Cuccinelli: Promote Economic Development by Creating Level Playing Field

cuccinelliby James A. Bacon

In a press conference this morning at a Richmond SweetFrog restaurant, Attorney General Ken Cuccinelli laid out the philosophical principle that would guide his approach to economic development if he were elected governor: Create a level playing field for all businesses rather than incentives for a lucky few.

He would close tax loopholes carved out for special interests, restructure the tax code to eliminate local business taxes and reduce the top corporate income tax rate from 6% to 4%, and he would pare way back on grants and tax breaks used as economic incentives. “Relative to what you’ve seen in the past, I would take a much harder view” of incentives, he said.

Cuccinelli said he would follow the example of Governor Bob McDonnell in making job creation his top priority. But he has no intention of playing a wheeler-dealer in seeking big corporate investments. Instead, he wants to create a tax climate that is more attractive to job creators by lowering taxes for every Virginia business.

The presumed Republican gubernatorial nominee was introduced by Vance Spilman, chief operating officer of Sweet Frogs, a chain of yogurt shops that opened in 2009, now has 250 locations around the country and is preparing to expand overseas. Sweet Frogs is profitable, Spilman said, and it is reinvesting its profits to grow the enterprise, which currently provides jobs for about 400 Virginians. Reducing the corporate income tax from 6% to 4% would allow the company to grow faster, he said.

Cuccinelli’s plan contained only a few specifics. He would:

  • Reduce the top individual income tax rate from 5.75% to 5% over four years beginning in 2014.
  • Establish a Small Business Tax Relief Commission with the goal of reducing the state corporate income tax and eliminating or reducing local Business Professional Occupational License (BPOL), Machine and Tool (M&T), and Merchants Capital (MC) taxes.
  • Pay for those tax reductions by eliminating outdated tax exemptions and loopholes “that promote crony capitalism” and by limiting the growth of General Fund spending to the rate of inflation plus population growth.

If his revenue cap had applied to the current fiscal year, in which spending increased 5.8% and inflation + population growth increased 3.3%, his formula would have saved $530 million.

Cuccinelli did not say specifically which loopholes he would cut, although he did endorse a proposal outlined by Del. David J. Toscano, D-Charlottesville, and Del. R. Lee Ware, R-Chesterfield, that would have closed about $75 million in loopholes. He also said that service-sector exemptions for the sales tax would be “on the table,” although he ruled out extending the sales tax to education or health care.

Curtailing incentives, broadening the tax base and lowering tax rates would be “fairer” and create opportunity for all business, he said.

The candidate also highlighted the “unique window of opportunity” presented by the expansion of the Panama Canal and Hampton Roads’ temporary status as the only East Coast port with channels deep enough to accommodate fully loaded post-Panamax vessels. The next governor, he said, needs to maximize that opportunity, which is expected to last only three or four years, by participating actively in state marketing efforts to attract more port cargo and more distribution centers.

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23 responses to “Cuccinelli: Promote Economic Development by Creating Level Playing Field”

  1. DJRippert Avatar

    By Cuccinelli’s own admission his tax cuts are estimated to reduce state revenue by $1.4B per year. Meanwhile, the only specific thing he can find to balance that massive cut is $75M in potential loopholes to close.

    Even former members of the Clown Show are better at math than that.

    Cuccinelli will lower the taxes on businesses and raise the taxes on individuals. His claim that sales tax on service items is “on the table” is transparent. Of course it’s on the table – it’s the only possible way to close the gap after the business cuts.

    I don’t have as much a problem with his economic policy as I have with his disingenuous communications. If he wants to lower the taxes on businesses while raising them on individuals he ought to have the minimal courage required to say that. If he’s going to cut $1.4B in tax loopholes he ought to name some of the bigger loopholes he intends to close. If he’s going to cut spending he ought to say what he plans to cut.

    Right now, he has $1.4B in cuts and $75M in savings.

    If he doen’t know what the hell he’s going to do he ought to shut up until he does know.

    As far as his spending cut “formula” I’d really like to know he feels about the odds of getting the Clown Show to pass that law. I’d also like to know how he would have cut the budget by $530M this year.

    All in all, a pretty miserable first attempt at economic policy.

    1. Where do you get the $1.4 billion number?

      1. DJRippert Avatar

        “Attorney General Ken Cuccinelli II said Tuesday that if elected governor, he would cut business and individual income taxes by $1.4 billion a year and build on Gov. Robert F. McDonnell’s “Bob’s for jobs!” slogan.”.

        1. larryg Avatar

          this is the ole “starve the beast” approach and there is no Plan B if the economy goes south and revenues fall even lower.

          this is why we have a national deficit right now. They cut taxes to spur growth, the economy tanked, revenues plummeted and we can’t do anything about it – just blame “spending” and shoot for “austerity”.

          the myopic right these days, (post RINO), believes that cutting taxes alone is fiscal conservatism but real fiscal conservatism is fiscal responsibility especially in a policy that anticipates the inevitable recession cycles.

          the only way I would EVER support such an approach is if they explicitly address what the policy will be when recessions inevitably hit and if the answer is “cut spending more” or worse “cut taxes more” then no dice.

          We have national gridlock right now – because we had no policy goals if we cut taxes and a recession hits – so we just slide into deficit – and no one can agree on how to reduce it.

          Virginia is supposed to be a pay-as-you-go state which is somewhat in tatters transportation-wise, and defined-pension-wise these days. We don’t want to make it worse.

  2. larryg Avatar

    message from scandal TV – “now back to our regularly scheduled blather”.

    actually since McDonnell lanced the transportation boil… what is left?

    more tax cuts sounds like more funding cuts for education…

    McAuliffe I don’t get. If he wants to win – he has to do a heck of a lot more than he is right now. He need to come on strong with a vision agenda or the Cooch is going to clean his clock and rightly so.

  3. Breckinridge Avatar

    JLARC does a nice dispassionate job of tracking the growth in state spending that compares it to population growth and inflation, and over the past decade Virginia has done pretty well with regard to the GENERAL FUND. For the most part the General Fund is tax dollars, while the Non-General Fund is federal money, hospital revenue, tuition revenue (and yes, some taxes like fuels taxes if they are dedicated to a specific use.) Over the past ten years the 35 percent growth in the GF was not far off the combination of population growth and inflation. The growth of almost 6 percent last year follows a couple of years of actual declines, and you can’t ignore the base when talking about growth.

    The Non-General Funds are another matter. Some of the massive federal spending increases flow into our state budget, and not just in Medicaid. When the universities raise tuitions, that shows up as Non-General Funds. Controlling that part of the budget, keeping that within the confines of population + inflation, well that would be the ultimate stretch goal for a new Governor.

  4. larryg Avatar

    Breckinridge makes an excellent point that most folks never are aware of.

    general revenue funds are DIFFERENT from earmarked funds.

    of course the two do cross when the general fund is used to supplement earmarked funds – as Breckinridge points out with higher ED.

    the maga devil in the details has always been how much MORE the general fund should add to the earmarked monies.

  5. Richard Avatar

    I can’t believe this guy. For Cooch and his fellow travelers (where did that term come from?) in the General Assembly, “level the playing field” means eliminating regulation and competition for big business and their supporters – coal, energy, highways. “Elimination of tax loopholes” means tax everyone else more so that marginal rates can be reduced. Sounds good but it’s devoid of detail and reality.

    I think we know who the Cooch really is based on his grandstanding performance as attorney general.

    What a disaster it will be for Virginia if Cooch as governor teams up with the reactionaries in the General Assembly – ridiculous social legislation out (and in!) the wazoo, harrassment of illegals, more onerous voting restrictions, elimination of environmental regulations (drill-baby-drill, uranium mining and fracking anyone?), attacks on public school teachers and higher education (teachers’ pensions are too expensive, lots of charter schools, tax vouchers, “let me see your emails”), wild west zoning and real estate development, and catering to the “job creators” who’ve done such a wonderful job of creating jobs with all the tax cuts they’ve taken since 2001!

  6. Peter Galuszka Avatar
    Peter Galuszka

    What are the loopholes being closed?

    What is his ‘philosophy.’
    ONce again Jim, you lack healthy skepticism. This sounds like flackery.
    Where will he make up the $1.4 billion? What loopholes will be closed?

    Why are the proposed tax reductions in corporate and individual incomes so modest?

    WTF cares?

    1. What loopholes are being closed? Try reading the post:

      “Cuccinelli did not say specifically which loopholes he would cut, although he did endorse a proposal outlined by Del. David J. Toscano, D-Charlottesville, and Del. R. Lee Ware, R-Chesterfield, that would have closed about $75 million in loopholes.”

      You asked what is Cuccinelli’s philosophy. Again, try reading the post.

      “Ken Cuccinelli laid out the philosophical principle that would guide his approach to economic development if he were elected governor: Create a level playing field for all businesses rather than incentives for a lucky few.”

      Flackery? Really? Once again your criticism is nothing more than an ad hominem attack. That’s a lot easier than actually comparing my post with, say, the Washington Post coverage, showing how my coverage differed and explaining how that difference might be motivated by partisan considerations.

      1. larryg Avatar

        This is Mitt Romney deja vu all over again!

        1. – cut taxes
        2. – talk about getting rid of “loopholes”
        3. – never answer the question about which ones

        this is either the most egregious form of arrogance and condescension toward answering obvious voter questions OR Romney/Cooch/The GOP think that the average “low information” voter doesn’t know and is not even smart enough to realize that it’s a marketing ploy – not a policy.

        I say the next guy that gets up to blather about future unspecified closing of loopholes needs to be branded like a heifer on the buttocks with the phrase “liar liar pants on fire”.

        1. I rarely agree with Larry on partisan issues, but this is one of those times. Basically, Cuccinelli has punted the job of identifying specific loopholes to a commission to be set up after he takes office. That way he doesn’t have to take heat during the election for specific cuts.

  7. Neil Haner Avatar
    Neil Haner

    I’d still like to see “tax reform” as only one part of supporting Virginia’s business friendly climate, instead of offered as the end-all, be-all solution. It needs to be partnered with a commitment to infrastructure upgrades (those Panamax ports are only worth so much when the rail lines, highways, and bridges/tunnels leading to and away from them are boondoggles), and reform of our unsustainable higher education pricing model (and, to a lesser degree, shift degree program emphases to more STEM) to ensure the Commonwealth can continue to provide quality college and trade-school graduates into the workforce.

    But, you know, “lower taxes” is much easier to fit into a 30 second TV spot.

    1. I agree with your larger point, that “economic development” needs to be framed as a much bigger issue than it traditionally has been. I often talk about Virginia’s dysfunctional institutions — transportation, land use, health care, K-12 education and higher ed. If we can get serious about reforming those issues, economic development will take care of itself.

  8. larryg Avatar

    If someone is going to give a tax cut number then they should show which loopholes were used in calculating that number.

    It’s not fiscal conservatism to pick a number seemingly out of thin air and then say that you can meet than number by closing unspecified loopholes.

    If the Cooch had cited the report referenced by Breckinridge : it would have provided some level of credibility – AND some level of accountability as he would then be indicating which things were under consideration.

    Remember also – the GOv of Va is a high wire act in terms of him saying “make it so”.

    And as Richard has pointed out – tax cuts alone don’t pay the bills for education, transportation and law enforcement much less economic development.

    We just got done with McDonnell convincing much of the Va GOP that to not adequately fund transportation was to strangle Va. economic growth potential.

    He went from a Gov looking for and finding stranded money in VDOT programs to one who became personally convinced that unless we better funded transportation, the state would be harmed.

    that’s quite a different “philosophy” from the Cooch.. if you think about it.

    If the Cooch had been Gov – there would have been not increase in transportation money, right?

  9. DJRippert Avatar

    Could Bill Bolling be the last honest political leader in Virginia? Our esteemed Lt Governor takes both Cuccinelli and McAuliffe to task for promising specific tax cuts paid for with unspecified budget reductions.

  10. Breckinridge Avatar

    Bolling has the same right to comment as the rest of us (and he isn’t hiding behind a pseudonym), but he quit the field of battle and is now shooting the wounded. The reporters will keep him on speed dial as long as he’s willing to give them what they want.

  11. larryg Avatar

    re: McAuliffe tax cuts promises = Cuccinelli tax cut promises


    Dem’s generally are not perceived as offering tax cuts. They often talk in terms of maintaining or increasing our “investments” in infrastructure, education, etc.

    the GOP on the other hand – ever since Ronald Reagan – as a fundamental philosophy – advocate tax cuts. It’s a matter of party identity.

    it’s not a normal “Dem” thing but it’s become a boiler-plate GOP “thing”.

    even though even Ronald Reagan had to back up to keep from going into deficit – my idea of a real fiscal conservative – a responsible one.

    I’m not opposed to tax cuts as long as they are part of a cogent plan that also addresses how they will be paid for.

    I’m in favor of the Simpson-Bowles approach where all 3 components – taxes, tax-cuts and spending are addressed comprehensively AND in such a way that they acknowledge and accommodate economic cycles.

    The GOP, on the other hand, seems to the concept that future recessions either won’t happen or are not allowed – to “interfere” with the tax cut philosophy.

    None of this matters with GOP base – nationwide or in Virginia. It’s an article of party faith.

    So in Va, all Cucinelli has to do to get the GOP base is literally hold to the “party line”/

    Not one GOP voter in Virginia is going to confuse Cuccinelli’s tax cut message and McAuliffe’s tax cut message.

    strange – you’d think McAuliffe’s strategy would be to go after the folks who voted for Obama – not Romney..

  12. Peter Galuszka Avatar
    Peter Galuszka

    Ad hominem attack? You bet!

    Meanwhile, you go on about a “philosophy” which has yet to take shape which makes you sound like a flack. I don’t see a philosophy, I see some rather modest tax cut proposals with no info on what loopholes will be closed (and PUh lease don’t refer me to some delegate somewhere, spell it out if you want me to bother to read you) and how the money deprived from the budget will be made up.

    I see a whole lot of nut-in.

  13. Les Schreiber Avatar
    Les Schreiber

    I read the so called economic plan and it was rubbish. Like Romney ,he says cut taxes and but I’ll tell you how I’m going to pay for them AFTER I’m elected. He’s going to appoint a commission to figure this all out after he is elected. Who is going to be on the commission.?What about the pension short fall in VRS. If low taxes were the only key to economic growth Intel would be in Mississippi and Wall Street would move to South Carolina. Economic growth is a complex issue. The Republican has no interest in complexity and nuance. All this guy is really interested in is banning abortion and beating up on the gays.

  14. Scout Avatar

    Wave a “tax cut” slogan in front of a Virginia electorate and it’s like handing out crack cocaine or driving a meat wagon through a pack of wolves. It’s a sure road to victory because very few people care how it works, or even whether it works. I’d say that this is Cuccinelli’s to lose at this point. Statewide politics is so easy, as long as it is only about getting elected. Governance is another skill altogether, but it’s completely irrelevant to the matter at hand.

    1. Neil Haner Avatar
      Neil Haner

      Governance is an irrelevant skill because Virginia’s Governor’s don’t have to worry about getting reelected, so they can be as incompetent as they want once they’re in. Unless they’re planning a US Senate run after their term, they can stop caring about the electorate’s wishes the second week of November.

      If only that worked in the rest of the world, where my obligation to work hard stopped the day I got hired, and I didn’t have to keep my wife happy once I said “I do.”

  15. larryg Avatar

    I’m actually sympathetic to the complaint that taxes should not keep going up and that we do have to prioritize what we allocated to stay within a budget and live within our means.

    this is what drives the anti-tax zealots – they’re to the point where they do not care how cuts are made anymore – just that govt is forced to do it.

    this, in turn, has driven out politics further right and further into sound-bite concepts.

    I do not care for the politics of the right at all. I fear what would happen to Va with someone like Cucinelli in charge – not only because of his politics but who he would appoint to important roles.

    but the shift to the right is inevitable and it will continue until or unless the constituencies in the middle and left assert their numbers more in the General Assembly and that’s problematical because give the right credit – in most local jurisdictions, they are “growing” candidates for higher office.

    We just had a Dem State Senator knocked off and the BOS itself is effectively controlled by anti-tax folks.

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