The Tax Grinch is on His Way!

 

Get ready Virginians, and many residents of other states, the lie that Medicaid Expansion will be federally funded is already about to hit home. Your healthcare costs and state level taxes are about to rise for a number of reasons and in a number of ways.
First, in order to fund the cost of Medicaid Expansion not covered by federal funding, Virginia will layer a tax on hospital systems in the state. Do you think the hospital systems are just going to absorb that cost? No, no, no…..EVERY patient’s hospitalization, yours and mine, will be more expensive.
Message: EVERY tax increase is eventually paid by the consumer.
Second, the change in federal tax rules resulting from the tax reform act have created a dilemma for states. For Virginia, the crystallization of the situation is well defined by the Richmond Times Dispatch.
“Law Makers Prepare to Address Tax Policies”
“Va. Officials flush with taxpayer relief option after federal reforms”
“Gov. Ralph Northam sees a projected $594 million state windfall from federal tax reform as ‘a chance for us to level the playing field’ for Virginias who make less than $50,000 and reap fewer benefits from the new law than their wealthier neighbors.  ‘…..that sounds like a back door tax increase to benefit people who aren’t paying much income tax. We see it actually as a redistribution of income’, Senate Majority Leader Tommy Norment……”
This would be on top of the $555 million-dollar surplus the state received last year due to improved economic activity. This is in addition to what law makers see as a potential $250 million dollars in new tax revenue from changes in state sales tax law (a back door tax increase for anyone who makes purchases on line from out-of-state sellers). Why in heavens name would we allow hundreds of million more be taken out of Virginians hands to fund a wealth transfer proposal? If the Governor is so moved to provided more direct financial assistance to lower income Virginians, why wouldn’t he just bring a legislative proposal to the GA to use some of the surplus or the sales tax windfall? You and I both know why he will not……….he’d rather bury his tax increase/wealth transfer combo in the federal tax law legislation.  Shame………

Comment: I make more than $50,000 and I am not seeing any material benefits from the new federal tax law either.  The intend of the tax law changes were to spur economic growth and ensure every Virginia that wants to work can find a job. The focus was on business tax relief both large and small.  Since most of the jobs in this country are driven by small business, of course small business owners will share in the benefit. They must be incented to invest in their business.  Otherwise we’ll experience the same economic stagnation we had through most of the previous administration that fought incentives for small business investment at every turn. For big business, the new rules incent businesses to bring home hundreds of billions of dollars in profits, being held in overseas subsidiaries, due to the repressive US tax laws.  Now those funds can be used to invest in plants, equipment, new jobs and improved compensation for US workers (the Bureau of Labor Statistics reported earlier this year that 224.000 manufacturing Jobs had been added in the previous 12 months – these are the jobs Obama said “were lost forever”).  We have all witnessed during 2018 the evidence of the wisdom of this policy change in the significant economic growth improvements, lowest unemployment in 50 years and improving worker compensation including the substantial bonuses provided to workers by many high profile companies stating it was the direct result of tax reform.

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