Virginia Democrats Propose a Raft of New Taxes After Taking State Government Trifecta

Democrats now control all three branches of government in Virginia for the first time in six years, and they’ve wasted no time proposing a slew of new taxes to impose on residents of the commonwealth.Virginia saw significant budget surpluses for fiscal years 2022 to 2025 — when Republican Glenn Youngkin was governor — totaling around $10 billion. The governor used some of the money to provide substantial tax relief and fund key services like education and Medicaid.Although the commonwealth closed the latest budget year with a $2.7 billion surplus, Democrats — including the newly sworn in governor, Abigail Spanberger — want more.A tally of new tax proposals listed in the government’s “bills and resolutions – taxation” section shows more than 50 so far, but the legislation is coming in so fast the website can’t keep up. Democrats hold a 64-36 majority in the House of Delegates, so many of the bills are expected to sail through and be signed into law by the Democratic governor. One bill, HB334, “authorizes all counties and cities to impose an additional local sales and use tax at a rate not to exceed one percent with the revenue used only for capital projects for the construction or renovation of schools.”Another, HB550, allows a county that imposes a state sales tax “to levy a tax on admissions for attendance at an event.” It’s unclear what constitutes an “event,” as the text of the bill simply says “any event.”Then there’s HB243, which “imposes on large employers, as defined in the bill, a corporate welfare tax equal to 100 percent of the qualified employee benefits received by any employees of such large employer residing in the Commonwealth.”“Qualified federal benefits,” according to the bill, means any money received through supplemental nutrition assistance, the school lunch program, monthly assistance payments for rental of a dwelling unit and the “amount of payments made under the Social Security Act.”The flood of new tax proposals is drawing widespread scorn on social media. “Virginia Democrats appear to be replicating the model of California in chasing away businesses and high-income households,” political pundit Jonathan Turley wrote on X.Tax reform activists are also questioning the timing of the proposals. “It’s always a bad time to raise taxes, but it would be particularly foolish for Governor Spanberger and the Democrats who now control Richmond to do so at this time of heightened state tax competition,” says the president of Americans for Tax Reform, Grover Norquist.“Governors and lawmakers in other states aren’t just seeking to reduce income taxes and other levies, they’re pursuing full tax elimination in many state capitals,” he added. “For individuals, families, and employers who wish to avoid the hostile tax policies pursued by Democrats in Richmond, they have plenty of options close by.”While some of the bills cap taxes for certain individuals, like members of the military, many are new charges or increases for commonwealth residents. All of the tax increases were proposed by Democratic legislators.Like HB919, which would impose “a firearm and ammunition tax equal to 11 percent of the gross receipts from the retail sale of any firearm or ammunition by a dealer.” Dealers would pay the new tax and potentially pass it on to customers. Then there’s HB900, which adds an additional tax on every “retail delivery” (think Amazon, Uber Eats, FedEx, UPS, Costco, Target and others) in Northern Virginia.Another Democratic bill introduces a new net investment income tax of 3.8 percent. HB 378, “imposes a net investment income tax on individuals, trusts, and estates beginning in the taxable year 2027. The tax is generally equal to 3.8 percent of the lesser of (i) net investment income, defined in the bill, for the taxable year or (ii) federal modified adjusted gross income, defined in the bill, for such taxable year reduced by $500,000.”The new tax would be in addition to the tax commonwealth residents already pay on such items.Make a lot of money? Virginia wants more of it. HB188 “establishes a new income tax bracket beginning in the taxable year 2026, that taxes income in excess of $1 million at a rate of 10 percent.” Another bill, HB979, would establish another tax bracket after January 1, 2027, for those who earn “in excess of $600,000 but not in excess of $1,000,000.”And there’s HB557, which “establishes a separate classification of tangible personal property for electric-powered landscaping equipment employed in a trade or business and used to maintain commercial, public, or private gardens, lawns, trees, shrubs, or other plants, including lawn mowers, edgers, trimmers, leaf blowers, and chainsaws.”It’s worth noting that a few Virginia localities have banned gas-powered leaf-blowers, a move that some home owners’ associations have followed. But Democrats in the Assembly want to expand those bans across the commonwealth. HB881 “provides that any locality with a population density of at least 2,500 persons per square mile may by ordinance prohibit or regulate the use of gas-powered leaf blowers.”The newly empowered Democrats are wading into every aspect of life in the commonwealth. The summary alone for HB978 runs more than 500 words and includes this passage: the bill “levies the retail sales and use tax on the following services: admissions; charges for recreation, fitness, or sports facilities; non-medical personal services or counseling; dry cleaning and laundry services; companion animal care; residential home repair or maintenance, landscaping, or cleaning services when paid for directly by a resident or homeowner; vehicle and engine repair; repairs or alterations to tangible personal property; storage of tangible personal property; delivery or shipping services; travel, event, and aesthetic planning services; and digital services.”Even the internet isn’t safe from new taxes. The same bill “also imposes the retail sales and use tax on digital personal property, defined in the bill as a digital product delivered electronically that the purchaser owns or has the ability to continually access without having to pay an additional subscription or usage fee to the seller after paying the initial purchase price.”The bill defines “Digital services” as software application services; the broad category of “computer-related services”; and digital subscription services, could include services like Prime Video, Disney+ and other video streaming outlets. Think you’re safe if you live in Fantasy Land? Think again. Even fantasy sports leagues with your buddies are facing new taxes. A Senate bill, SB129, “imposes a 10 percent tax on a fantasy contest operator’s fantasy contest revenue, with five percent of the tax revenue being allocated to the Problem Gambling Treatment and Support Fund and the remaining 95 percent being allocated to the general fund.”

Virginia Democrats Propose a Raft of New Taxes After Taking State Government Trifecta

Virginia Democrats Propose a Raft of New Taxes After Taking State Government Trifecta

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