Correction, Jan. 25: This article originally said that Gov. Glenn Youngkin’s office did not reply to two requests for comment. Those requests were sent to the wrong email address. We have removed the reference; PolitiFact Virginia’s ruling remains unchanged.
Speaker: Gov. Glenn Youngkin
Statement: Virginia tax receipts “in just the last four years alone have grown 50%.”
Date: Jan. 23, 2023
Setting: Speech
Gov. Glenn Youngkin has been stressing that Virginia can afford the $1 billion in tax cuts he recently proposed.
“The overtaxation of Virginians is something we can address here and now because we have seen the government’s tax resource grow astronomically,” Youngkin said on Jan. 23 during a speech at the Weinstein Jewish Community Center in Richmond. “Receipts just in the last four years alone have grown 50%.”
Virginia’s Republican governor made the same 50% tax growth claim in his State of the Commonwealth Address on Jan. 11.
We fact-checked the governor’s claim and found it’s close to the mark. Youngkin wants to cut levies that go to Virginia’s general fund — which supports public education, public safety health programs and general government expenses. Those tax revenues grew by 45.2% during the past four budget years, according to state financial records.
Virginia collected $19.9 billion in general fund taxes for the fiscal year that ran from the start of July 2017 to the end of June 2018. It took in $28.9 billion for the budget year that ended in mid 2022. (Virginia’s fiscal year runs from July 1 to June 30.)
The general fund has three major money sources: personal income tax, corporate income tax and the sales tax. These account for 93% of the general fund’s tax receipts, and each revenue stream significantly grew during the last four years even as tax rates stood pat and Virginia’s population barely grew.
Let’s take a look.
Personal income taxes are by far the largest source of general fund money, kicking in about two-thirds of the revenue. Their net revenues grew over the last four budget years (fiscal 2019, 2020, 2021, 2022) from $14.1 billion to $20.4 billion — a 44.7% increase. Nationally, state income tax receipts grew by an estimated 36.7% over the same span, according to data from the National Association of State Budget Officers.
Virginia collects two types of income taxes. A withholding tax is the money held out of paychecks. A non-withholding tax (also called a capital gains tax) is a levy on profits from selling personal assets such as stocks.
Net withholding tax collections rose from $10.6 billion to $13.6 billion during the last four budget years — a 28.3% increase. Much of the increase came from salary growth among upper income workers, according to a November 2022 report by the staff of the Virginia House Appropriations Committee.
Gross non-withholding tax receipts rose from $3.5 billion to $6.8 billion — a 94.3% increase. The gain was mostly caused by people cashing in profits from the soaring stock market of the last four years.
Sales tax revenues increased from $3.5 billion to $4.6 billion over the last four budget years — a 31.4% increase. Much of the rise was caused by inflation and a heightened demand for goods during the COVID crisis, according to Anne Oman, staff director of the state’s House Appropriations Committee. Sales tax receipts in all states grew by about 30% during the span.
Corporate income tax collections rose from $862 million to $2 billion over the period - a 132% increase. Oman said uncertainty over inflation, recession and the economic effects of COVID caused many businesses to sit on profits instead of reinvesting them, creating greater corporate tax income. Corporate income tax revenues from all states combined grew by an estimated 177% during the same four years.
Virginia’s burgeoning tax revenues have not been unique. States have quirks that make it impossible to exactly compare their total general fund tax receipts. What they have in common, however, is that income, sales, corporate taxes produce the vast majority of their proceeds. Virginia saw its revenues from those three levies increase by 46.1% over the last four years, slightly higher than the estimated 44.2% rise seen by all states combined.
Youngkin’s $1 billion in tax cuts would come on top of nearly $4 billion in tax cuts that went into effect in the second half of 2022. The boon allowed Youngkin and the General Assembly to agree on a budget last year that also raised spending and lifted Virginia’s reserve funds to a record $2.6 billion.
But the gravy train began to slow in the latter half of 2022 and is expected to continue to do so this year due to uncertainty about rising interest rates, the stock market and a possible recession, according to Virginia Secretary of Finance Stephen Cummings.
Democrats have been skeptical about Youngkin’s proposed tax cuts this year, saying the money is needed to improve programs.
Our ruling
Youngkin said “Virginia tax receipts “in just the last four years alone have grown 50%.” State records show that general fund tax receipts have grown 45.2% over the last four budget years. So, Youngkin’s claim, while very credible, is a little high.
We rate Youngkin’s statement Mostly True.
Sources
Youngkin, Speech, Jan. 23, 2023 (27:08 mark)
Glenn Youngkin, State of the Commonwealth Address, Jan. 11, 2023 (29:20 mark)
Virginia Secretary of Finance, “Fiscal Year 2018 General Fund Collections: Actual and Official Forecast,” Aug. 17, 2018 (page 36)
Virginia Secretary of Finance, “Fiscal Year 2022 General Fund Collections: Actual and Official Forecast,” Aug. 19, 2022 (page 36)
Virginia House Appropriations Committee, “A Summary of Virginia’s Biennial Budget FY 2022-24,” Jan. 5, 2022
Virginia House Appropriations Committee, “2022 Session Revenue and Budget Outlook,” Nov. 16, 2021
Interview with Anne Oman, staff director of the House Appropriations Committee, Jan. 23, 2023
Email from Brian Sigritz, director of State Fiscal Studies, National Association of State Budget Officers, Jan. 23, 2023
National Conference of State Legislatures, “FY 2022 State Budget Update,” March 2, 2022
NCSL, “2021 Tax Trends: Income Tax Cuts Back on the Menu,” June 28, 2021
National Association of State Budget Officers, “State Expenditure Report,” 2019 and 2022, Table 56. NASBO.
U.S. Census, Virginia population, 2022
Presentation by Stephen Cummings, Virginia Secretary of Finance, Dec. 15, 2022