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.
To help celebrate twenty years of service to advocating for abused and neglected children in Henrico County, Henrico Court Appointed Special Advocates, Inc. (CASA) will host an evening with bestselling author K.L. Randis on Tuesday, Aug. 26, from 5:30 p.m. to 7:30 p.m. at Belmont Recreation Center in Lakeside.
Randis is best known for her bestselling novel, Spilled Milk, which tells her painful – but ultimately triumphant – personal story of abuse and of child abuse prevention. The book is her first novel.
The Ambassador of the Philippines to the United States Jose L. Cuisia, Jr. attended the Ninth Annual Filipino Festival at Our Lady of Lourdes Church earlier this month. Cuisia (pictured above with festival performers) was welcomed by County Manager John Vithoulkas and Brookland District Supervisor Dick Glover (below) at the church, which is located in Lakeside.
While enjoying some of the cultural performances at the festival, the ambassador and his wife had a private lunch with Vithoulkas, Glover, Eldon Burton (an outreach representative from U.S. Senator Mark R. Warner’s Office) and Father James Begley, the pastor of OLL. > Read more.
Hundreds of spectators filled the banks of the James River to watch two dozen teams of competitors in the Walgreen’s Richmond International Dragon Boat Festival at Rocketts Landing Aug. 2. The event included a number of races, as well as several cultural performances. The sport is billed as the fastest growing water sport in the world.(Photo by Roger Walk for the Henrico Citizen) > Read more.
‘Fire and Rescue’ proves too predictable, boring
Planes: Fire and Rescue opens with a dedication to the hero firefighters of the world. It’s an admirable notion, and it makes sense, given that this is a film about planes that fight fires.
But here it might be a little out of place, as Planes: Fire and Rescue has a few things on its mind besides supporting the men and women who routinely throw themselves into burning buildings.
Like money. Lots and lots of money – into the 11-figures-and-counting range. In case you weren’t aware, 2006’s Cars was the biggest moneymaker Disney had in decades – not because of how much green the film printed at the box office, but because a combination of toys, games and snack foods stamped with the Cars seal of approval routinely pulls in tens of billions of dollars per year. > Read more.
This weekend in Henrico, you can learn about fall herbs or mad science. Enjoy some laughs from West End Comedy or Three-Penny Theatre’s production of “The Rivah Home Companion.” For music lovers, Jennifer Nettles is in concert tonight and the fifth annual GWAR-B-Q takes place tomorrow at Hadad’s Lake. For all our top picks this weekend, click here! > Read more.
Find out how your favorite dining establishments fared during their most recent inspections by the Virginia Department of Health. > Read more.
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CalendarHear from “Sciencetellers” at 3:30 p.m. at Varina Library and at 7 p.m. at Twin Hickory Library. Sciencetellers combine storytelling, comedy and exciting science experiments into a dynamic and highly… Full text