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Virginia Republicans reject T-Mac’s tax cut

The General Assembly budget committees revealed their proposed Virginia government tax and spending plans for the next two years – and stepped right into the trap Governor McAuliffe laid out for them over two months ago (Virginian-Pilot [1]).

Virginia GOP lawmakers are pushing for bigger raises for state employees and more spending on public schools while Democratic Gov. Terry McAuliffe wants to lower corporate tax rates and increase spending on economic development initiatives.

Both the House and Senate budget proposals remove $60 million proposed by McAuliffe to create bioscience research companies that would have been managed by MedImmune, a research company with offices in Gaithersburg, Md. House Republican leaders said the proposal by the company lacked accountability and proper structure.

Both chambers also opted not to include McAuliffe’s suggested reduction in the state’s corporate income tax rate from 6 percent to 5.75 percent, something the governor said would help him negotiate future deals.

And neither chamber includes any budget items related to expanding Medicaid, a long-sought goal of the governor that Republicans have steadfastly opposed.

To be fair, Medicaid expansion is as bad an idea now as it was two years ago; kudos to the Richmond Republicans for saying “no” to that nonsense. Ditto the industrial policy writ small in re MedImmune.

However, by refusing to cut the corporate tax rate, the GOP threw out the baby with the bath water, and all but assured they’ll come out of any budget fight the worse for wear.

Of course, every Republican in Richmond will insist (and has been insisting already) that the tax cut was tied to Medicaid expansion, but just because that’s how T-Mac funded it doesn’t mean the General Assembly had to follow suit. I find it hard to believe that $64 million (source [2]) couldn’t be found in a $100-billion-plus budget to slice the corporate tax rate. Had the legislature’s budget committees done that, then the issue would have been resolved, and the argument about Medicaid expansion (which Republicans have actually won, twice) could be rehashed.

Instead, not only does Terry McAuliffe – yes, Terry f*cking McAuliffe – look more friendly to businesses and taxpayers, but every corporation in Virginia has been told by the Richmond Republicans that lowering their taxes depends upon Medicaid expansion.

That’s not how to win friends and influence people.

The worst part about this is that it’s not news. I warned Howell, Norment, Jones, et al over two months ago that T-Mac had set this trap for them [3]. They stepped right into it anyway.

This comes on top of three tax increases Virginians have seen imposed upon them by their Republican Party (in part) over the last twelve years. Now, they see their Democratic governor call for lower taxes, and their Republican legislators say “no.”

There is still time for the Richmond Republicans to fix their mistake, but they may need some help noticing it. We have two candidates for Governor (Ed Gillespie and Congressman Rob Wittman) and a Party Chair suddenly freed from the burden of a contested re-election (John Whitbeck). I would hope that at least one of them (and preferably all of them) call for their fellow Republicans in the General Assembly to free themselves of the T-Mac trap and place the corporate tax cut in their budget(s).

The alternative is watching Hillary Clinton (this year) and Ralph Northam (next year) tar them as tax-and-spenders via guilt-by-association, and I don’t think they want that.