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.
The Richmond West Breakfast Lions Club (based in western Henrico) recently donated 59 backpacks to the Westover Hills Elementary School on Jahnke Road.
Above, club members display some of the backpacks prior to their distribution. > Read more.
Thanks to a first-place win in The American Protege International Vocal Competition 2014, Glen Allen High School student Matija Tomas will travel to New York City to perform at Carnegie Hall in December.
At the first-place winners recital in Weill Hall, Matija will perform Giacomo Puccini’s opera aria, “Chi il bel sogna di doretta.” She will perform with other vocalists from around the world and have the opportunity to win other awards and scholarships.
Locally, Thomas has performed with Richmond’s renowned Glorious Christmas Nights, Christian Youth Theatre, and WEAG’s Urban Gospel Youth Choir. > Read more.
The John Rolfe YMCA and Gayton Baptist Church have partnered in an effort to bring greater health and wellness opportunities to the community.
Through this partnership, the John Rolfe Y will run Youth Winter Sports programs, including basketball and indoor soccer, in Gayton’s newly renovated $5.5 million outreach center that features a new gymnasium, youth and teen space, social space with café, meeting space and full service commercial kitchen. > Read more.
CAT Theatre’s 51st season will open with Sherlock Holmes: The Final Adventure, which will run Oct. 24 through Nov. 8. The play is based on the original 1899 play by William Gillette and Sir Arthur Conan Doyle, and adapted by Steven Dietz, and was the winner of the 2007 Edgar Award for Best Mystery Play.
The story follows Holmes, whose career as the world’s greatest detective seems to have reached its end until he is confronted with a case far too tempting to ignore. When the King of Bohemia faces blackmail by famed opera singer, Irene Adler, Holmes and his companion Dr. Watson find themselves falling into the trap of evil genius Professor Moriarty. > Read more.
Find out how your favorite dining establishments fared during their most recent inspections by the Virginia Department of Health. > Read more.
If you’re in the mood for a little music this weekend, you won’t be disappointed! Pete Peterkin, a finalist on America’s Got Talent, will present a musical tribute to the legendary Ray Charles at CACGA tomorrow. Fans of gospel music can head to Sandston Baptist Church for an Eastern Henrico FISH benefit concert. Richmond native and American Idol Season 5 finalist Elliott Yamin will perform at the Weinstein JCC. For all our top picks this weekend, click here! > Read more.
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