Marcellus on the Corporate Income Tax

Between state and federal corporate income taxes, the United States has the highest tax rate on corporate profits in the world, writes Bob Marcellus, the hedge fund manager who is acting as point man for the business initiative to scrap Virginia’s corporate income tax, in an op-ed in today’s Times-Dispatch. “While other countries have been slashing this tax, America has been asleep at the switch.”

Marcellus acknowledges the fiscal challenges of balancing the budge while abolishing the state’s 6% corporate income tax, which is anticipated to generate about $660 million in revenue this year. His solution is setting the date the tax cut goes into effect 12 to 24 months in the future, “creating a ‘wow’ factor for growth while still building tax revenue until the actual implementation.”

Marcellus also anticipates attacks on his idea on the grounds that it is anti-labor.

“It would be easy to criticize this tax as a give-away to major corporations. But this initiative is …overwhelmingly pro-labor. … National and provincial governments across the political spectrum have been working to cut this tax and have experienced increasing tax revenues as a result. People don’t understand how destructive this tax is to jobs, investment, and business growth. They certainly don’t understand that labor ultimately pays the highest price.”

I concur. Workers make gains only when the economy is growing, jobs are being created, and employers compete for labor by bidding up wages and benefits. The Bush/Obama era has demonstrated that bailing out too-big-to-fail banks and propping up failed automakers while starving small business of credit is no way to expand the number of jobs. Virginia can’t un-do the failed policies of the federal government, but we can stimulate investment and job creation here in the state. We need to get rid of the corporate income tax.

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8 responses to “Marcellus on the Corporate Income Tax”

  1. why not have a performance benchmark that qualifies you for a corporate tax break?

    so if you hire more people, you get the break.

    if you don't, you don't.

    why base a policy like this on what some people want to believe but cannot provide credible proof of?

    Fredericksburg, Va granted tax relief to a new Wegmans if they met a performance benchmark – sales and employment.

    This makes about as much sense (in an opposite direction) of saying that just throwing money at something is what is needed.

    I remember Jim B being less than thrilled at the idea of offering incentives for companies to move to Va to bring jobs.

    How is this much different?

  2. Groveton Avatar

    Here is the best plan. It was written by a guy you probably don't know. You will know him soon. He will be the next president of the United States. Pg 45 deals with the national corporate income tax.

  3. Anonymous Avatar

    I fail to see how a 6 percent corporate income tax — among the lower end of the states — keeps jobs from forming or growing. Plenty of other factors come to play, such a market demand for a certain set of products, available capital, etc. Let's not forget that a 6 percent income tax level is far lower than what individuals pay.
    I fail to see the urgency for Virginia to drop a corporate income tax. It is plenty good to companies already and I hate to see the recession used as an excuse for another conservative tax giveaway,. especially when the Commonwealth is $4.2 billion int he budget hole.
    Even Gov. McDonnell hasn't jumped on this idiocy.

  4. Anonymous Avatar

    In a debate long ago about raising the speed limit on the interstates from 55 to 65, opposition was urged because it would increase traffic deaths. One delegate quipped that perhaps the speed limit should be lowered to 30 in order to save even more lives.

    This debate about corporate income tax has similar echos. Why not follow the lead of Mr. Laffer and lower/abolish taxes for everyone? We all would have more $$ in our pocket to spend goods and services which would grow the economy. Just look at how successful states with no income tax are – Florida, Tennessee, etc. – in weathering the recession. Why I suspect that they have no budget gap, do they?

    I agree with Larry G that there has to be some standard with which to hold corporations, if you are going to abolish the tax. Bosun

  5. Anonymous Avatar

    Some people would have you beleive the Laffer curve is a bell curve or even skewed to the left, so that taxes as low as 15% actually decrease total government revenue.

    As far as I can figure out th opposit is true. Really high taxes eventually reduce government revenue, but the rate at which that begins to happen is wll north of 60%.


  6. Members of the Committee on the Budget
    111th Congress

    Gerald Connolly, VA

    is this a joke?

  7. Gooze Views Avatar
    Gooze Views

    Yo Bacon,
    Let me get this straight. A hedge fund manager wants to repeal corporate income taxes during a budget crisis. How would he replace the revenue again? Credit default swaps?

    Peter Galuszka

  8. […] of  advancing tax proposals to make Virginia more competitive — such as eliminating the state corporate  tax and thereby bring more real prosperity and consequently tax revenue to the Commonwealth — we […]

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