ATR Supports Legislation to Reduce Virginia's Corporate Income Tax
With the legislature back in session in Richmond, Delegate Ben Cline has introduced legislation (HB 1243) that would reduce the corporate income tax from 6% to 5%, effective Jan 1, 2015. Reducing the corporate income tax is not, in fact, a handout to greedy corporate fat cats, as those on the left often try to paint such efforts. After all, corporations are composed of people: those who the company employs, and those who are shareholders (401 K owners, IRA owners, pensioners, etc.) who own the company. It is these individuals who pay the corporate income tax. In fact, economists estimate that 60 cents out of every $1 taken for the corporate income tax is paid for in the form of lower wages, while the other 40 cents out of the dollar is paid for by lower returns to shareholders. A reduction in the state’s corporate income tax would mean more take home pay for workers and larger returns for shareholders.
Currently, Virginia holds a ranking of 26th in the Tax Foundation’s “Business Tax Climate Index”. A reduction in the corporate income tax would surely improve this score, and thus create a better climate for businesses to grow and create jobs. Furthermore, cutting the corporate income tax in Virginia is becoming increasingly important in the context of competition amongst the states. This past spring, Republicans in North Carolina General Assembly passed a historic tax reform package which includes a cut in the state’s corporate tax rate. The rate will be lowered to 5% by 2015, and if certain revenue targets are met, the rate could go as low as 3% by 2017. Thus, it is even more important that elected officials in Virginia work to cut the corporate income tax, so that the state remains an attractive place to start, grow, or relocate a business. HB 1243 is a simple and effective place to start and ATR urges all Virginia legislators to support it.