Virginia Democrats Continue Efforts to Raise Taxes in New Budget

Democrats in Old Dominion continue to push forward with a budget that will impose sweeping new, higher sales taxes on critical products and services across the state.

Virginia has the perfect opportunity to deliver immense tax relief to the hardworking citizens of the state who are struggling to handle inflation. Instead of working on behalf of Virginans, Democrats are ignoring these struggles and increasing taxes on families and businesses and pushing new wasteful spending.  

Democrats are continuing efforts to add new regressive taxes on working Virginians and add a novel business-to-business transaction tax. By making B2B digital transactions subject to state sales taxes for the first time in history, Virginia would become an extreme outlier among neighboring states. There is good reason why the vast majority of states do not tax such transactions: doing so leads to unnecessary complexity and permanent price hikes, as the tax is passed on to consumers. It also disincentivizes business investment and economic growth in the state. These efforts would lead to almost $2 billion in additional taxes on families and businesses across the Commonwealth. 

This shortsighted Democrat proposal does not consider the downstream effects of higher taxes on productivity and new investments in the Virginia economy. Businesses would be forced to account for new costs that would be passed on to working families. For instance, taxing certain business inputs and not others introduces severe economic distortions while introducing penalties on their use of innovative new technologies. 

For the first time in state history, streaming services, such as Netflix and Hulu, would now be subject to state sales taxes under the Democrat majorities’ plan. A host of other digital services would receive similar treatment, including cloud storage – an essential for most Virginians who take photos on their cell phones. Residents can expect to pay an additional 6% or more for those services.

With just a 1-seat majority in both chambers, Democrats’ tax hike efforts on a wide-ranging slate of products and services reveal just how out of touch their agenda is with the real struggles of working families and the business community. Collecting another $2 billion in new taxes every year is the last thing Virginians need. 

This is why Governor Glenn Youngkin originally proposed a 12% across-the-board income tax cut for all Virginia residents, bringing the state’s top income tax rate down to 5.1%. In contrast to Democrat leaders in the House and Senate, Governor Youngkin is working to return more money to hardworking taxpayers. 

As the legislative session concludes lawmakers in Richmond should work to kill billions in unnecessary tax hikes and instead adopt the Governor’s tax cut proposal. Families deserve to keep more of their income, not be subjected to a slew of taxes on basic items.