Governor proposes low-income tax refund in budget

Updated: Aug. 17, 2018 at 10:52 PM EDT
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RICHMOND, VA (WWBT) - Gov. Ralph Northam pitched his wish list to the General Assembly budget committees Friday with his top goal to make the state's Earned Income Tax Credit refundable, using expected extra state revenue from the new federal tax cuts.

Under Northam's proposal, he says a family that owes $800 in taxes but qualifies for a $1,000 Earned Income Tax Credit would not only owe zero taxes, but would receive a $200 refund check from the state.

"This is tax payer money," said Northam. "We have a surplus of over $500 million, and I think it's only fair to give some of it back to some of the hardest working Virginians."

But Republicans say not so fast, arguing those are tax dollars that someone else paid.

"We see it as a redistribution of income because the increase in those payroll taxes have actually been paid by individuals," said Sen. Tommy Norment (R - Williamsburg), co-chair of the Senate Finance Committee.

Added Delegate Chris Jones (R - Suffolk), chair of the House Appropriations Committee, "If you haven't earned it, you shouldn't be able to get additional dollars back above that."

Instead, Republicans want to change the requirement that state taxpayers must take the standard deduction if they do on their federal tax return. Now that the federal standard tax deduction has doubled, more taxpayers are expected to take it rather than itemize. Republicans say that means many state taxpayers, particularly in the middle class, will pay more state taxes if they can't itemize their deductions.

"That's the toughest group because they're right over the threshold," House Speaker Kirk Cox (R - Colonial Heights) said. "They don't get the scholarships, they have the toughest time with student debt. I think they're the group that is hurt more."

Northam also said he wants the budget to include more money for workforce training, return education spending to pre-recession levels and expand broadband access to areas that don't have it.

"I want everyone, whether they live in a rural area or a city or somewhere in between, to have access to quality job opportunities," Northam said. "Every job depends on the internet."

Northam will formally propose his budget amendments in December.

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