(The Center Square) – A policy memo circulated to Republican members of Congress is drawing attention to tax proposals introduced during Virginia’s legislative session, saying the measures could significantly increase taxes over the coming years.
The memo, produced by the Advancing American Freedom Foundation, examines tax-related legislation introduced after Democrats in November elections secured majority control in Richmond. The document does not attempt to predict which bills will become law but evaluates the potential fiscal effects of proposals with published fiscal impact statements.
According to the memo, seven proposed bills would raise taxes by an estimated $6.6 billion in fiscal year 2027 alone. The analysis states those projected increases would be more than 300% higher than previously forecasted growth in Virginia tax collections between fiscal years 2026 and 2027.
The memo also points to what it describes as an eighth tax on payroll.
“An eighth tax on payroll will go into effect in fiscal year 2029 when it would raise taxes by an additional $1.5 billion per year,” the memo states.
Taken together, the memo estimates the proposals could raise taxes by more than $37.2 billion over five years, covering fiscal years 2027 through 2031. The authors describe that figure as conservative because it excludes proposals lacking formal fiscal impact statements.
Preston Brasher, one of the authors, said the analysis was designed to capture the scope of tax proposals introduced early in the session.
“This is showing just the wide range of different tax proposals that we’re seeing out of the Virginia Legislature,” Brasher said. “Obviously, some of these will not become law, or they may be changed into different forms.”
Brasher said the number of proposals stood out given Democrats’ campaign emphasis on affordability.
“How quickly lawmakers were able to go from an affordability agenda to proposing dozens of potential tax increases was rather striking,” Brasher said.
Tim Chapman, president of the Advancing American Freedom Foundation, said the volume of proposals could carry broader political implications.
“With their tax, tax, tax legislative agenda, Virginia Democrats have handed national Republicans a winning message on a silver platter,” Chapman said. “By focusing on Virginia, Republicans can reclaim their mantle of being the party of affordability and economic growth as we head into the midterms.”
Among the measures cited in the memo is House Bill 1207 and its companion Senate Bill 2, which would establish a paid family and medical leave insurance program funded through a payroll tax. Under the legislation, the tax rate would be set by the state tax commissioner based on projected program costs.
Brasher said payroll taxes can affect both employees and employers.
“Anytime you’re talking about a payroll tax, that acts as a wedge between the amount that the employer is paying to employ you and how much you’re actually receiving,” Brasher said.
The memo also highlights other tax proposals moving through the General Assembly.
House Bill 145 would impose a 10% tax on fantasy contest operators’ revenue. Under the bill, 5% of tax proceeds would be directed to the Problem Gambling Treatment and Support Fund, while the remaining funds would go to the general fund. The legislation also narrows the legal definition of fantasy contests and requires operators to obtain permits from the Virginia Department of Agriculture and Consumer Services.
Another measure, House Bill 341, would expand Virginia’s existing tax on disposable plastic bags.
The memo also raises concerns about potential changes to Virginia’s income tax structure.
The memo states Virginia’s top income tax rate “could increase from 5.75% to 13.8%” and says that change would “instantly catapult” Virginia to the highest effective top income tax rate of any state.
The memo also states the proposed income tax hikes would take nearly $3.5 billion more per year “out of the hands of Virginia’s families and taxpayers.”
