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Republican Delegates Pitch Plan to Extend Trump Tax Cuts

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Republican leaders in the House of Delegates pitched their plan today to extend the Trump tax cuts to the state level. Their proposal sets the stage for a tax showdown with Democratic Governor Ralph Northam.

The Trump tax cuts doubled the standard deduction on federal taxes, making them more appealing for taxpayers who used to itemize their deductions. But nothing has changed in Virginia’s tax code, which is currently tied to the federal tax code.

In practical terms, that means some taxpayers will be paying lower federal taxes and higher state taxes. Republicans put the figure at roughly 600,000 taxpayeers.

Republican Delegate Tim Hugo has a plan that would allow taxpayers to itemize their state taxes even if they take the federal standard deduction. His proposal would increase state standard deduction from $3,000 to $4,000 for an individual and from $6,000 to $8,000 for a married couple.

“This will allow middle-class families to receive the maximum benefit of tax relief at the federal level, and still relieve the maximum tax relief on the state level,” he said.

The bill has the support of Republican leaders in the House, though Speaker of the House Kirk Cox said he expects other plans to emerge as well.

Virginia Democrats called the Republican plan a “tax giveaway to the rich” in a statement today.

Governor Northam favors leaving most of the current tax structure in place. He wants to use the extra revenue to help low-income taxpayers by making the earned-income tax credit refundable. His ammended budger calls for saving most of the rest of the estimated $1.2 billion two-year windfall for a future recession.

Both sides agree the issue will dominate the first weeks of the General Assembly, which begins January 9th.

Ben Paviour covers courts and criminal justice for VPM News with a focus on accountability.
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