ATR urges state lawmakers to reject Governor Ralph Northam’s (D-Va.) numerous tax hikes and Medicaid expansion in the state budget. The hikes range from taxing hospital beds to increasing the tax on real estate transactions (including homes) and motel/hotel rooms. After failing to pass his plan in the legislature’s regular session, Northam has called a special session to get lawmakers to acquiesce to his demands.
Northam’s proposed tax hikes come in the wake of Virginians being hit with more than 20 Obamacare tax hikes over the last ten years and a massive state sales tax hike passed within the last five. As Virginians are just starting to enjoy tax relief from the federal Tax Cuts and Jobs Act, the last thing they need is for Northam to wipe out the benefits of the Trump tax cuts at the state level.
Northam’s hikes would raise living costs on Virginia residents and damage Virginia’s economic recovery. The hospital bed tax will be passed directly on to those receiving care, increasing the cost of healthcare for Virginians. The real estate tax increase would increase the price of homes, making living in Virginia more expensive. The 3% tax hike on hotel and motel rooms would drive tourists out of Virginia into neighboring states for lodging, harming Virginia businesses and incentivizing tourists and travelers to spend their money elsewhere. It would also have a negative impact on downstream businesses that benefit from tourism and hotel stays in the state as a result of consumers having less money to spend while in town.
Adding to the fiscal damage of tax hikes is the expansion of Obamacare. According to a February report from the Foundation for Government Accountability, Medicaid expansion costs exceeded 250% more than the federal government promised. Per person costs of expansion were 79% higher than expected, and overruns of expansion costs have cost taxpayers 157% more than expected. In other words, expanding Medicaid would potentially stick Virginians with consistent tax hikes driven by cost overruns for years to come. This would also crowd out other budget priorities such as education, transportation and public safety.
For Northam’s Medicaid expansion and tax hikes to pass the legislature, two Republican votes in the Senate and the support of the Republican Speaker of the House, Kirk Cox, are needed. Currently, Republican Senators Frank Wagner, who can be reached at (804) 698-7507 and Emmett Hanger at (804) 698-7524 are considering supporting Northam’s proposal. Speaker Cox can be reached at (804) 698-1066 and has publicly supported the proposal. A vote is expected sometime this week.
ATR urges Virginia taxpayers to call Senator Wagner (804) 698-7507, Senator Hanger (804) 698-7524, and Speaker Cox (804) 698-1066 and tell them to oppose Northam’s tax grab and Medicaid expansion.