April 6, 2022

Washington Post: Want to really fix Virginia’s standard deduction? Index it.

media mention

On that topic, the Institute on Taxation and Economic Policy wrote:

Any feature of an income tax that is based on a fixed dollar amount will be vulnerable to inflationary effects. In many states, this means that tax breaks designed to provide low-income tax relief — including exemptions, standard deductions, and most tax credits — are worth a little bit less to taxpayers every year. When all these small impacts are added up, the long-term effect can be a substantial “inflationary tax hike” — and one that falls hardest on low- and middle-income taxpayers.

In other words, indexing needs to be on the negotiating table, too. Read more