Study: Cut Va. taxes

The rich may be rich and the poor may be poor, but a nonpartisan think tank says there’s a way to eliminate state income taxes on the poorest Virginians while providing as much as a 10 percent tax cut to everyone else.

The Thomas Jefferson Institute for Public Policy on Friday unveiled a plan to restructure Virginia’s tax system – which the group says could generate substantial economic growth.

The nonprofit group’s report recommends slashing certain business taxes and income taxes while expanding the sales tax to currently untaxed services.

“By expanding the current sales tax to most of the industries that do not currently collect it from their end-user individuals, every individual taxpayer can be substantially helped,” said Michael Thompson, president of the Thomas Jefferson Institute.

“The competitive business environment in Virginia can be enhanced, and our state and local governments would not lose a penny.”

The institute, based in Springfield, advocates a philosophy of “limited government, free enterprise and individual responsibility.” Its new economic study, “Tax Restructuring in Virginia: Revenue Neutral Path for Improving Virginia’s Economy,” was prepared by Chmura Economics and Analytics, a Richmond consulting firm.

“Basically, this is a collaborative team effort,” Xiaobing Shuai, Chmura’s senior economist, told reporters during a telephone news conference. “What Chmura Economics did in this study is go through probably 100-plus sales tax exemptions, and then try to estimate the value of those sales tax exemptions.”

A computer model developed by economists at the Beacon Hill Institute, an independent public policy foundation at Suffolk University in Boston, tested various scenarios for overhauling Virginia’s tax system.

Nine economic scenarios were put through the tax model.

“We took Chmura’s numbers, which is a static model that doesn't account for the positive economic benefits of the tax restructuring, and put them in our dynamic model and ran the nine scenarios that you see in the study,” said Paul Bachman, director of research at Beacon Hill Institute.

“The model resolves for new values, and we get new values for jobs, investment and disposable income. What we are doing, in economic terms, is shifting some of the tax burden away from businesses and households in some scenarios and putting it onto an untaxed service sector.”

Virginia currently exempts almost all services, from haircuts to auto repair, from sales taxes.

A major goal of the Thomas Jefferson Institute’s plan is to eliminate three taxes that business owners consider onerous and an impediment to creating jobs:

• The Business Professional Occupation Licensing tax, which is levied on gross receipts.

• The Machine and Tool tax, which is levied on equipment a business buys.

• The Merchants Capital tax, which is levied on a business’ inventory.

Virginia businesses must pay those taxes regardless of whether they make a profit. Thompson called them “job-destroying taxes,” saying they discourage businesses from expanding and hiring more employees.

The Thomas Jefferson Institute initiated its study to see if it was possible to eliminate those taxes and restructure the state’s tax system in a revenue-neutral manner that could improve Virginia’s economy.

The nine scenarios outlined in the study range from a relatively small impact to a radical overhaul.

The first scenario, for example, would simply eliminate the BPOL, M&T and Merchants Capital taxes and make up the revenue by extending the sales tax to certain currently untaxed services. The study said this would create 900 private-sector jobs.

Other scenarios suggested not only eliminating the three business taxes but also eliminating the lowest income tax bracket and cutting other personal income tax rates. Under these scenarios, the sales tax would be expanded to more services. In some scenarios, the sales tax would be cut, too. (It’s currently 4 percent for the state and 1 percent for local government.)

The scenarios did not specify exactly what types of services would be taxed. The study acknowledged that taxing medical bills, health insurance premiums, private school tuition and financial fees probably wouldn’t fly.

The more extensive scenarios would create at least 40,000 jobs, the study said.
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Earnhardt gives Redskins a ride


Dale Earnhardt Jr., driver of the Hendrick Motorsports No. 88, stopped at Richmond Raceway Aug. 8 in advance of the track’s NASCAR weekend in September. He was joined by five players from the Washington Redskins, who were in town for the team's training camp, which concluded Aug. 14. The day in Richmond gave Earnhardt and the Redskins players an opportunity to see how the athletes compete in their respective sports. > Read more.

READ Center a finalist for $25k grant


The READ Center is a top-200 cause finalist in State Farm’s Neighborhood Assist program, making it eligible to earn a $25,000 grant to support adult literacy in the Richmond region. The 40 organizations from across the nation with the most votes will win grants.

The READ Center, based in Henrico, provides classroom instruction and one-to-one tutoring to adults with very low literacy. > Read more.

Henrico County property transactions, Aug. 1-6


A sample of property transactions during this period appear below:

1847 New Market Road – $137,000, 1,659 SF (built in 1935), from Philip J. Whiteway, III and Donna H. Whiteway et. al to David T. and Katherine W. Benckert.
6304 Trailing Ridge Court – $165,000, 1,246 SF (built in 1999), from Carol A. Allen to Sandra R. Jefferson.
1722 Devers Road – $169,950, 816 SF (built in 1949), from Heather K. Brunner to Kasey A. Sheridan and Jason Talbot.
3201 Purvis Road – $175,000, 2,051 SF (built in 1997), from Geneva Moore LLC to Jessica I. Bolling. > Read more.

Glen Allen wins 2 of first 3 games at 14U Babe Ruth World Series


The host Glen Allen 14-year-old all-star baseball team won two of its first three games in pool play at the 14-year-old Babe Ruth World Series, which is it hosting at RF&P Stadium in Glen Allen. The team beat the Midwest Plains champions, 9-4, in its first game Aug. 10, then topped the Southwest champions, 7-3, Aug. 11 before dropping a 5-4 result to the Ohio Valley champions. > Read more.

Filipino Festival draws thousands


Thousands of attendees visited the annual Filipino Festival at Our Lady of Lourdes Church in Lakeside Aug. 11-12, enjoying native foods, entertainment, clothing and commemorative items and much more. > Read more.

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Innsbrook After Hours continues its 32nd year with Brothers Osborne. The Osborne siblings, TJ and John, grew up in Deale, Md., playing everything from traditional country music to rock and roll. Their major-label debut is titled “Pawn Shop.” Gates open at 5 p.m. Show begins at 6 p.m. Tickets start at $20. Net proceeds from the concert series benefit the American Constitution Spirit Foundation and the Innsbrook Foundation. Rain or shine. For tickets and more information, call the IAH Hotline at 423-1779 or visit http://www.innsbrookafterhours.com. Full text

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