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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The event, one of three walks the association will hold in its service area this year (the Middle Peninsula-Northern Neck walk was held Oct. 7 and the Fredericksburg walk Oct. 14) raises money to help the association fight the disease, which affects more than 26,000 people in the metro Richmond region. > Read more.

Fairfield meeting Oct. 25 to focus on cybersecurity


Henrico County Board of Supervisors Vice Chairman and Fairfield District Supervisor Frank J. Thornton will hold a constituent meeting Wednesday, Oct. 25 to discuss cybersecurity.

Thornton also has invited candidates who will be seeking election to local offices on Tuesday, Nov. 7 to introduce themselves. > Read more.

Music makers


Members of the Glen Allen High School Marching Band perform at Glen Allen High School Oct. 16 as part of the annual Henrico County Public Schools Band Showcase. > Read more.

McShin Academy expanding to St. Joseph’s Villa


Two Lakeside-area nonprofits are partnering to create what is believed to be the first recovery high school in Virginia.

The McShin Academy will be a joint effort of the McShin Foundation (a recovery community organization based at Hatcher Memorial Baptist Church in Lakeside) and St. Joseph's Villa (a 183-year-old nonprofit on Brook Road that provides a variety of services for children with special needs). > Read more.

Reynolds CC dedicates student center


Reynolds Community College recently celebrated the dedication of the Jerry and Mary Owen Student Center, named for longtime supporters of the college who have made numerous investments in it.

Jerry Owen served on the Reynolds College Board from 1984 to 1988, and he and his wife support the college’s scholarship fund and created an endowment for the Reynolds Middle College, which helps students earn a high school equivalency and transition into a degree or workforce credential program. > Read more.

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October 2017
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The fourth annual Party on the Avenues will take place from 12 p.m. to 6 p.m. in the West End community of Westhampton (along Libbie Avenue between Patterson and Guthrie Avenues). Enjoy local art, live music featuring Red Neck Pool Party and The Mystic Soul Bubbas, kid’s activities including face painting, bounce houses and a large paint-by-numbers wall, shopping, food, beverages and more. Admission is free. Proceeds benefit Project Local, supporting small, locally operated charitable organizations through fundraising and event proceeds. Full text

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