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Virginia governor proposes tax refund for working families

August 10, 2018

RICHMOND, Va. (AP) — Gov. Ralph Northam on Friday outlined a proposal to use extra state revenue from federal tax cuts to give a tax break to low- and moderate-income families.

Northam said he wants to make the earned-income tax credit fully refundable, which he said could mean a windfall of “several hundred dollars” for up to 400,000 families in Virginia.

Northam outlined his proposal to reporters Friday, ahead of a speech to state legislative committees next week.

Northam said recent changes in federal tax law have so far largely benefited corporations and high-income people.

“There’s an imbalance of who benefits from those,” he said.

The earned-income tax credit benefits low- and moderate-income working parents. It is used to reduce a family’s tax burden, but if the amount owed in taxes is less than the credit, the taxpayer does not receive the difference. Under Northam’s proposal, the credit would be fully refundable.

State Finance Secretary Aubrey Layne said 29 states currently offer earned-income tax credits. He said Virginia is one of five states that do not make the credit fully refundable.

Northam said the proposal would cost the state about $250 million. The move would have to be approved by the General Assembly.

The governor said he also wants to use the extra revenue to invest in workforce training programs, broadband, and education.

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