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Governor pitches tax plan to help low-income families, Republicans fear impact on middle class

RICHMOND, Va. -- Governor Ralph Northam (D - Virginia) has presented his plan to give low-income Virginia families a greater tax break. His plan would make the earned income tax credit fully refundable.

"It’s taxpayer money and we have a surplus of over $500 million," the governor told state lawmakers Friday morning. "I think it’s only fair to give some back to some of the hardest working Virginians."

The surplus is a result of the federal tax reform legislation President Trump signed last year.

If passed, his plan would impact about 600,000 Virginia families whose household income is $50,000 or less.

"If a family qualifies for a $1,000 tax credit, but they only owe $800 in taxes, Virginia currently keep that additional $200," the governor explained, "[we want to make] the credit refundable giving that $200 back so people get to keep more of their hard-earned money.”

While Governor Northam said he believed his plan would help level the playing field, some Republican leaders expressed concern over the impact it might have on middle class families.

"I think it’s really a tax increase on the middle class and especially 640,000 people that would itemize," House Speaker Del. Kirk Cox (R - Chesterfield) said. "A lot of you know that in Virginia with federal reduction doubling."

Senate Majority Leader Tommy Norment (R - New Kent County) said he believed state leaders must figure out the consequences of the governor's plan.

"We’ve had a number of false starts over many years on tax reform in Virginia and we really have not been successful in doing that," he said. "I think looking at the itemization is something worth taking a look at it because it would be more broader based and would not be more directed towards lower income people. I’m not suggesting they don’t deserve assistance, but it would be on a broader spectrum that would affect both middle income people as well."

Governor Northam’s proposal would require a change to state tax code, which would require new legislation passed in the 2019 General assembly session.

Republicans currently hold a slim margin in both the State House and Senate.