January 24, 2023
Governor’s Proposed Budget Amendments Prioritize Corporate Interests Above Working People and Families
Teachers and frontline workers helped Virginia navigate the COVID-19 pandemic and are bearing more than their share of harm from rising costs on their everyday expenses. Across Virginia, workers and families say that their top priority for lawmakers this legislative session is to help them make ends meet. Instead of using tax policy to provide targeted, economic relief, Governor Youngkin’s proposed budget amendments double down on Virginia’s upside-down tax code through wasteful giveaways to profitable corporations by way of a lower tax rate than the top rate 86% of taxpayers pay. The final budget agreement must prioritize families over corporations and plan carefully for the future.
In his proposed budget amendments, Gov. Youngkin asks lawmakers to lower the Virginia corporate tax rate to 5%, which is lower than the current top tax rate of 5.75% that most Virginia families pay. Put simply, this would let 246 corporations with taxable incomes over $10 million pay a lower tax rate than a starting teacher who makes $42,300 a year or a health care support worker who makes $31,400 a year.
The governor’s proposed budget amendments would let 246 corporations with taxable incomes over $10 million pay a lower tax rate than a starting teacher who makes $42,300 a year or a health care support worker who makes $31,400 a year.
Instead of using available revenues to provide teachers and workers with meaningful pay raises or address crumbling school and road infrastructure, Gov. Youngkin is proposing permanent, ongoing cuts to our shared resources. His business tax plan would cost Virginia over $500 million in this budget, with additional significant cuts moving forward, and would do more to line the pockets of wealthy business interests than help families.
This is poor policymaking for many reasons.
First, Virginia has many unmet needs that Virginia families continue to ask lawmakers to prioritize. Instead of forfeiting $500 million to profitable businesses, state lawmakers could:
- Support families who need it most by strengthening Virginia’s Earned Income Tax Credit ($36.5 million)
- Give working people paid time off to care or to experience their baby’s first laugh by kickstarting Virginia’s paid family leave program ($5 million)
- Create and preserve additional affordable housing units by increasing funding for the Virginia Housing Trust Fund ($75 million)
- Get students the support they need to be successful by eliminating the support cap for student support positions at public schools ($268 million)
- Make sure all kids in Virginia have health care coverage ($19.1 million)
Second, Virginia needs to protect and even raise state revenues so that working families and communities don’t pay the price of economic uncertainty, like they did during the Great Recession. Many federal lawmakers are threatening to make significant cuts in the federal budget through sequestration. Federal cuts in spending, particularly defense spending, disproportionately impact Virginia, which makes up 19% of Virginia’s economy. In fact, the 8% decline of federal contracts in 2012 and 11% decline in 2013 resulted in lower wages and significantly lower revenues than originally projected. Furthermore, during the Great Recession, Virginia responded to declining revenues by cutting support for key services in our communities. Some funding, including support for K-12 public education, was structurally altered and state funding per pupil has only just returned to pre-Great Recession levels and still falls short of what the Virginia Board of Education says is required to provide a high-quality education.
Lawmakers should reject these corporate giveaways to protect revenues, provide targeted economic relief to families, and fund many of the unmet needs in communities across Virginia.
Categories:
Budget & Revenue, Economic Opportunity
