Terry McAuliffe’s campaign for Virginia governor is pushing the notion that Attorney General Ken Cuccinelli II’s plan to cut state taxes would eventually lead to increases in local property taxes, a claim the Republican’s side says uses “faulty logic” and one that relies on a series of big assumptions about the effects of the proposal.
McAuliffe (D) launched Web ads this week with a “property tax calculator tool” that purports to show Virginians how much their property taxes would rise under Cuccinelli’s tax plan. Cuccinelli has called for lowering the individual income tax rate from 5.75 percent to 5 percent over four years, and the business income tax from 6 percent to 4 percent, at an estimated yearly cost of $1.4 billion.
Cuccinelli also has proposed appointing a commission that would be tasked with ranking every credit and loophole in the Virginia tax code based on effectiveness, and he would then ask the General Assembly to eliminate the least effective among them. He has repeatedly declined to name specific credits he would eliminate, saying he would leave that to the commission and the legislature.
McAuliffe’s calculator makes a series of assumptions about Cuccinelli’s tax plan: It assumes that he won’t actually eliminate a single tax credit or loophole. It assumes he won’t offset any of the revenue loss with spending cuts — Cuccinelli has said he would seek to hold spending growth to the rate of inflation plus population growth. And it assumes localities that are deprived of state money will make up for it entirely by raising property taxes.
“Because he has offered no concrete proposals on how he will pay for the $1.4 billion in lost revenue the state would incur as a result of his plan, localities could be forced to raise property taxes and place greater burdens on Virginia’s middle class,” McAuliffe spokesman Josh Schwerin said in a release announcing the ad.
Cuccinelli spokeswoman Anna Nix countered that “the only thing Terry McAuliffe should be calculating is how much he is going to raise taxes on Virginians, how much his war on coal will force electricity rates to skyrocket and how much his support for Obamacare will raise premiums for Virginia families. Ken Cuccinelli has made it very clear that his economic policy will be revenue neutral and localities will continue to receive full funding through a funding mechanism in the Tax Department.”
To support its theory, the McAuliffe campaign cites a May Washington Post editorial that said “leaders of some of the state’s largest jurisdictions saw Mr. Cuccinelli’s blueprint as a recipe for higher property taxes, which are imposed at the local level.” And it cites a quote making a similar point from Rep. Gerald Connolly (D-Va.), a co-chair of McAuliffe’s campaign.
But Cuccinelli said at the candidates’ July debate that he would not cut taxes without finding offsets, and accused McAuliffe of making a series of campaign promises without explaining how he’d fund them.
“You know if I don’t succeed in reining in government growth and if I don’t succeed in getting the exemptions and loopholes identified to pay for the tax cuts, we don’t get the tax cuts,” Cuccinelli said. “This isn’t Washington, Terry. You know, we have to pay for the things that we want to put in the budget.”