Bacon's Rebellion

Democracy Thrives in Sunlight

Virginia is for Lovers of Tax Cuts

—

by

James A. Bacon
in ,

by John Sims

After years of sluggish post-recession growth, our state’s recent history shows that Virginia is for lovers of pro-growth policies—at the foundation of which is the Tax Cuts and Jobs Act.

Efforts to pursue these pro-growth policies have led to a red-hot economy. According to the latest report from the Bureau of Labor Statistics, the nationwide unemployment rate dropped to the lowest level in 49 years: 3.7 percent. For Virginia, the rate is even lower, at 3 percent.

Moreover, job creation is competing with wage growth in a race to the top. Wages are growing at their fastest rate in a decade, and Virginians from Fairfax to Halifax are feeling the love. From the first quarter of 2017 to 2018, 11 of the 12 largest counties in Virginia saw increased wages, while Richmond’s average wage growth was among the top performing cities in the country.

These vibrant economic indicators are just the beginning. Projections show that over a four year period, the 2017 Tax Cuts and Jobs Act will be credited for creating almost 25,000 jobs in Virginia, while the average Virginia worker will realize a take-home pay increase of almost $25,000 over the next 10 years.

Recent polling conducted by the Job Creators Network and ScottRasmussen.com shows that Americans, regardless of political persuasion, are generally supportive of tax cuts and other less restrictive fiscal policies. Sixty-three percent of Democrats, 84 percent of Republicans, and nearly three out of every four independents support free markets and individual liberty.

Embracing individual freedom helps create a level playing field between Wall Street and Main Street. Virginia is home to over 700,000 small businesses, which employ almost half the state’s workforce. By cutting red tape and supporting job creation, tax cuts keep hard-earned revenues in the communities that created them.

Conversely, tax hikes allow for the federal government to expand, which in turn causes bureaucracy and bloat. Only 27 percent of all Americans want a larger role for the federal government. Even Democratic Governor Terry McAuliffe has admitted that Virginia needed to diversify its economic portfolio to decrease our reliance on the federal government, and has credited lower tax rates for attracting businesses.

Congress is working hard to lock in long-term economic growth. Last month the House passed what’s been dubbed “Tax Cuts 2.0” which would make the individual tax cuts (set to expire in 2025) permanent, and would expand tax breaks for start-ups.

These savings give folks freedom to choose how to create a better future for themselves and their families. The formula is simple: whatever it is you do, work hard, and you’ll be rewarded. That’s it. It was always your money; use it as you see fit.

Virginia is an incredibly diverse state, with diverse needs. Whether you’re a veteran in Hampton Roads, a doctor in Richmond, or a farmer in Roanoke, pro-growth policies will let you decide how best to spend your money.

John Sims is the owner of LeafSpring School which is based in Richmond, Virginia.

Share this article

ADVERTISEMENT

(comments below)

ADVERTISEMENT

(comments below)

Comments

8 responses to “Virginia is for Lovers of Tax Cuts”

  1. James A. Bacon Avatar
    James A. Bacon

    I have fought for lower taxes — and against tax increases — all my life. I like keeping my money instead of giving it to Uncle Sam for often-dubious purposes. And there’s no doubt that the Tax Cuts and Jobs Act has stimulated economic growth. But I am alarmed at the rapidly increasing deficit and national debt. (See my previous post.) Sooner or later, we will have to pay the piper.

    My concern is that everything will come crashing down at once — not only plunging the U.S. into an economic crisis but a social, political and constitutional crisis. When the federal government breaks the social contract forged over the past 60 years and can no longer maintain the welfare state, there will be hell to pay. If people are pissed off now, just wait until Uncle Sam starts curtailing Social Security, Medicare, Medicaid, defense, and every non-essential domestic spending program in the government.

    So, John, enjoy the tax cuts and the prosperity they engender while they last.

  2. TBill Avatar
    TBill

    I only regret my consulting work days are mostly behind me now, thus I cannot take advantage. Previously I was upset how much Federal tax bite I had for self-employment income in the range say $125K: you had Social Security about 17%, Fed taxes 25%, state taxes 6%…you were in the hole 50% before you even got the pay check over to the bank.

    The new Fed tax rule addressed my issue above, with the business tax deduction.

  3. LarrytheG Avatar
    LarrytheG

    It’s not magic. If you cut taxes and don’t cut spending – then we’re not paying
    for the salaries of government (or govt contractors or govt-paid services – like Medicare) and they continue to work, get salaries and so we REALLY ARE “creating” more jobs with the increase salaries of those who got the tax cuts.

    What they’re doing is almost precisely the same thing as “stimulus” which is designed to jump start a depressed economy – be adding to the deficit – and the theory was that when the economy recovered – you’d pay back the deficit.

    So what we’re doing now is cutting taxes and phase two will be “starving the beast” spending cuts which are problematical. The biggest Federal Govt employer by far is DOD civilian/contractor and law enforcement agencies like FBI/CIA/BATF/ICE/etc . “Cutting” Medicare means essentially cutting reimbursements to Doctors and/or increase the $134 monthly premium.

    I love tax cuts but the fundamental truth is that 90% of taxes pay salaries and when we cut taxes – we OUGHT to be cutting govt jobs – and if we actually do that – then whatever we gain in terms of private sector employment will be offset by the loss of government employment.

    We can make an argument for productivity perhaps but its still mostly trading one private sector job for one govt job.

  4. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    Meanwhile, Speaker Cox of the General Assembly reports :

    “For several years now, we’ve been among the slower growing states in the country. And what we hear from Virginia businesses, large and small, is this:

    The main reasons their business is not growing is they can’t find the qualified workers.

    – There’s also the disastrous brain drain we’re experiencing. Many of the young people we’ve educated are not finding good jobs here, so they’re leaving for better opportunities elsewhere.

    Think about it: Something that never happened before in Virginia (at least not since they started collecting the data) now has happened here for 4 straight years: a net loss of talent to other states.

    This disconnect between talent development and job opportunities has a very negative impact on our state and its people. And it is not just the impact on businesses and economic growth—it’s also the human cost:

    – Think of the wasted potential of young people, especially those who don’t come from traditional college-educated families, and who either can‘t afford the education or can’t find the jobs to match their skills.

    – Think of the impact on families when a son or daughter has to move away—not just from the country to the city, but from Virginia to a distant state—in order to get a good job …”

    For complete text of the Speakers speech see:

    http://www.kirkcox.com/news/speaker-kirk-cox-addresses-virginia-business-leaders-on-talent-affordability-and-performance-based-accountability-in-higher-education/

  5. LarrytheG Avatar
    LarrytheG

    I don’t have a problem with Speaker Cox though I’d not be surprised if his days as Majority speaker might be tenuous.

    I also don’t have a problem with UVA’s Ryan or all the other players in the issue.

    But I DO think the idea that 4yr on-campus higher Ed is the Middle Class Creme de la Creme that must be preserved at any cost – is more anachronism than contemporary.

    Northam and others have said that “higher ed” is more than just a 4yr degree from a University in the 21st century and I do believe we must confront this reality.

    BECAUSE – getting back to the budget – we need to recognize that ANY taxpayer is better than any entitlement taker and while we do need degreed “professionals” in the economy – we need other workers with technical educations to have a diverse and robust economy that grows.

    Let the University Higher Ed do their thing including dealing with their critics and would-be reformers but also recognize in the 21st century that the workforce is far more than just 4-year degree workers.

  6. TooManyTaxes Avatar
    TooManyTaxes

    Points about excessive government spending from whatever party are well taken.

    But something has energized the American economy. Growth for 2016, the last year of the Obama presidency, was 1.6% – very anemic. It’s been slowing but is still better than 2016. Non-government employment is up considerably including employment for blacks and Hispanics. And if we were to stop importing illegal labor, wages would start rising as well. Not that you’d read this in the publications from the Ministry of Enlightenment and Propaganda.

    1. LarrytheG Avatar
      LarrytheG

      re: “But something has energized the American economy”

      Tax cuts did – no question about it. But how were those tax cuts funded if they did not cut spending?

      Obama actually proposed something just like that – he wanted to cut taxes on people as “stimulus” but the GOP voted against it because they said it would increase the deficit.

      That’s exactly what the current tax cut is doing.

      It’s not magical. It’s simple. If you cut taxes – and do not cut spending – it increases the deficit.

      We are goosing our economy by selling more treasury notes to compensate
      from the taxes we’re not collecting.

      Used to be Conservatives and the GOP said this was fiscally irresponsible because it added to the deficit/debt. Now they say more blacks are employed than ever – AND to be fair – the more folks who are employed -the less that are receiving entitlements!

      1. TooManyTaxes Avatar
        TooManyTaxes

        Larry – I fully agree with you that federal spending must be reigned in. I don’t think that either Party has the intention or will to do that. And I don’t have a solution, except perhaps amending the constitution to require a supermajority to approve a budget. I think California and some other states have this restriction. In most situations, neither Party is likely to have a supermajority so compromise would be necessary. And I think the need to compromise might force both sides to give up some of their favorite spending programs and amounts.

        At the same time, we need tax changes, IMO. We have too many nonprofits with too much money involved in public policy. I think it’s fine for nonprofits to provide direct services or fund education, etc.. But why do we have tax-exempt think tanks and groups that lobby, without paying taxes. One of the very few things Bill Clinton did that I agreed with was making expenses for federal and state lobbying nondeductible for FIT purposes. This should extend to any nonprofit that pays people, in-house or outside consultant, to lobby. If you spend money trying to influence the government, you lose your tax exemption for your nonprofit and any affiliates. This would prevent a nonprofit engaged in typical charity work from establishing an affiliate that lobbies.

        My proposal would still allow nonprofits to use volunteers to contact Congress or the state legislature. This would protect community groups.

        And, as I’ve written many times, we need to force businesses that use illegal workers to pay higher taxes. If a company doesn’t have E-Verify results for all of its employees, save some minor number just because things fall through the cracks accidentally, the business would be limited in the deduction for employee compensation to one-half of the amount paid. Businesses would have a choice, follow our immigration laws and get full deductions or ignore them and pay a much bigger FIT bill.

        If these tax changes were proposed I expect the Political Elite and the MSM would oppose them. It’s easier to insist ordinary people pay more.

Leave a Reply

Read More