Time for serious tax restructuring in VirginiaMore News

With the issue of transportation funding settled, it’s time for serious tax reform that can grow our economy, provide more spending money for Virginians, and relieve businesses of some truly job-killing taxes. The results of tax reform can offset the job losses we face from cuts in the federal budget. Tax reform can be revenue neutral fashion and have dramatic impact on Virginia’s economy.

The Thomas Jefferson Institute for Public Policy worked for two years on a major new Tax Restructuring proposal and the General Assembly has now taken notice and is seriously looking at this idea. Over the next few months, hearings will be held by the Manufacturing Development Commission and the Small Business Commission — including the Virginia Association of Counties and the Virginia Municipal League — to review our study (see here) and its potential to help the state’s economy. The goal is to have a serious tax reform proposal crafted by the end of the year.

The study demonstrates that we can enjoy a major tax restructuring that will create an overall net plus on job creation, cash in our pockets, and business investment.

The Jefferson Institute study found that the unpopular gross receipts tax on business (known as the Business Professional Occupation Licensing or BPOL), the Machine and Tool Tax and the Merchants Capital Tax can be eliminated, the local governments that collect these taxes can be “made whole” through the broadening of the sales tax to industries currently exempt, and personal income tax reductions can be achieved. Indeed, in one scenario the bottom two tax brackets are totally eliminated, while everyone else receives a tax cut. In another, everyone receives a 17 percent cut in state income taxes. Other scenarios show the economic impact of keeping certain services sales tax exempt such as private schools and colleges.

The study runs several ideas through our dynamic tax model to see what the results would be on the overall economy and found that one had a definite economic advantage over the others. This scenario shows only health care services remaining sales tax exempt.

This scenario eliminates the state’s bottom two personal income tax brackets, reduces the remaining two brackets by 9 percent and 13 percent, and eliminates the three job killing taxes mentioned above while making whole the cities and counties that now collect those taxes. This is paid for by broadening the sales tax to those segments of our economy that have been exempt in the past, except health care services.

The results are dramatic over the next five years: 79,000 new jobs created, $287 million in new business investments, real disposable income (dollars in your pockets) will increase by $2.85 billion and the state’s gross domestic product will grow by $8.4 billion.

Other scenarios outlined in this study show the economic effect of “adding back in” certain industries — allowing them to remain sales tax exempt — such as private schools and colleges. The overall economic impact is somewhat lower, but still quite significant. The Thomas Jefferson Institute study, Tax Restructuring in Virginia: Revenue Neutral Path for Improving Virginia’s Economy, was researched by Chmura Economics and Analytics of Richmond and the computer model was built to test various scenarios for this tax restructuring concept by the economists at the Beacon Hill Institute (BHI) at Suffolk University in Boston. Tax models by BHI have been used in the past by the Jefferson Institute with positive feedback from legislators and executive branch leaders of both political parties.

Policy makers now have a clear roadmap to tax restructuring. They can use our well-respected economic model to see the impact of exempting sales taxes from various combinations of industries.

By expanding the current sales tax to industries that do not now collect it from individual customers, every individual taxpayer in Virginia can be substantially helped through income tax cuts, more people hired, the competitive business environment for Virginia enhanced and our state and local governments will not lose a penny.

We now have the facts in this Jefferson Institute study and its tax model to dramatically improve Virginia’s economy while giving everyone a substantial reduction in their state income taxes.

I completely agree Mr. Thompson.

Another fantasy proposal by yet another Koch-ALEC-SPN affiliated 'independent' right wing think tank

Entirely regressive - pushes taxes off of businesses onto sales taxes and increases state taxes for the poorest

i have a better idea. take away tax exempt status for churches. problem solved.

Curmudgeon Wrote:
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> i have a better idea. take away tax exempt status
> for churches. problem solved.


+1000

and make sure that large companies actually pay their taxes in the US