House Democrats voted down the chamber’s only tax conformity bill Monday because it wrapped policy into what should be a straightforward issue affecting taxpayers, some delegates said.
Conformity typically happens unceremoniously in the legislature. It adopts annual definitions of income from the federal government for tax purposes and requires a supermajority vote to go into effect immediately. That way, it doesn’t interrupt tax filing season.
But because of President Donald Trump’s Tax Cuts and Jobs Act, conformity is wrapped up in a tax policy battle.
To ensure the money from federal changes would be reserved for refunding to taxpayers, House Republicans wrote a conformity bill that would also create a new taxpayer relief fund while policy was ironed out.
“The plan advanced by the House of Delegates to this point was the responsible step to ensure that tax refunds can immediately be processed while still protecting the money that rightfully belongs to taxpayers,” said Del. Chris Jones, R-Suffolk, chair of the appropriations committee.
“It’s unfortunate that some of our Democratic colleagues blocked the House from reaching the 80-vote threshold necessary to pass this bill as emergency legislation.”
Without conformity, the Virginia Society of Certified Public Accountants warned in a document evaluating tax options, taxpayers would have to make more than a dozen complex changes to their taxes.
The group also suggested a fund to capture extra money from the federal tax bill to “allow the flexibility and time for a thoughtful dialogue regarding tax policy changes.”
Democrats were supportive of a plan presented by Gov. Ralph Northam, which would use some of the money coming from tax changes to fund big investments like broadband, water quality improvements and making the earned income tax credit fully refundable.
House Democrats said Republicans “politicized” the process and were “trying to hide bad policy in the emergency bill on tax conformity.
“Make no mistake: House Republicans are holding your tax returns hostage to double down on Trump’s unpopular tax plan.”
“It is unfortunate that House Republicans are holding conformity hostage at the expense of 2018 Virginia tax filers, in order to advance their own agenda,” said Del. Eileen Filler-Corn, D-Springfield.
“House Republicans seem determined to double down on the Trump tax plan. From the beginning, our caucus has advocated to first pass conformity, so that Virginians do not run into complications with their 2018 tax returns, and then we can address legislative solutions to mitigate the damages from the Trump tax plan.”
Republicans said they plan to introduce the same conformity bill without an emergency clause, which would mean it goes into effect July 1 once tax season is over.
“All 51 House Republicans are united behind a plan to guarantee $950 million in tax relief while also ensuring a smooth tax filing season, and we will proceed tomorrow to do this even without the emergency clause,” said Del. Kirk Cox, R-Colonial Heights, Speaker of the House.
The Senate passed its own conformity bill that includes some other provisions, like raising the standard deduction. Senate Democrats had similar concerns to their House counterparts, and said the bill wrapped policy and conformity together.