SB1405 would conform Virginia to the Internal Revenue Code (“IRC”) on a rolling basis. This would allow Virginia to conform to federal tax changes to the IRC as soon as they are enacted by Congress, and it would also allow Virginia to conform to the Inflation Reduction Act (“IRA”) and the Consolidated Appropriations Act of 2023 (“CAA”).
The Virginia State Senate passed SB1405 on April 12, 2023 by a vote of 40 to 0. We have assigned pluses to the nays because it is irresponsible to legally bind one’s state to changes in federal law, especially regarding tax policy. While it might be convenient in the short-run, such a decision could potentially complicate future attempts to nullify federal tax laws, particularly if they become excessively draconian. The Constitution establishes a system of checks and balances, which safeguards state sovereignty by preventing the federal government from exceeding its authority and encroaching upon powers reserved for the states. It is best to embrace federalism and keep states and the federal government as separate as possible.