Senate panel proposes consideration of key Youngkin income tax proposal, but backs one-time refunds | Govt. & Politics

BY MICHAEL MARTZ Richmond Times-Dispatch

RICHMOND — A major part of Gov. Glenn Youngkin’s tax-cutting package suffered a major blow Thursday, when a Senate panel recommended deferring the proposed doubling of the standard income tax deduction for a year. to allow for study by a special sub-committee on fiscal policy.

A Senate Finance and Appropriations subcommittee voted to send similar bills to increase the deduction, proposed by Senate Minority Leader Tommy Norment, R-James City and Sen. David Suetterlein, R-County Roanoke, to a new special sub-committee to study over the next year.

The legislation would double the standard state income tax deduction from $4,500 to $9,000 for individuals and from $9,000 to $18,000 for married couples, but it would also reduce family income. state of $2 billion over the next two years and nearly $900 million the following year.

“What worries me is the price to pay,” Senate Finance Chair Janet Howell, D-Fairfax, said before the resources subcommittee voted to delay the legislation until the next session. the 2023 General Assembly.

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The panel also let die a proposal by Sen. Chap Petersen, D-Fairfax City, that would have increased the standard state income tax deduction even further to match the $12,550 federal deduction for individuals and $25,100 for married couples.

Norment said his proposal would benefit middle-income families on their state taxes, but called himself “realistic” about his chances on the subcommittee of three Democrats and two Republicans.

The subcommittee – whose recommendations will be sent to the full finance committee next week for action – approved a one-time income tax refund, as had been proposed by Youngkin, the newly inaugurated Republican governor, and by former Governor Ralph Northam, a Democrat.

However, the panel did not recommend the reimbursement amount, pending a new revenue forecast expected before the full committee produces its own version of the biennial budget and amendments to the current spending plan later this month.

Northam had included nearly $1 billion in his farewell budget proposals to provide a $250 refund to individual taxpayers and $500 to families. Youngkin offered refunds of $300 for individuals and $600 for families at an additional cost of more than $200 million.

Sen. Emmett Hanger, R-Augusta, a member of the finance committee that sponsored the bill for Youngkin, said the state had “surplus funds and it would be appropriate to return some of them to taxpayers.” .

Hanger also recognized other pressing needs in the state budget, including paying off long-term pension commitments and investing in major improvements to Virginia’s struggling behavioral health system.

“The number is the tricky part,” he said, agreeing with the subcommittee to wait for final reimbursement amounts until the governor releases a new revenue forecast in the coming weeks.

The House of Delegates, now under Republican control, is moving in a different direction on Youngkin’s tax package. A day earlier, the House Finance Committee approved the proposed doubling of the standard deduction and the $300 and $600 refunds requested by Youngkin.

The House Appropriations Committee will then consider those bills, along with proposals to eliminate the state sales tax on groceries and suspend the latest 5-cent-per-gallon tax increase on gasoline. The House finance panel also backed those proposals on Wednesday.

The Senate subcommittee also took a different position than the House on a proposal to make 20% of the earned income tax credit refundable, which would allow direct payment to eligible low-income families in the rest of the credit after applying it to their income taxes. .

A House finance subcommittee killed a similar refundable tax credit bill earlier this week.

Supporters say making part of the tax credit refundable would help low-income families recover from the COVID-19 pandemic, but Sen. Steve Newman, R-Lynchburg, opposed using the code state taxes to provide social benefits to those who need them. .

“I don’t think the tax code is the right place to do that,” Newman said, before the subcommittee voted 3-2 to recommend approval of the bill, co-sponsored by Sen. George Barker. , D-Fairfax and Sen Jeremy McPike, D-Prince William.

The most tense moment of the meeting came after Norment proposed eliminating the planned 30% allocation of revenue from a new marijuana tax to the Cannabis Equity Reinvestment Fund. He proposed instead sending the money to the general fund for lawmakers to spend.

The assembly created the fund last year to direct some of the marijuana tax money to initiatives aimed at helping majority-minority communities that had been hardest hit by past enforcement of anti-marijuana laws. possession and distribution of drugs.

Former Richmond councilman Marty Jewell, who is president of the Cannabis Equity Council of Virginia, said he was “shocked” by Norment’s proposal.

“I can’t help but believe that war has been declared on black people,” Jewell said.

Board members and other community groups also “vehemently” opposed the proposal, which the subcommittee recommended be killed at the request of Sen. Jennifer McClellan, D-Richmond.

In response, Norment said, “I categorically reject the blatant language that some of the speakers have used.”

He denied any ‘adverse’ intentions in his proposal, which he called a ‘political issue before us’.

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