Income tax, corporate; eliminates tax for taxable years beginning on or after January 1, 2014. (SB692)

Introduced By

Sen. Steve Martin (R-Chesterfield) with support from co-patron Del. Mark Cole (R-Fredericksburg)

Progress

Introduced
Passed Committee
Passed House
Passed Senate
Signed by Governor
Became Law

Description

Elimination of the corporate income tax. Eliminates the corporate income tax for taxable years beginning on or after January 1, 2014, by setting the rate of the tax at zero percent. Amends § 58.1-400, of the Code of Virginia. Read the Bill »

Outcome

Bill Has Failed

History

  • 08/31/2012
  • 08/31/2012 Prefiled and ordered printed; offered 01/09/13 13100304D
  • 08/31/2012 Referred to Committee on Finance
  • 01/09/2013 Impact statement from TAX (SB692)
  • 02/06/2013 Left in Finance

Comments

Waldo Jaquith writes:

Note that the Joint Legislative Audit and Review Commission (a legislative agency) recently conducted a study of the state's corporate income tax (CIT) at the request of the General Assembly and concluded that:

Virginia’s CIT is largely consistent with the corporate income tax systems in other states. Further, the CIT does not appear to be a major detraction from economic development efforts, particularly in light of the State’s favorable business environment.

[...]

While major restructuring initiatives could be considered, most carry significant risks that may outweigh potential benefits and would likely disrupt the stability of Virginia’s CIT system. Implementing extensive changes may also be a disproportionate response to the narrowly focused concerns described in this report.

Here are some specific highlights:

The Virginia corporate income tax (CIT) generated nearly $650 million in 2009, paid largely by a small subset of taxpayers comprised of multistate, highly profitable corporations

About 5% of Virginia's income is derived from the corporate income tax, so eliminating this tax would either require a huge cut in spending or a significant increase in other taxes. The study also points out that less than 40% Virginia businesses pay the corporate income tax at all.

So, to summarize, Sen. Martin proposes to do something that is precisely the opposite of what the legislature's own research team recommends after being directed to research it by the legislature. Either Sen. Martin has access to his own special research about Virginia that his own staff lacks, he is seeking to harm Virginia economically, or he is cynically introducing a bill that he knows has no chance of passing in order to curry favor with voters, donors, and interest groups. I cannot claim to know which is true.

Dustin writes:

You want Virginia business to bloom and unemployment to drop? Support this bill. This is much better than Gov. McDonnell giving tax breaks to some companies over others just to get jobs in Virginia giving current businesses a disadvantage. But having companies move to VA allows Gov. McDonnell to do ribbon cutting and receive praise from the press.