Citing his opposition to transportation-funding legislation supported by Governor Bob McDonnell, Richard W. Rahn has resigned from the governor’s Joint Advisory Board of Economists.
“I strongly disagree with the new tax/transportation bill that you supported,” wrote Rahn in a letter to McDonnell. “Unfortunately, I was not asked for my advice (which I assume was also true of the other Joint Advisory Board members) before you and the legislature embarked on passing the largest increase in taxes in the history of Virginia. This action will do damage to the people of the Commonwealth of Virginia.”
The hike in the sales tax should have been offset by a reduction in the state income tax, which Rahn described as “perhaps the most destructive tax.” He added: “A number of other Republican governors are supporting major rate cuts in their state income taxes, and in several cases proposing to totally eliminate the state income tax. Virginia should be doing the same.”
Virginia should more aggressively seek private-sector funding for transportation infrastructure as well as privatization of “other functions now performed by the state.” He offered no specifics.
Rahn, former chief economist for the U.S. Chamber of Commerce and currently a senior fellow with the libertarian-leaning Cato Institute, said he would be willing to assist in a “serious effort” to reform the Virginia tax structure…. Not that he’s likely to be asked at this point.
In related matters, McDonnell and his staff are conducting a “legal and constitutional review” of the transportation bill. As Willie Deutsch highlighted on his blog, the governor had this to say in last week’s “WRVA’s Ask the Governor” radio show:
“I’m still conducting a legal and constitutional and review of the bill. We haven’t even gotten the bill yet. It’s over 100 pages.” (14 min mark)
“It is 100 pages. It will undergo review, legal review and constitutional review by the attorney general’s office, policy review by my office. …It’s only been five days since the session is over. We just got it. We’ve gotten over 900 bills to review.” (23 min mark)
Review by the AG’s office? Holy, moly! McDonnell did not specify the constitutional issues in the tax package, but presumably he was referring to a provision that would have generated taxes for regional use by imposing taxes in Northern Virginia and Hampton Roads. (Paul Goldman and Norm Leahy described the state constitutional issues here.) It would be quite a development if Ken Cuccinelli got the final say on this key piece of the legislation!
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