approved last year. “Tell them, ‘We want tax cuts. We want Virginia’s tax burden to go down again,” he said. “‘Thank you for the past year. We want more.'”

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