(The Center Square) – Core components of Virginia Gov. Glenn Youngkin’s $1 billion package of proposed tax cuts – bills to reduce the top income tax rate, raise the standard deduction and lower the corporate income tax rate – were voted down in a Senate committee Tuesday, a week after identical proposals were advanced in the House of Delegates.
Lawmakers on the Senate Finance and Appropriations Committee voted to “pass by indefinitely” on Senate Bill 1451 to reduce the top income tax rate from 5.75% to 5.5%, and increase the standard deduction to $9,000 for single filers and $16,000 for joint filers. The committee also voted to “pass by indefinitely” on Senate Bill 1355 to reduce the corporate income tax rate from 6% to 5%.
The defeat of the bills in committee represent a blow to progress on Youngkin’s proposed tax plan, which he first announced in December as part of his budget amendments. Youngkin has touted his proposed tax cuts as a way to “compete” against other southern states and attract businesses and jobs, but Democrats have criticized the governor’s plan to reduce taxes for corporations, and lower taxes for earners in the state’s top bracket.
The Republican-controlled House of Delegates voted to advance measures identical to SB 1355 and SB 1451 earlier this month, though Tuesday’s committee vote indicates they are likely to face a similar fate when they go before the same committee in the Democrat-controlled Senate.
The politically-divided General Assembly was able to agree on a budget last year that incorporated $4 billion in tax cuts, which included doubling the standard deduction to $8,000 for single filers and $16,000 for joint filers. Some Democratic lawmakers have indicated support for further boosting the standard deduction, but they disagree with Youngkin’s proposal to reduce the top income tax rate and cut the corporate tax rate.
House Minority Leader Del. Don Scott, D-Portsmouth, told The Center Square earlier this month that he thinks it would be a “mistake” to pass a “corporate tax giveaway of Virginians’ money,” adding he didn’t think that proposal had “any chance of going anywhere.”
Lawmakers will continue to iron out and compromise on amendments to the biennial budget signed last summer over the next few weeks. Republicans have voiced support for Youngkin’s proposed tax cuts, arguing Virginians are “overtaxed,” while Democrats have voiced concern for cutting taxes when public education has not been fully funded since the Great Recession.
Macaulay Porter, the governor’s spokeswoman, told The Center Square in an email the governor is “committed to providing necessary tax relief,” and will “continue to work with the general assembly to reduce the individual income tax and lower rates for business.”
“Our Commonwealth needs tax reform to retain and attract people, businesses, and compete with neighboring states,” Porter said. “Virginians have been overtaxed for too long and deserve their hard earned money back.”
The details of the budget amendments will ultimately be discussed among budget negotiators over the next few weeks during the session, which is expected to end Feb. 25.