Governor Youngkin’s budget proposal to reduce state income taxes and raise sales taxes would be a hit to the majority of the Virginians. If Gov. Youngkin believes that cutting income taxes will put extra money in people’s pockets, actually, increasing the sales tax will do the opposite.
Theoretically, his proposal to reduce income taxes by 12% appears appealing. But to offset the loss of $2.3 billion from the Virginia budget as a result of the income tax reduction, Gov. Youngkin proposes increasing the sales tax from 4.3% to 5.2%.
In addition to Democrats, there is opposition from Republicans to this proposal as well. Sen. David Suetterlein, (R-Roanoke County) called it, “Very regressive.” (Cardinal News)
According to The Commonwealth Institute, Virginia’s four income tax brackets range from 2% to 5.75%, so higher earners pay more taxes. By reducing income taxes, people with high income will benefit the most.
Sen. Bill Stanley, (R-Franklin County) realizes the impact of Gov. Youngkin’s tax reform proposal if it becomes law. “Areas that helped get the governor elected are being left on the side of the road,” Sen. Stanley said. (Cardinal News)
Raising the sales tax to offset lower income taxes would hurt the average person on a daily basis. Fixing an issue by creating a larger one is what Gov. Youngkin’s budget proposal seems to be doing.
However, a reform in the corporate income tax code, perhaps, can boost the State’s budget. Obviously, 63% of corporations in Virginia do not pay tax because of clever maneuvers and loopholes (The Commonwealth Institute). Corporations must be more vetted as at the same time the tax loopholes must be tightened.
Gov. Youngkin can set a record by pushing to expand children’s Medicaid in order for all Virginian children to be eligible. In fact, this is one of the major concerns for all families. Returning a few hundred dollars to the Virginian families would not be as effective as using the taxes to expand children’s Medicaid.
Regardless of the party line differences, children’s Medicaid should not become a tool to be used in the political arena. Understanding the true urgency and necessity of this crucial program should align lawmakers and Gov. Youngkin to take quick action on it.