by James A. Bacon
In a press conference this morning at a Richmond SweetFrog restaurant, Attorney General Ken Cuccinelli laid out the philosophical principle that would guide his approach to economic development if he were elected governor: Create a level playing field for all businesses rather than incentives for a lucky few.
He would close tax loopholes carved out for special interests, restructure the tax code to eliminate local business taxes and reduce the top corporate income tax rate from 6% to 4%, and he would pare way back on grants and tax breaks used as economic incentives. “Relative to what you’ve seen in the past, I would take a much harder view” of incentives, he said.
Cuccinelli said he would follow the example of Governor Bob McDonnell in making job creation his top priority. But he has no intention of playing a wheeler-dealer in seeking big corporate investments. Instead, he wants to create a tax climate that is more attractive to job creators by lowering taxes for every Virginia business.
The presumed Republican gubernatorial nominee was introduced by Vance Spilman, chief operating officer of Sweet Frogs, a chain of yogurt shops that opened in 2009, now has 250 locations around the country and is preparing to expand overseas. Sweet Frogs is profitable, Spilman said, and it is reinvesting its profits to grow the enterprise, which currently provides jobs for about 400 Virginians. Reducing the corporate income tax from 6% to 4% would allow the company to grow faster, he said.
Cuccinelli’s plan contained only a few specifics. He would:
- Reduce the top individual income tax rate from 5.75% to 5% over four years beginning in 2014.
- Establish a Small Business Tax Relief Commission with the goal of reducing the state corporate income tax and eliminating or reducing local Business Professional Occupational License (BPOL), Machine and Tool (M&T), and Merchants Capital (MC) taxes.
- Pay for those tax reductions by eliminating outdated tax exemptions and loopholes “that promote crony capitalism” and by limiting the growth of General Fund spending to the rate of inflation plus population growth.
If his revenue cap had applied to the current fiscal year, in which spending increased 5.8% and inflation + population growth increased 3.3%, his formula would have saved $530 million.
Cuccinelli did not say specifically which loopholes he would cut, although he did endorse a proposal outlined by Del. David J. Toscano, D-Charlottesville, and Del. R. Lee Ware, R-Chesterfield, that would have closed about $75 million in loopholes. He also said that service-sector exemptions for the sales tax would be “on the table,” although he ruled out extending the sales tax to education or health care.
Curtailing incentives, broadening the tax base and lowering tax rates would be “fairer” and create opportunity for all business, he said.
The candidate also highlighted the “unique window of opportunity” presented by the expansion of the Panama Canal and Hampton Roads’ temporary status as the only East Coast port with channels deep enough to accommodate fully loaded post-Panamax vessels. The next governor, he said, needs to maximize that opportunity, which is expected to last only three or four years, by participating actively in state marketing efforts to attract more port cargo and more distribution centers.
Leave a Reply
You must be logged in to post a comment.