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House and Senate Democrats swat Youngkin tax cuts

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(The Center Square) — Virginia’s House of Delegates and Senate have responded to Gov. Glenn Youngkin’s December proposed budget, boldly rejecting many of his plans.

True to form, the Republican governor introduced substantial tax reforms in his proposed 2024-26 biennial budget, including a statewide, across-the-board 12% personal income tax reduction partially offset by a near 1% increase in the state sales and use tax.

The Democratic-majority House and Senate finance committees did away with Youngkin’s provisions that would have resulted in a net tax cut for Virginians, including eliminating the state’s car tax. But they adopted Youngkin’s proposal to apply sales tax to digital products and services like downloads, streaming and online data storage, working to close what Youngkin called the “tech tax loophole.”

Republicans lamented the budget proposals’ divergence from the governor’s original plan.

“Democrats have hijacked Governor Youngkin’s plan to make Virginia’s tax structure more progressive and resilient by dumping all of his proposed tax cuts but keeping the offsets he proposed,” said House Minority Leader Del. Todd Gilbert, R-Shenandoah, in a statement. “That means higher taxes for Virginia families already struggling with the aftermath of sky high inflation.”

The two chambers’ budgets also contain some important differences. The Senate’s budget went a step further than the governor’s and the House’s by including business-to-business transactions in the changes to digital taxation.

The House’s budget included the governor’s plans for the Alexandria entertainment district, while the Senate’s did not.

Freedom Virginia, an advocacy group for “economic security policies” that promote access to affordable healthcare, education and energy — celebrated the budgets in a statement.

“The House and Senate money committees have prioritized what hard-working Virginians want: more funding for schools, affordable healthcare, and a fair tax system that lets you keep more of what you earn,” the group said. “We urge conferees to consider additional avenues to invest in everyday Virginians and make our tax code more balanced for the middle class, including a Fair Share tax credit, a child tax credit and an increase in the refundable earned income tax credit.”

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