Tom Perriello releases tax reform plan

Tom Perriello, Democratic candidate for governor of Virginia, has released a tax reform proposal that gives the middle class a tax cut and funds a working families agenda including paid leave, universal pre-kindergarten, and two years free community college, trade school or apprenticeship.

tom perrielloThe proposal asks the very wealthy and large corporations to pay their fair share, while cutting wasteful spending and eliminating loopholes and credits that overwhelmingly benefit those at the top, so the tax code can be fairer and generate revenues needed to make growth-oriented investments in middle and working class Virginians.

Perriello is proposing a pro-growth plan to raise incomes and expand Virginia’s economy from the middle out – a sharp contrast with both President Trump’s recently proposed federal tax plan, which could be worse than the Bush tax cuts, and Republican gubernatorial frontrunner Ed Gillespie’s tax plan, which would give the wealthy a massive tax cut. Gillespie’s $1.3 billion tax cut overwhelmingly benefits those at the very top without explaining the cuts he would make to Virginia services to pay for it.

“It is long past time to replace Republican tax plans that suffocate real growth in Virginia. We need new ideas that grow our economy from the middle class out, remove special rules for the most powerful, and allow us to invest in our people,” said Perriello. “Most Virginia incomes haven’t gone up in 20 years, and I am the only candidate in this race outlining how to achieve a real agenda to support working and middle class families to spur economic growth. Meanwhile, Ed Gillespie is pushing a $1.3 billion tax cut that largely benefits a select few, and he’s not even telling Virginians what he’ll cut to pay for it. We saw this movie before when he directed it for George W. Bush and it bankrupted the country. We don’t want the sequel imposed on Virginia.”

Gillespie claims his proposal would give nearly $1,300 in tax cuts annually to a “typical” family, but according to our analysis, only families making more than $237,000 a year would see a benefit that large. A family of four earning Virginia’s median income of $65,000 a year would get roughly a quarter of that, or around $300, from Gillespie’s plan, which would disproportionately benefit millionaires and outlines zero cuts he would make to pay for it – a strategy which earned him the nickname “Mr. Free Lunch” by the Washington Post.

Perriello’s plan includes a real tax cut for middle class families, by offering them a $500 refundable child care tax credit. In addition, Perriello has previously outlined serious reforms to put more money in the pockets of middle and working class Virginians, from fully funding universal pre-K to allowing student debt refinancing to guaranteeing eight weeks of paid leave.

The Perriello plan also begins to address the structural inequality in Virginia’s tax code. Under current law, any Virginian making more than $17,001 a year pays an income tax rate of 5.75 percent – which means millionaires, or even billionaires, can be in the same tax bracket as someone working full-time and making just above the minimum wage. Perriello is outlining a new tax bracket structure for Virginians making more than $500,000 a year – a plan that would only affect the top 0.79 percent of Virginia income-earners – while closing wasteful spending loopholes in Virginia’s tax code that allow the wealthy to avoid paying taxes on high-end services like limousine rides, golf courses, and lobbying. More than 99 percent of Virginians would see no change to their income tax rate.

“It is unfair and anti-growth that a Virginian making $18,000 a year pays the same income tax rate as someone making $18,000,000. We can make our tax code fairer while giving the middle class a tax cut and generating revenues to fund key priorities for working families,” Perriello added. “For years, we have been told that cutting taxes for those at the very top will trickle down to the rest of us; but the evidence is clear: growth is driven from the middle class out. I am proposing an aggressive new growth strategy of investing in Virginia’s workers, students and families to raise incomes and boost our economy.”

Perriello’s proposal costs less than Gillespie’s $1.3 billion tax cut, and key components include:

  • Gradually raising income tax rates 1 percentage point on those making more than $500,000 a year and 1.5 percentage points on those making more than $1,000,000 a year — meaning more than 99 percent of Virginians will see no change to their income tax rate.
  • Cutting taxes for middle class families through a $500 refundable child care tax credit.
  • Reducing gender inequality in the tax code, including by ending the “Tampon Tax” and making the Earned Income Tax Credit refundable.
  • Ending special exemptions that largely benefit the wealthy by removing carveouts for high-end services like country clubs, limousines, or lobbying.
  • Closing the corporate “reporting” loophole that allows large corporations to shift profits to low- or no-tax states to avoid paying their fair share.
  • Creating a minimum tax floor for the most profitable big companies so they don’t game the system to avoid taxes altogether.
  • Cutting wasteful spending, tax credits and cash grants, such as reforming state lottery spending and ending pension spiking by elected officials, among other provisions.

Perriello’s full tax reform proposal can be viewed here.

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