Today’s announcement that Virginia faces a budget shortfall of more than quarter of a billion dollars clearly shows the economic consequence of faulty economic and regulatory policies at the national level.
However, it also is a clarion call for serious tax reforms in our state to encourage economic growth.
Our current tax system was created for a different economic era and needs to be re-crafted. Not only is the consequence of sequestration a continued drag on our state’s economy but so is our tax system.
Our political leaders need to rewrite the tax code. As a starting point, the Thomas Jefferson Institute has proposed a tax restructuring idea that will create close to 70,000 new jobs over the next five years. It gives all Virginians a tax break, eliminates two oppressive business taxes that discourage hiring, and broadens the sales tax to better reflect today’s service economy. This tax restructuring is revenue neutral and Virginia’s localities are not harmed — the state and localities do not lose money. But it encourages economic growth by merely re-arranging the tax system a bit to bring jobs to our state … to grow our economy.
Had the state adopted this tax restructuring a few years ago we would likely not be facing the economic “wet blanket” that we ere presented with today.
Michael W. Thompson is the president of the Thomas Jefferson Institute for Public Policy.
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