At Last, Something Bold from Youngkin

by James A. Bacon

Governor Glenn Youngkin has always fought for lower taxes, but his proposals — one-time rebates, tinkering with tax schedules — never captured the imagination. Speaking before the House and Senate Finance Committees today, he rolled out two initiatives that you don’t need a tax preparer to understand.

Proposal #1: a 12% cut to state income taxes across all brackets;
Proposal #2: eliminate the car tax.

To offset the cuts, according to the Virginian-Pilot, Youngkin would close the “big tech tax loophole” on digital goods and include those products as part of the sales and use tax base.

Chronic Amazon.com shoppers may take umbrage to that last idea — heck, I guess I’ll have to start paying sales tax on all my audiobook downloads — but it’s hard to argue that shoppers patronizing bricks-and-mortar merchants in Virginia should pay a sales tax while those purchasing digital goods online shouldn’t. It’ll be tough getting anything through the Democratic-dominated General Assembly, but this time Youngkin has a big advantage: Virginians can immediately see what’s in it for them.


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100 responses to “At Last, Something Bold from Youngkin”

  1. Nancy Naive Avatar
    Nancy Naive

    Wait! Brackets? Just how many brackets are there?

    Hey, here’s a thought. How about just recognizing that a “high income earner” is someone making significantly more than $17K?

    1. how_it_works Avatar
      how_it_works

      In some parts of Virginia…a high income earner IS someone making $17k.

      (max SSI payments for an individual are only $943 a month, or $11,316 a year).

    2. how_it_works Avatar
      how_it_works

      In some parts of Virginia…a high income earner IS someone making $17k.

      (max SSI payments for an individual are only $943 a month, or $11,316 a year).

      1. Nancy Naive Avatar
        Nancy Naive

        Does the State tax SSI? SNAP? It would be the Virginia Way.

        1. Stephen Haner Avatar
          Stephen Haner

          Another sign I’ve been doing this too long. Virginia DID tax food stamp benefits until I did a story in the Roanoke Times 40 years ago about how the tax take exceeded the state’s admin cost, and the state was making profit off food stamps! Then State Senator Bobby Scott carried the bill as I recall.

          Don’t know about SSI but they don’t tax regular Social Security so I doubt they tax SSI.

          1. Nancy Naive Avatar
            Nancy Naive

            God, I love us.

          2. how_it_works Avatar
            how_it_works

            Virginia would tax the oxygen we breathe if they could figure out how.

          3. Stephen Haner Avatar
            Stephen Haner

            Well they tax the CO2 we breathe out!!

          4. Dick Hall-Sizemore Avatar
            Dick Hall-Sizemore

            Tom Bliley told me once that, after his stint as mayor, that the city indeed would have done that, if they could have figured out how to do it.

          5. Stephen Haner Avatar
            Stephen Haner

            Well they tax the CO2 we breathe out!!

          6. how_it_works Avatar
            how_it_works

            I just don’t think I’m seeing the value from what I pay in taxes.

          7. Nancy Naive Avatar
            Nancy Naive

            No, they tax the CO2 we breathe back in. The hiccups will break you.

          8. how_it_works Avatar
            how_it_works

            They ought to give me a tax break for not clear-cutting the 1.5 acres of trees on my property.

            (Not that I would do that anyway…)

          9. Nancy Naive Avatar
            Nancy Naive

            Isn’t that how farm subsidies work?

          10. how_it_works Avatar
            how_it_works

            Where they pay you to not grow something?

          11. Nancy Naive Avatar
            Nancy Naive

            Yep.

          12. Stephen Haner Avatar
            Stephen Haner

            You fool. You’re not getting paid for carbon offset credits on those trees? $$$$

          13. Where do I apply?

          14. You can, put it in a conservation trust.

          15. I like Bobby Scott.

            I had a couple of good conversations with him about motorcyclist rights back in early 1990s.

          16. LarrytheG Avatar

            social security actually is taxable

        2. how_it_works Avatar
          how_it_works

          They don’t. I’m just pointing out that $11,316 a year is what you can get paid just to exist.

    3. Virginia’s tax “brackets”

      Income between $0-$3,000 – 2%
      Income between $3,000-$5,000 – 3% plus $60
      Income between $5,000-$17,000 – 5% plus $120
      Income greater than $17,000 – 5.75% plus $720

      That is some weird stuff.

      It might make more sense to me if all of the income amounts were multiplied by ten.

      1. how_it_works Avatar
        how_it_works

        The Virginia tax “brackets” probably haven’t been updated since you could buy a gallon of milk for 25 cents.

        After all, the General Assembly has had much bigger fish to fry between then and now, like banning radar detectors and hunting on Sunday.

      2. LarrytheG Avatar

        important to know that say for 17K, the whole 17k is not taxed at 5.75%.

        Only everything after the 17k is taxed at 5.75% Everything under is taxed according to the brackets.

        For instance, when it says $60 .. that $60 is the amount taxed at 2% and then the amount over that is taxed at 3% until you hit $5k.

        so at the top the $720 is the accumulated taxes from each bracket up to the 17K.

        After 17k, it’s all taxed at 5.75.

        so for 30K, you would owe $720 plus 5.75% of 13k.

        Did I explain this right?

        And I see what Wayne is saying.. that perhaps the first 34K taxed at the lowest rate?

      3. how_it_works Avatar
        how_it_works

        The Virginia tax “brackets” probably haven’t been updated since you could buy a gallon of milk for 25 cents.

        After all, the General Assembly has had much bigger fish to fry between then and now, like banning radar detectors and hunting on Sunday.

        1. Nah, as far as the GA is concerned bracket creep is a feature not a bug. It increases tax collections without voting for a tax increase, and the GA needs money to spread around.

          Cruise control is more effective at stopping speeding tickets than a radar detector and it’s legal. The Federal Communications Act of 1934 makes receiving RF signals legal. If you don’t want someone to receive the signals don’t send them to them. However, like Heller in D.C. it will take someone with the time and money to take the Virginia radar law to the Supreme Court.

  2. Nancy Naive Avatar
    Nancy Naive

    Lemme see, 4.3% reduction in the tax rate for high income earners (>$17K) was defeated, but a 12% reduction in all tax rates won’t be?

    1. Stephen Haner Avatar
      Stephen Haner

      The idea of shifting the tax burden from personal income and to sales and use is totally valid. It is good tax policy. The complaint that Virginia’s 5.75% top rate is higher than our neighbors, and this an impediment to economic recruitment, is also valid. But there is an art to getting things like this done and it is very much a team sport. First I heard of any of this was today.

      The car tax thing is just showbiz, and bad showbiz since most will quickly figure out that the higher sales taxes will wipe out any real benefit, except for those with really, really good cars. Watch the D’s present the Gov with a bill to end the car tax on EV’s only….

    2. Stephen Haner Avatar
      Stephen Haner

      The idea of shifting the tax burden from personal income and to sales and use is totally valid. It is good tax policy. The complaint that Virginia’s 5.75% top rate is higher than our neighbors, and this an impediment to economic recruitment, is also valid. But there is an art to getting things like this done and it is very much a team sport. First I heard of any of this was today.

      The car tax thing is just showbiz, and bad showbiz since most will quickly figure out that the higher sales taxes will wipe out any real benefit, except for those with really, really good cars. Watch the D’s present the Gov with a bill to end the car tax on EV’s only….

    3. Stephen Haner Avatar
      Stephen Haner

      The idea of shifting the tax burden from personal income and to sales and use is totally valid. It is good tax policy. The complaint that Virginia’s 5.75% top rate is higher than our neighbors, and this an impediment to economic recruitment, is also valid. But there is an art to getting things like this done and it is very much a team sport. First I heard of any of this was today.

      The car tax thing is just showbiz, and bad showbiz since most will quickly figure out that the higher sales taxes will wipe out any real benefit, except for those with really, really good cars. People without cars will pay the new sales taxes. Watch the D’s present the Gov with a bill to end the car tax on EV’s only….

      1. I’ll finally be able to buy that mid-engine Corvette I’ve had my eye on…

        1. Nancy Naive Avatar
          Nancy Naive

          The way I imagine you drive, you’d be better off with 500lbs of pig iron in front of you and not behind you.

          1. Hey, man, get with the times. LT6 Corvettes have aluminum engine blocks and heads. They only weigh 475 lbs…

            😉

      2. Dick Hall-Sizemore Avatar
        Dick Hall-Sizemore

        I figured it out instantly. Because I am conservative (cheap) and don’t buy new cars, my 20+-year old car and truck are assessed at a level that I don’t have to pay any car tax. (The vehicles run fine, so why replace them?) As a result of this proposal, I would have a significant net increase in my taxes.

        1. You’d get no benefit from a 12% income tax cut?

      3. Nancy Naive Avatar
        Nancy Naive

        Hey, I got one for ya that I just discovered today. Between 1988 and 1991, I made 4 post-tax (non-deductible) $2K contributions to my IRA. Roth’s didn’t exist then. It’s okay, you just file an 8606 that keeps track of the contributions. Never bothered with the part about how it comes out. I just figured the first time I took a distribution, I get the post-tax stuff back tax-free.

        And that’s exactly what happens… as a PERCENTAGE of the total IRA balance. I get to collect 1/10th of 1% tax-free at a time! AND have to fill out an 8606 every year until I die now!

        Paperwork Reduction Act?! Bull!

        1. how_it_works Avatar
          how_it_works

          If they reduce the paperwork, they reduce the chances that someone at the IRS will lose it.

      4. Super Brain Avatar
        Super Brain

        Spot on Mr. Haner. The benefits will got to NOVA, central VA, and the Beach area. GOP country will get the shaft.
        I live in Midlo and pay Chesterfield $1,080 for car tax. I would have to have about 110K in taxable sales tax purchases for break even. I win but someone else loses.

  3. VaPragamtist Avatar
    VaPragamtist

    I don’t quite follow. . .all of my Amazon purchases already have sales tax added on.

    1. Super Brain Avatar
      Super Brain

      The Gov wants to tax services. Goods are already taxed. It was a big fight to have Amazon taxed. It goes to the South Dakota V. Wayfair court case.

      1. VaPragamtist Avatar
        VaPragamtist

        I see. The first sentence in the last paragraph threw me off.

        I can see the argument for taxing streaming services, especially since others pay 5% in communications tax.

        I don’t Uber or use Grubhub, so I don’t know if those users pay tax. . .but I don’t think they should (outside of the food ordered), as most service taxes are exempt (you don’t pay tax on a taxi, for example).

        I’ll be interested to see how it plays out and if the numbers balance with a 12% cut in income tax.

        I’d also rethink or cap the DCRSUT Exemption.

  4. Nancy Naive Avatar
    Nancy Naive

    There’s a simple solution to all of this — competition. We need a federal law that allows you pay the State tax to the State of your choice. Problem solved.

    There is still a personal property tax on cars and boats, but the tax on the boat is paid to the locality where the boat is “stored”, not the address of the owner.

    Nobody pays ppt on a boat.

  5. Stephen Haner Avatar
    Stephen Haner

    Right. It is such a good idea that voters who were promised this 60 days ago rewarded Republicans with a bunch of victories, giving them the majorities needed to pass this. No. Wait.

    Gerry Baliles said it to me over four decades ago. Politics is like sex. It is all in the timing. Missing the afterglow on this….

    Jim ignored that the Governor is proposing about a one penny hike in the state sales tax on everything. Asked at the meeting today how the localities would/could make up the $2 billion they would lose by eliminating the car tax (on personal cars only I’m sure, not business cars), Secretary Cummings just said they could raise their local sales taxes. So what is that, another 2 pennies? Easy Peezey. All I’ll say at this point.

    1. Nancy Naive Avatar
      Nancy Naive

      Oooh, snark.

    2. Nancy Naive Avatar
      Nancy Naive

      “Secretary Cummings just said they could raise their local sales taxes. So what is that, another 2 pennies? Easy Peezey. All I’ll say at this point.”

      How about this? An inconsiderate sales tax to be an extra 1% sales tax on any items #13, 14, … rung up in the “12 items or fewer” express registers..

      1. how_it_works Avatar
        how_it_works

        They need to make them “10 items or fewer” registers, because some people can’t count beyond 10, they don’t have enough fingers.

    3. DJRippert Avatar

      Starving the localities a bit would be good. Up here in NoVa, the BoS might actually start having to demand that developers pay for more of the added costs their development drives.

      Every private company worth a lick spends a lot of time trying to drive costs down.

      But when your “revenue” comes from threatening incarceration vs free choice I guess cost containment isn’t that big an issue.

  6. Irene Leech Avatar
    Irene Leech

    Interesting. But do all localities have the right to set and charge sales tax? I seem to remember Prince Edward County being denied the opportunity.

    We’ve got to find ways to treat localities more equally, especially those that have few options for income. More stress on local property taxes will be unwelcome and that could be about all some localities have. Some have justified car taxes saying that’s what gets people who don’t own real estate to contribute to the local budget.

    1. how_it_works Avatar
      how_it_works

      “what gets people who don’t own real estate to contribute to the local budget”

      Even renters pay real estate taxes. It’s part of the rent.

      1. Stephen Haner Avatar
        Stephen Haner

        Amazing how few get that major point. 🙂 The car tax is hated because people have to write an actual check twice a year. One of the few taxes that almost everybody pays directly. Of course now they put it on their credit card and pay the fat processing fee (kicked back to the local government) and then let interest accrue.

        Politicians prefer hidden taxes.

        1. DJRippert Avatar

          “Politicians prefer hidden taxes.”

          They sure do.

          An interesting question for the Thomas Jefferson Institute might be … “Where do Virginians pay hidden taxes and how much is paid through those hidden taxes?”

          Two come immediately to mind:

          1. The subsidies built into the electric bills.

          2. Overcharging some students by state universities in order to subsidize other students.

      2. Good point.

    2. But do all localities have the right to set and charge sales tax?

      No they do not – with the exception of the additional 1% all localities are allowed to add to the total 4.3% state sales tax. All localities charge this additional 1%, so the current total sales tax throughout most of the state is 5.3%.

      Certain localities specified in the Code of Virginia may charge an additional sales tax over and above the 1%.

      https://law.lis.virginia.gov/vacode/title58.1/chapter6/

      https://www.tax.virginia.gov/sales-tax-rate-and-locality-code-lookup

      EDITED for clarity (I hope) – 1357

      1. Dick Hall-Sizemore Avatar
        Dick Hall-Sizemore

        I assume that the administration will propose legislation that will enable localities to increase their sales tax rate.

        1. I suspect you are right.

  7. James Wyatt Whitehead Avatar
    James Wyatt Whitehead

    Bold my…well you know what. The blue wall and Youngkin are going to get absolutely nothing done. Just like the current do nothing US Congress.

    1. Nancy Naive Avatar
      Nancy Naive

      What are they up to now, 24?

    2. There is a bright side to a “do nothing” legislature.

      If they’re not passing new laws they’re not infringing further on our rights.

      1. James Wyatt Whitehead Avatar
        James Wyatt Whitehead

        Exactly! Gridlock! As long as your not the one stuck in the Springfield mixing bowl.

        1. LarrytheG Avatar

          public roads are not a “right” per se. And we have public roads because we do take land from private owners to build them. They get paid but they cannot refuse to sell.

          1. James Wyatt Whitehead Avatar
            James Wyatt Whitehead

            whoosh

          2. Have you been hitting the ol’ eggnog a little early today, or did you post to the wrong thread?

            Or both?

          3. LarrytheG Avatar

            huh?

          4. What do public roads and imminent domain have to do with what we were discussing?

          5. What do public roads and imminent domain have to do with what we were discussing?

          6. What do public roads and imminent domain have to do with what we were discussing?

  8. Stephen Haner Avatar
    Stephen Haner

    Here is a perfect example of the math illiteracy that the poor voters are going to be confused by. This is now posted on the Richmond TD’s webpage:

    Gov. Glenn Youngkin wants to cut income taxes by 12% for all Virginia taxpayers and increase the state sales tax by 0.9%….,

    To raise the state basic sales tax from 4.3% to 5.2% is a 21% increase. And a cut in the various tax bracket rates, lowering them by 12%, is hardly a guaranteed your taxes will go down 12%. Too many other variables. But this passes for finance journalism….

    Gawd….

    1. Nancy Naive Avatar
      Nancy Naive

      Gov should have said, by a “bit”, 12.5%, or 1/8th then they woulda gotten all wrapped around the axel, “Arrrgh fractions!”

    2. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      Until the actual legislation is available, you might not be able to answer this. I have Amazon Prime. That is an annual fee. Prime membership entitles me to return merchandise and not pay a shipping fee. It also entitles me to stream lots and lots of music on Prime Music at no extra charge. Furthermore, I get to stream lots of TV shows and movies on Prime Video. For some of the movies, I have to pay a fee, but not for all movies. How is the sales tax going to to be applied in this instance?

      1. Isn’t Amazon Prime considered a service? Do you pay sales tax on the annual fee?

        1. Stephen Haner Avatar
          Stephen Haner

          Now, no. Under this, yes.

        2. Stephen Haner Avatar
          Stephen Haner

          Now, no. Under this, yes.

          1. Wow.

          2. One sales tax on the annual fee of $139, or $69 for students, then nothing on all the bundled streaming/services, not so bad.

      2. Stephen Haner Avatar
        Stephen Haner

        You will pay the state and local sales tax on any online subscription. Netflix, Amazon, Microsoft, etc. Buy a dirty movie, say a Susanna Gibson video, and the tax will apply. Pay Amazon a premium to watch a specific show — taxed.

        1. At least they’re not going to tax labor charges for things like car repairs, HVAC service, etc.

          Yet…

  9. VaPragamtist Avatar
    VaPragamtist

    Will localities also have the ability to tax digital services? If not, how will localities be able to recover the losses from the PP tax?

    1. Nancy Naive Avatar
      Nancy Naive

      Cover fees. $20/person to live in Virginia. Not unreasonable, but having to wear the hospital band…. Still, better than a ear tag.

      1. A “Virginia is for Lovers” hand stamp?

        1. Nancy Naive Avatar
          Nancy Naive

          Forehead.

          1. Even better.

          2. James Wyatt Whitehead Avatar
            James Wyatt Whitehead

            Gotta spell it backwards so you can read it yourself in the mirror. Sen. Lucas made a comment about spelling something on her forehead. This would be a good plan of action for her.

    2. Nancy Naive Avatar
      Nancy Naive

      Cover fees. $20/person to live in Virginia. Not unreasonable, but having to wear the hospital band…. Still, better than a ear tag.

  10. LarrytheG Avatar

    If the State stops funding the car tax rebates, how much is that and is it equal to a 12% reduction from taxpayers to the state to essentially give it back to the localities?

    How then would the localities get that 12% state tax reduction from local taxpayers to make up for the loss of state car tax rebate?

    Would a straight up trade for the loss of the state car tax rebate to a sales tax (that includes all services) be more or less “equal” to many/most localities?

    Bonus Question- is this one of those legislative/political deals where they talk about one thing to change and it really sets in motion potential changes to all kinds of other things?

    A lot of folks won’t like the concept of this nor the result so you gotta call it “bold” for sure!

  11. f/k/a_tmtfairfax Avatar
    f/k/a_tmtfairfax

    The current sales tax rate in Wake County is 7.25% (4.75% state, 2.00% local, 0.50% transit). The sales tax on food purchased in a grocery store is 2.0%. The personal income tax rate is 4.75%, dropping to 4.5% in 2024. It bottoms out at 3.99% in 2026. The current corporate income tax rate is 2.50%, reaching 0% in 2o30. The corporate tax rate started at 6.90%.

    1. DJRippert Avatar

      Interesting perspective from the Tar Heel state.

      What transit is funded by that tax? Buses?

      1. LarrytheG Avatar

        If NoVa had a dedicated tax like this, would it help Metro?

      2. f/k/a_tmtfairfax Avatar
        f/k/a_tmtfairfax

        The special transit sales tax, collected in Wake, Durham and Orange Counties, funds The Research Triangle Regional Public Transportation Authority, a/k/a GoTriangle, a regional transit authority. Here is a link to the service map. https://gotriangle.org/sites/default/files/gotriangle_system_map_c.pdf

        Today, I believe it’s all bus service, but a light rail system between UNC in Chapel Hill and Durham is under construction (???). A proposed heavy rail system between NE Raleigh and Durham through Downtown Raleigh, Cary, and the RTP failed to get Federal Transit Authority funding earlier this year. Wikipedia says 2023 ridership is c. 6000 per day.

        Wake Forest has two circulator bus lines that seem to run almost empty and an express bus line to Downtown Raleigh, about which I know nothing.

    2. LarrytheG Avatar

      Thanks for sharing that info !

      More stuff to think about maybe:

      Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming do not have an income tax.

      Alaska, Delaware, Montana, New Hampshire and Oregon have no sales tax.

      Looks like Alaska and New Hampshire have
      neither.

      Alaska, I think, funds from taxes on oil.

      I don’t know what New Hampshire does but it sure does sounds like a low tax state without knowing more.

      1. Based on the latest information at taxfoundation.org, New Hampshire has a 7.5% corporate income tax, and a flat 4.00% personal income tax.

        It is correct that they do not collect sales tax at either the state or local level.

        https://taxfoundation.org/location/new-hampshire/#:~:text=New%20Hampshire%20has%20a%20flat,not%20levy%20local%20sales%20taxes.

        PS – Alaska has no state sales tax but has local sale tax of up to of 7.5%.

        1. f/k/a_tmtfairfax Avatar
          f/k/a_tmtfairfax

          New Hampshire only taxes interest and dividends.

          1. 10-4. Thanks.

        2. LarrytheG Avatar

          Thanks for checking. I rely on the Tax Foundation also but sometimes get lazy and google. Looks like NH has changed but not sure for how long. Still a pretty low tax state but I have read that they also do not provide services at the levels of other states.

          “New Hampshire is a state that doesn’t have a personal income tax. However, currently, the state has a 5% tax on dividends and interest. However, due to legislation, the tax on dividends and interest is being phased out. The rate will be 4% for 2023, 3% for 2024, 2% for 2025, and 1% for 2026.”

          also…

          “New Hampshire Policy Points: How We Fund Public Services”
          https://nhfpi.org/blog/new-hampshire-policy-points-how-we-fund-public-services/

          1. My apologies. You are correct about New Hampshire’s personal income tax. I misread the article. The 4.00% personal income tax is only on dividends and interest.

            Interestingly, they also appear to have a statewide property tax (collected by the localities) for education.

          2. LarrytheG Avatar

            I noticed that also. Wonder how they do assessments. local or state run?

  12. LarrytheG Avatar

    re: ” Proposal #2: eliminate the car tax.”

    I wonder how many people understand how the car tax “works”?

    My understanding is that the county assesses the tax based on value and the state then “rebates” part of it but not the entire amount.

    I don’t think they’re talking about getting rid of the entire car tax.

    Am I wrong?

    1. energyNOW_Fan Avatar
      energyNOW_Fan

      As an outcome of Gov Gilmore’s (?) ~Year2000 attempt to reduce/reform the car tax, the state refunds part of the car tax to the localities (the car tax relief amount). Due to this convoluted approach, the localities – especially NoVA- urgently need to keep to the stupid car tax to keep the state revenue coming in. Hopefully Youngkin being from Great Falls knows how to navigate NoVA, otherwise it is just blowing smoke. What Dems will do is give the good citizens who buy EV’s tax breaks, subsidized by the bad human beings who use gaso in their cars.

    2. energyNOW_Fan Avatar
      energyNOW_Fan

      As an outcome of Gov Gilmore’s (?) ~Year2000 attempt to reduce/reform the car tax, the state refunds part of the car tax to the localities (the car tax relief amount). Due to this convoluted approach, the localities – especially NoVA- urgently need to keep to the stupid car tax to keep the state revenue coming in. Hopefully Youngkin being from Great Falls knows how to navigate NoVA, otherwise it is just blowing smoke. What Dems will do is give the good citizens who buy EV’s tax breaks, subsidized by the bad human beings who use gaso in their cars.

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