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Posted at 12:15 PM ET, 05/08/2013

Cuccinelli’s ho-hum tax plan


Republican gubernatorial hopeful Kenneth Cuccinelli has come out with his first platform issue – lowering taxes.

Under Cuccinelli’s plan, tax cuts would total $1.4 billion. That’s certainly joyful noise to Virginia’s perpetual tax-cutting crowd. But the chops are actually quite modest, and Cuccinelli hasn’t really identified how he would make up for the lost revenue.


Ken Cuccinelli outlines his Economic Growth and Virginia Jobs Plan in Richmond this week (P. Kevin Morley - AP)
Take corporate income taxes. Cuccinelli wants to drop them from 6 to 4 percent over four years. Sounds good, but maybe a little underwhelming after one looks at other states. At 6 percent, Virginia was in the middling range, like that of Michigan or Oklahoma, but nowhere close to some Northeastern states that charge 9 or more percent.

Going to 4 percent takes Virginia to the level of Mississippi. But a number of states have zero corporate income tax, including South Dakota, Texas and Wyoming.

Individual income taxes, under the attorney general’s plan, would drop from 5.75 percent to 5 percent over four years. Once again, nice, but no big cigar.

Cuccinelli has also pitched getting rid of several obscure taxes, such as those on machinery. But Democrat Terry McAuliffe is no fan of these taxes, either, and just about every tax study recommends dropping these oddities. They have been around for some years, and no one seems to remember why.

Also, playing the populist card, Cuccinelli says he wants to avoid big money incentives to attract major national corporations. A few examples that may come to mind are Northrop Grumman, Amazon and MeadWestvaco, which all got plenty of money and other goodies from Govs. Robert F. McDonnell, Tim Kaine and Mark Warner to land in Virginia.

Cuccinelli says he wants more of a level playing field whereby small businesses are helped, too. Interesting point. McDonnell got into some hot water for snagging a couple of distribution centers from Amazon with $3.5 million from the Governor’s Opportunity Fund and $850,000 from a tobacco lawsuit settlement fund.

It turned out that the Web-based retailer wouldn’t have to pay Virginia sales taxes. That really got the small retailers in the state riled up because it automatically gave Amazon a 5 percent or so price advantage. McDonnell and the General Assembly later took corrective action. Small businesses rarely get that kind of state money help to set up shop.

So, while it is nice that Cuccinelli is thinking seriously about issues other than his trademark wedge social ones, and is taking time off from the gift-giving and recusal problems, what he’s come up with is a bit ho-hum.

Peter Galuszka blogs at Bacon’s Rebellion. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.

By  |  12:15 PM ET, 05/08/2013

 
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