Virginia Gov. Ralph Northam is excited because the recent federal tax reforms mean an extra $1.2 billion is headed to the commonwealth’s coffers, but Republicans say the apparent windfall is nothing more than a de facto tax increase that must be addressed.
At issue is the federal law reducing deductions taxpayers can take on state and local taxes. Critics of the law frequently pointed to high-tax states like New York, California, and New Jersey. It will also impact Virginia.
And while Northam is already drafting plans to use the extra revenue for higher teacher salaries and assist low-income families, Republicans say the responsible thing is to reform the state tax code and ease the burden on taxpayers.
GOP Delegate Nick Freitas says the $1.2 billion is not just some serendipitous discovery.
“If the governor gets what he wants, this is definitely a situation where Virginia taxpayers will be on the hook,” said Freitas. “Gov. Northam is trying to make this into a situation where he has this sudden windfall, and that’s just really not the case.”
And who exactly will be paying higher taxes because of the change regarding state tax deductions?
“Your average home, where maybe you have someone in law enforcement or maybe you have someone in academia or a teacher, when you have a dual income like that a lot of those people fit neatly in those income brackets that would experience a tax increase as a result,” said Freitas.
While Northam describes the the money he would like to give back to low-income Virginians as tax relief, Freitas says it’s nothing more than redistribution and that creates a toxic atmosphere.
“When you punish people for producing, when you punish people for their success, you’re disincentivizing success. (Late British Prime Minister) Margaret Thatcher said it best: ‘Sooner or later, you run out of other people’s money.'” said Freitas.
“No politician has any idea of the various sacrifices that people make to get a business to a point where it’s finally turning a profit. The politicians just show up with their hand out and then they convince other people that are maybe experiencing some difficult times that (if you) elect them, they’ll take from this person and give it to you.
“That just creates a society of greed and a society of envy. That’s not what we want. We want an aspirational society. We want an opportunity-driven society,” said Freitas.
The Virginia legislature returns Jan. 9. Freitas says the slim Republican majorities are planning to fix the tax code so Virginia families do not get socked by the changes in federal law.
“The Republican Caucus and our leadership have all been very adamant that we want to see a conformity bill that does not involve a tax increase of any kind,” said Freitas.
Del. Freitas would like to see sweeping tax reform in Virginia that reduces rates for everyone while also ending many tax credits and exemptions.
“Let’s not make our tax code a contest over whoever has the best lobbyist wins,” said Freitas.
Listen to the full interview to hear what Freitas sees as a much better way to help the poor than to redistribute money from wealthier people and what he sees as another major debate impacting the Virginia economy as Republicans and Democrats gear up for midterm elections in the Old Dominion in November.