Youngkin’s budget proposal takes from the poor to feed the rich

Yesterday Governor Youngkin presented his budget proposal, a map of his priorities and values, his and the VAGOP’s. 

It creates a $3.5 billion loss of revenue over the biennium by lowering income tax rates for all brackets. Which he claims will keep people from out-migrating to other states like NC who have lower income tax rates. (Studies show people do not move based on income tax rates, but based on availability of good jobs and affordable housing.)

It partially pays for that tax cut by…wait for it…increasing the state sales tax! And adding a digital goods (Spotify, Hulu, etc.) tax.

Because the rich have exponentially more income than low-income and middle-income folks, but proportionally spend far less of their income buying taxable goods and services, this means Youngkin’s “modernization of the tax code” hurts low-income and middle-income folks to help the rich. 

On top of that, there’s still a $1 billion shortfall after these tax changes. I didn’t read the entirety to know where all the cuts will be made, but a couple of items people did notice right off the bat were cutting a Pell Grant program and some large cuts to public education funding.

And there’s more. This isn’t included in the budget, but Youngkin spent a lot of hot air hyping it up, thinking this makes him a popular guy. He thinks the local car tax should be eliminated. Now we all know paying taxes sucks. But the car tax a) disincentivizes people from using cars to get everywhere, and b) brings in a whole lot of revenue that is used by local governments to fund things like public schools, sewers, roads, etc. As always, taxes aren’t just collected and then burned in a bonfire—taxes are collected and spent on things communities want. During his budget presentation, Youngkin’s Finance Secretary suggested localities be “made whole” (i.e. make up the revenue they’d be losing if the car tax were eliminated) by allowing them to increase their local sales tax. 

So again, how many cars do the wealthy own relative to low-income folks, and of what value/tax rate are they? And how much proportionally of their income do low-income folks spend on taxable goods and services? So this is another shift that helps the wealthy at the expense of low and middle income folks. 

A side note: every year Democrats in the General Assembly propose to allow localities to increase their local sales tax rate to raise additional money for their public K-12 schools (if the community agrees to it, nothing mandatory for all places). Every year that proposal is shot down. But suddenly it’s okay to allow localities to increase their sales tax for this! 

Of course, this is just the opening volley in what is a long and complicated process. The final budget will look nothing like what the Governor proposed. The legislature will pass its own budget proposal that will reflect the priorities of the newly-elected Democratic majorities–probably funding public education, increasing access to mental health care, helping create more affordable housing, and protecting the environment and our natural resources, while being fiscally responsible. The Governor will amend it. He’s not in great position to negotiate from because a) he’s a lame duck, b) he’s faced with a Democratic majority legislature, and c) he badly wants to make this Caps/Wizards Alexandria sports stadium deal happen as some sort of signature achievement and would have to spend all his bargaining capital to make that happen. Stay tuned!