As governor, Ed Gillespie will cut individual income taxes for all Virginians – leaving nearly $1,300 more in your pocket and creating more than 50,000 new full-time private-sector jobs. The “Cutting Taxes for ALL Virginians” Plan is driven by the need for a tax code that – instead of picking winners and losers – fosters natural, organic economic growth for all Virginians and is oriented toward our modern economy. The plan is responsibly phased-in and fully funded within existing revenue growth to make sure Virginia can keep its commitments to education, health care, transportation, public safety, and other core services.
Virginia families are feeling the squeeze, our approach to economic development is a relic of the past, and Virginia is losing ground to other states. Our economic growth rate has trailed the national average for five straight years. We even fell to the bottom 10 states for economic growth in 2014. Virginia’s antiquated tax code was designed in a bygone era and our income tax rates have never been lowered since they were established in 1972. Our tax climate ranking fell to 33rd in 2017, falling behind neighboring states like North Carolina, Tennessee, and West Virginia. Our business rankings are falling and more people are moving out of Virginia than moving in.
The plan will cut income tax rates for all Virginians by 10 percent over a three-year period. For a family of four, the “Cutting Taxes for ALL Virginians” Plan will mean $1,285 more in your pocket when fully phased in. Economists predict this plan will lead to more than 50,000 new full-time private-sector jobs and more than $300 million in new investment when fully implemented. Because the plan is phased in over time, we can be sure that state government will meet its existing commitments to education, health care, transportation, public safety, and other core services. This responsible plan utilizes 40 percent of projected revenue growth for tax relief, while preserving approximately $2 billion for new spending over the next four years.
The plan also puts Virginia on a path to reform the archaic local business taxes that stifle business formation and hamper job creation. These taxes are vestiges of a prior era when Virginia’s economy was growing by leaps and bounds despite these impediments to growth. Local governments, through no fault of their own, have come to rely on these job-killing, growth-stunting taxes. The plan details specific steps to empower localities to replace these anti-growth taxes with revenue options that are less detrimental to growth – all while recognizing the need to appropriately balance state and local funding and services.
The plan will raise take-home pay for hard-working Virginians squeezed by stagnant wages and higher costs, orient our economy toward start ups and scale ups, entrepreneurs, and small businesses, and make Virginia more competitive and attractive to businesses, retirees, and veterans, after three straight years of more people moving out than into Virginia. Instead of solely focusing our efforts on throwing taxpayer dollars at big corporations and hoping they move to Virginia, this plan is crafted to create jobs and strengthen our economy over the long term through a more patient approach that will help start ups, entrepreneurs, and existing small businesses. They are the key to sustainable, long-term job creation. The path to diversifying our economy will be charted by entrepreneurs given greater freedom to invest and innovate. They will identify the new sectors, services and products to flourish in Virginia, not a top-down government approach that picks winners and losers in the marketplace, and too often makes the wrong bets with your tax dollars.
The “Cutting Taxes for ALL Virginians” Plan puts more money in your pocket, creates jobs and strengthens our economy, and protects critical state investments in core functions of government. This plan works for all Virginians.
Virginia’s tax code is antiquated and damaging to our economy. Here are five reasons why we need a tax cut.
The “Cutting Taxes for ALL Virginians” Plan cuts taxes for all Virginians in a responsible way that protects the Commonwealth’s investments in the core functions of government.
Cutting state income taxes is only part of the equation. To truly spark economic growth, Virginia needs to reform its antiquated, patchwork system of local business taxes. The Business and Professional Occupancy License or BPOL Tax, the Machinery & Tools Tax, and the Merchant’s Capital Tax are vestiges of a prior era when Virginia’s economy was growing by leaps and bounds despite these impediments to business growth.
Local governments, through no fault of their own, have come to rely on these job-killing, growth-stunting taxes. We need to work together to replace them with pro-growth alternatives. The plan puts Virginia on a path toward meaningful local tax reform by creating an action-forcing component that empowers localities to replace these anti-growth taxes with revenue options that are less detrimental to growth.
Cutting taxes and reforming Virginia’s antiquated tax code will not be easy. We have to overcome special interests and decades of entrenched thinking. As governor, Ed Gillespie will responsibly execute this plan by working with the General Assembly in an open and transparent manner.
This is a sensible and fiscally-responsible plan that is phased-in over three years and fully funded through existing revenue growth by using revenue triggers. Modeling conducted by the Thomas Jefferson Institute and economists that built its tax model at the Beacon Hill Institute shows that under the plan Virginia can keep its existing commitments to education, health care, transportation, public safety, and other core services.
Ed’s plan to cut taxes for all Virginians will put more money in your pocket and help small businesses create jobs. Modeling conducted by the Thomas Jefferson Institute and economists that built its tax model at the Beacon Hill Institute shows what this needed plan will do.
“Ed Gillespie is advancing a desirable, thoughtful, and responsible tax reform plan that will make Virginia more competitive, foster private-sector job creation, and allow all tax paying small business owners, individuals, and families to keep more of the money they have earned. Ed Gillespie's plan will ultimately save a typical family household nearly $1,300. That's truly meaningful tax relief for all taxpayers and will lead to a more vibrant Virginia economy.”
- Former Governor and U. S. Senator George F. Allen, Honorary Policy Co-Chair
“Republicans in the General Assembly have worked hard in recent years to put Virginia on fiscally-sound footing and lay the groundwork for exactly the kind of tax cut that Ed Gillespie is laying out. This responsible plan demonstrates Ed’s deep understanding of our economy and the state budget. The plan cuts taxes for all Virginians, creates long-term private-sector job growth, and responsibly protects Virginia’s existing commitments to core services. It’s smart, balanced, and exactly what we need.”
- Speaker-designee Kirkland M. Cox, Policy Co-Chair
“Ed Gillespie's bold plan for an across the board tax cut demonstrates his commitment to governing through conservative principles. A tax cut like this will make a meaningful difference to hard working Virginia families. It also sends a loud and clear message that Ed Gillespie is serious about restoring Virginia’s position as the best state in the country to do business.”
- Senator Mark D. Obenshain, Policy Co-Chair
“Ed Gillespie’s pro-growth plan will foster private-sector job creation by lowering the cost of doing business and increasing the Commonwealth’s competitiveness. Ed understands that the best way to encourage natural and robust economic growth is through fundamental policy shifts, not bigger government grants and incentives, ”
- Doug Holtz-Eakin, President, American Action Forum and former Chief Economist of the President’s Council of Economic Advisers (CEA)
“Ed’s plan recognizes the difficult choices that localities have been forced to make while trying to build innovative local economies with a decades-old tax structure. He’s serious about partnering with local leaders to find a path that allows us to eliminate job-killing taxes in a fiscally-responsible way. This is the first local business tax plan I’ve seen from a statewide candidate that can actually work.”
- Fairfax Supervisor Pat Herrity
“In order to grow, Virginia needs real leadership in the governor’s office. Ed Gillespie once again demonstrated that his vision for natural, organic growth is substantive and action-oriented. Ed’s vision for Virginia is an entrepreneurial vision for Virginia."
- James S. Cheng, Former Secretary of Commerce & Trade and Serial Entrepreneur, Co-founder CAV Angels
Our Commonwealth is at a critical juncture. We can either remain stuck in neutral with a
stagnant economy, or we can put forward a policies to spark economic growth, create private-sector jobs, raise take-home pay, lift people lift themselves out of poverty, and make life better for all Virginians.
No, Ed’s plan will provide tax relief to all Virginians!
Ed Gillespie supports federal tax reform and welcomes long overdue action to make Virginia and the
nation more competitive. The prospect of changes at the federal level increase the urgency to kickstart our economy and reduce how much we are impacted by federal policies. We want an economy that grows regardless of what happens in Washington.
The vast majority of Virginia businesses pay taxes as individuals, not corporations. Start ups and scale ups, small businesses, and contract businesses mostly pay the individual income tax rate. By cutting individual income taxes, we are cutting taxes that most businesses pay, leaving them more money to invest and grow. Also, more than two-thirds of the Virginia economy is driven by consumer spending. Disposable income drives consumer spending and further strengthens the economic impact of this plan.
Ed’s plan balances the need to spark economic growth with the need to fund education, healthcare, transportation, public safety, and other core government services. If enacted, this will be the largest tax cut in modern Virginia history, but it’s also phased in over time to be responsible.
It is important to remember that Virginia’s recent budget shortfall was a symptom of a much larger problem. For the past ten years or more, Virginia has been swapping out high-paying jobs out for low-paying jobs, leading to lower individual income tax collections. And for five straight years, our economic growth rate has trailed the national average. If we want to grow our economy in the long-term, we have to kickstart job creation and small business formation. We won’t do that by raising taxes.
Absolutely not. In fact, this plan was specifically crafted to protect these top priorities. The plan is responsibly phased-in over three years. Using the state’s own budget projections, this plan still provides more than $2 billion for new investments in the core services - including education, public safety and transportation.
Revenue triggers will be designed by the Secretary of Finance, agency heads from the Department of Planning and Budget, Department of Taxation, Department of the Treasury in partnership with a working group to include the House Appropriations (HAC) Staff Director, Senate Finance Committee (SFC) Staff Director and other individuals as designated by the governor. The revenue triggers will be reviewed by the Governor’s Advisory Committee on Revenue Estimates (GACRE) and ultimately adopted by the General Assembly. The triggers will be designed to ensure that Virginia can maintain its existing commitment to core services.
The challenges facing Virginia’s businesses due to the burdensome and anti-growth local business taxes are very real. We relied on significant research and analysis provided by JLARC and others to determine the best path forward for Virginia. This plan is different because it recognizes that something must be done for Virginia to grow and provides localities a choice, not a mandate. Ed plans to lead a collaborative effort to tackle this pressing challenge.
Ed’s plan establishes a responsible path to ensure that we actually cut taxes - not just talk about it. Instead of crafting a plan that hinges on eliminating preferences, Ed’s crafted a genuine tax cut. In addition to this plan, he will work with General Assembly leaders to eliminate special interest preferences that pick winners and losers.