Republican Glenn Youngkin has pitched big tax cuts for Virginia. Are they realistic? The Republican nominee for Virginia governor says the commonwealth has the money to cut taxes. But implementing them might pose a political challenge.
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Republican Glenn Youngkin has pitched big tax cuts for Virginia. Are they realistic?

Republican Glenn Youngkin wants to bring a slew of tax cuts to Virginia, but political obstacles might stand in his way. Steve Helber/AP Images hide caption

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Steve Helber/AP Images

In the race for Virginia's next governor, Republican nominee Glenn Youngkin has proposed a variety of tax cuts embraced by fiscal conservatives. But even if the former private equity executive ascends to the governor's mansion in January, his tax agenda may prove tough to implement.

Youngkin has pitched roughly $3.2 billion in cuts he says will be paid for, in part, by the record-breaking $2.6 billion budget surplus Virginia posted during the 2021 fiscal year. The businessman's message is appealing to Republican voters in Virginia, who tell pollsters that taxes and the economy are their top issues in the race, despite the commonwealth's strong economic performance and a tax burden that falls squarely at the middle of the spectrum compared with the rest of the U.S.

The native Virginian, who is neck and neck with Democratic nominee Terry McAuliffe in the polls, says Virginia's current Democratic leadership is trying to turn Virginia into a bastion of high-tax liberalism.

"In a few short years, Virginia has become California East," the candidate said during his "Day One Game Plan" announcement in August.

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The ex-businessman wants to double Virginia's standard income tax deduction, making it $9,000 for individuals and $18,000 for joint filers. Youngkin has also proposed sending Virginians one-time tax rebate checks of $300 to $600; eliminating the state's 2.5% grocery tax; suspending a recent gas tax increase; providing a temporary tax holiday to small business owners; and exempting a portion of veterans' retirement compensation from income tax.

Earlier this year, the Republican floated the idea of eliminating the commonwealth's income tax. He later walked it back amid criticism from both Democrats and Republicans that doing so would wipe out around 70% of Virginia's General Fund.

"In Virginia, we can't get rid of income tax, but we sure can try to bring it down," Youngkin said later in an August radio interview.

Youngkin's campaign did not immediately return a request for comment.

Youngkin has sourced much of his fiscal agenda from Stephen Moore, a writer and TV commentator who advised former President Donald Trump on his signature tax legislation, the 2017 Tax Cuts and Jobs Act. Moore, a proponent of supply-side economics, also helped shape a set of deep tax cuts that former Kansas Gov. Sam Brownback implemented in 2013, promising a host of benefits for the state's economy. The cuts quickly devastated Kansas' budget, and the legislature overturned them in 2017.

Democrat Terry McAuliffe has called Youngkin's tax proposals "crazy," and pledged to not seek new increases while pushing his own costly priorities, including a $2 billion annual investment in education. McAuliffe has touted what he calls "independent reports" decrying Youngkin's tax plan, though the reports come from left-leaning advocacy group Virginia Excels and the Virginia Education Association, a labor union that represents public school employees — and both focus on Youngkin's now-scuttled idea to abolish the income tax.

Meanwhile, fiscal conservatives have rallied around Youngkin's tax platform, saying if there was ever a time for Virginia to provide relief to taxpayers, it's now.

"The state is flush with cash," says Steve Haner, senior fellow for state and local tax policy at the Thomas Jefferson Institute for Public Policy, a right-leaning think tank. "We have the opportunity now to make some of those changes without doing too much damage to the basic budget."

September's optimistic revenue report from Gov. Ralph Northam's administration, Haner says, makes him even more confident that the state can afford tax cuts. And while Democrats have fixated on Youngkin's earlier comments about eliminating the income tax, Haner describes his other proposals as grounded in reality.

"The impacts are substantially smaller than the Democrats are whining about," he says.

But if Youngkin wins in November, many of his tax proposals would require buy-in from those same Democrats. The majority party is facing a challenge in the House of Delegates, where several seats could flip Republican during this year's election, but Democrats hold a majority in the upper chamber at least until their next election in 2023. That could put a damper on Youngkin's most far-reaching proposals, says Sen. Dick Saslaw (D-Fairfax).

"If they put in all this crazy stuff, the Senate's not going to go along with that," says Saslaw, a veteran Democrat on the Senate Finance committee.

Saslaw and his fellow Democratic caucus members have also raised questions about whether some of Youngkin's proposals pass legal muster. Under Virginia's constitution, roughly half the state's surplus must be set aside for its Rainy Day Fund, with another several hundred million reserved for water quality improvement and transportation, among other obligations. Virginia may also be required to make a "super deposit" into the Rainy Day Fund using $564 million of last year's surplus, leaving little behind for the next administration.

Virginia state Sen. Scott Surovell (D-Fairfax), vice chair of the Senate Democratic Caucus, calls Youngkin's proposals "out of touch with political reality."

"Most Republicans that I serve with don't want to do things that jeopardize our bond rating or our reputation as a well-managed state," Surovell says. "The last thing we need is to end up like Kansas."

Still, some of the Republican's less-ambitious fiscal proposals could be palatable to moderate Democrats in both chambers, says Del. Barry Knight (R-Virginia Beach), who is likely to become chair of the House Appropriations committee if the lower chamber flips to Republican control next year. Youngkin's pitch to eliminate the state's 2.5% grocery tax — at a cost of more than $568 million in the next fiscal year — has been discussed by Democrats as well, he says. (D.C. and Maryland exempt groceries from sales taxes, as do a majority of states.) Knight adds they may also accept granting an income deduction to veterans.

"If Youngkin wins and Democrats are in [both chambers], I think this grocery tax proposal would be awful hard to say no to. The demographics of our constituents — it would help them all, across the board," Knight says. "And how can you vote against giving a tax break for someone who's defended our country?"

Virginia's Joint Legislative Audit and Review Commission is now studying ways Virginia could make its state income tax more progressive. Any major changes to income taxes cannot pass before the legislature receives that report at the beginning of the 2023 legislative session, but other tax cuts can't be ruled out just yet, the delegate says.

As McAuliffe and Youngkin unleash an expensive barrage of TV ads slamming each other's platforms, Saslaw, who has served in the Senate since 1980, has been keeping his eye on the polls showing strong support for Youngkin. He acknowledges there's a good chance his party will have to work with another Republican executive come January, whether they like his fiscal agenda or not.

"I think Terry [McAuliffe] will pull it through, but it's close," Saslaw says. "No question about it."

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