The Hampton Roads Chamber is the premier pro-business organization serving as an Impactful Advocate for a variety of legislative issues to set the conditions for businesses to succeed.
The 2019 Virginia General Assembly session convened on Wednesday, January 9. Each week, the Chamber will send "Legislative Reviews" and "Action Alerts" on issues of importance to its members. We encourage you to check out the Chamber's 2019 State Legislative Priorities.
Top Issues in the 2019 Virginia General Assembly Session
•The Federal Tax Cuts and Jobs Act (TCJA) of December 22, 2017 made sweeping changes to the Internal Revenue code.
•Some provisions harm taxpayers such as changes to certain international tax provisions, net operating losses and interest expense deduction limitations.
•A number of unintended consequences for Virginia businesses may arise via the Commonwealth's conformity to any or all of the Federal TCJA provisions
Adoption by the Commonwealth of TCJA provisions have the potential to significantly increase corporate income taxes for Virginia taxpayers by broadening the corporate income tax base to include income the Commonwealth historically has not taxed and disallowing previsions available deductions to taxable income which presently allows Virginia to be one of the most competitive States for Business. Recommendations in this area include;
•Virginia should decouple from the Global Intangible low-taxed Income provisions.
•Virginia should allow full use of NOL deductions.
•Virginia should decouple from Federal interest expense limitations.
Without major changes to the State tax code taxpayers will see an increase of over $600 million dollars per year in their taxes.
Polling on Tax Policy Issue
A recent poll conducted by Mason-Dixon Polling and Strategy, Inc. that was sponsored by the Jefferson Institute returned the following result:
Question- Recent changes in Federal tax law will result in a two-year Virginia State revenue increase of $1.2 Billion dollars. Do you feel Virginia should use the additional money to expand current state programs or return the money to 2.8 million Virginia taxpayers by doubling the State's standard deduction for individuals and couples?
Spend Return Not Sure
23 % 62% 15%
Tax Plan Comparisons
|Conformity with No policy changes
(see Governnor Northams's Budget Bill)
|Thomas Jefferson Institute Proposal (see Peace's HB1851, Freitas' HB2110, and Stuart's SB1443)||House GOP Leadership Proposal (see Hugo's HB2529)|
|Summary||Allows State to keep and spend $1.2 billion in windfall revenue created by conformity to Tax Cuts and Jobs Act of 2017||Uses windfall revenue for broad tax reform, raising standard deduction for individuals and cutting business tax rates||Prevents windfall revenue by blocking elements of TCJA which created higher taxes for some, w/small standard deduction hike|
|Full Conformity w/ TCJA of 2017||Yes||Yes||Partial|
|Double the Standard deduction||No||Yes||33 Percent Increase|
|Business tax rate||No||Yes||No|
|Adjust brackets, Standard deduction for future inflation||No||Yes||No|
|Captures future windfall $ for future reform efforts||No||Yes||Yes|
|Returns TCJA windfall revenue||No||Yes||Yes|
|Avoids budget impact, risk to credit rating||Yes||Yes||Yes|
|Maximum tax cut from higher standard deduction||N/A||$325||$115|
|Allows State-only itemized deductions||No||No||yes|
|Retains TCJA cap on local tax deductions||Yes||Yes||No|
(Source: The Thomas Jefferson Institute)
Internet Sales Tax
Last year the U.S. Supreme Court in South Dakota versus Wayfair Inc. gave States broad authority to require online and other remote sellers to collect sales taxes;
One of the bills introduced in Virginia is SB 1267 (Stuart R28). This bill directs any money collected by the State from the remote taxes to be distributed directly to the Transportation Trust Fund.
Higher Education Partnerships
Virginia House of Delegates speaker Kirk Cox introduced legislation on January 11, 2019 to create partnership performance agreements between Virginia and individual public colleges and Universities. The agreements will include mutual commitments by the Commonwealth and individual higher education institutions on initiatives to increase the talent pipeline, encourage growth, and improve college access and affordability for Virginians. The goal is to measure and reward college performance based on student outcomes.
Governor Northam Urges " Different Path" in State of the Commonwealth Address
Governor Northam asked the Republican controlled General Assembly for an " open and ongoing dialog" on key issues. Contrasting Virginia with the dysfunction in Washington, the Governor called for a "different path" several times in his State of the Commonwealth speech. Governor Northam addressed many Democratic legislative agenda items in his hour long speech including, gun control, no excuse absentee voting, preserving abortion rights and passing the Equal Rights Amendment.
Governor Northam proposed to spend $1.2 billion in additional State taxes from changes in the Federal tax code on improving water quality in the Chesapeake Bay, rural broadband infrastructure and tax credits for Low-income families.
General Assembly Leader at Odds with Governor
Appropriations Chairman Chris Jones (R 76) spoke at the opening of the House Appropriations Committees first meeting declaring that "the house won't consider the $1.2 billion dollars windfall in preparing the Commonwealth's Budget."
Delegate Jones further stated that; " We cannot assume revenues that we do not have."
Chairman Jones is pushing for an agreement on tax policy before the Committee acts on the budget. On February 3rd, he believes that adjustments will be made at that time in committee.