The following paragraph was written five months ago. It is reproduced now with some emphasis added.
The 2023 Virginia General Assembly tax debate is just another revival of an old political show. Last year it ended well for new Governor Glenn Youngkin (R) and for those hoping to pay less in state taxes. This year is not guaranteed to see the same outcome, not unless there is a late push to engage public attention as the House and Senate seek compromise.
Was there a push in intervening months to engage public attention? No. Does the public even understand what tax policies are being proposed, and how those changes provide dollars they need for family necessities? Again, no, and an emphatic no because Republicans have changed their approach since the negotiations started months ago.
So should anybody be surprised that the opponents of any tax changes – the keep it all and spend it all crowd – are happy to stand their ground and view it a safe political position? No.
Virginia has now entered the second year of its two-year budget cycle, and the Republican-controlled House and Democratic-controlled Senate are still deadlocked over about $3.6 billion in revenue that is not allocated, some of which started accumulating years ago. Soon, end of fiscal year reports will give a more exact figure for the cash sitting on the table of this poker game. Expect a higher number.
The latest round of negotiations collapsed, according to news accounts, because the lead Republican negotiator thought he had a quiet agreement with leading Democratic negotiators. But what he thought was in their agreement (according to news reports) was very different than the first package, leaving out the original plan to lower the corporate income tax by 1% and to lower the top individual rate by a quarter of a percent.
The good news is the tax reform elements still on the table remain substantial, close to $1 billion, reasonably close to the dollar values attached to the original mix of proposals. Even better news was how the dollars shifted from a corporate income tax cut to more tax relief for individuals, and tax relief more targeted to middle and lower income households. It looks very familiar.
The best news of all, the compromise proposes increasing the standard deduction and raising the trigger threshold for the top rate to a higher income, both basically responses to inflation. Indexing the tax code to inflation would be the best approach, but these are effective steps in the same direction.
But here in the aftermath of the latest blowup, it is still unclear exactly what the Republicans had put on the table in their compromise. Details are lacking. If they had the Department of Taxation or the legislative staff run some financial impact estimates, none have been released or shared. They have made no effort to tell the average Virginian, “Your tax cut would be this much.”
The advice to turn the insider game of budget negotiations into a public campaign to promote tax cuts – either the previous package or this new one – was not taken. Instead, various Republicans thought it prudent to stand by quietly while their buddies in the other party suffered through hot primaries. The foolishness of that tactic has now been demonstrated.
Here is lesson one from a life in politics. This isn’t from a Viking Cruises commercial but from every campaign manual out there. The only commodity you cannot get more of is time. Five months of time that could have been spent making this case to Virginians is lost. Voting begins in three months, and there still is zero messaging, zero effort at communicating to Virginians in concrete detail what they might gain from tax reform.
If there is a new plan, a better plan, put it out there with as much detail as possible and make the spending advocates explain why they think it is bad. Why are they happy that inflation is making government rich while families struggle with the basics? Why do they want that to continue forever?
Since the Governor’s package first appeared, its opponents have disparaged it as tax cuts for rich corporations and the richest Virginians. The Democrats never mention how cutting that top rate helped everyone with more than $17,000 in taxable income. Those attacks are not applicable to the new package that is apparently on the table, but all the voters will be shown are the January roll calls with Republicans voting to…cut taxes on corporations and cut the top rate paid by millionaires.
A special session would allow legislators to go on record on some different plan, one not including those two elements, one more focused on the middle. Those roll calls could be produced as responses to the attacks which are coming. Again, if anybody wants anything like that to actually pass, the time to go public with details is long past.
The spending side of the debate needs attention, too. If not, the voters will think that one side was all about tax cuts, and the other all about spending on vital services, services also popular with Republicans and Independents. The House of Delegates budget and tax package applied far more of the $3.6 billion to spending than to tax relief.
Does anybody have those details? Are there talking points that highlight the House or Governor’s spending priorities that would accompany the tax cuts? In seeking information from those who should be involved in feeding facts into this debate, in framing such a message, one was advised to go visit the union- and liberal-funded Commonwealth Institute for Fiscal Analysis. That’s where the Republicans go for facts, apparently.
In the sound of silence, one thing can be heard: tick, tick, tick.
Steve Haner is Senior Fellow with the Thomas Jefferson Institute for Public Policy. He may be reached at Steve@thomasjeffersoninst.org.