With just over two months to Election Day (and less than one until early voting starts), Republican gubernatorial nominee Glenn Youngkin put playing  footsie  with the Big Lie on hold to announce his plans for tax reductions (Washington Post ).
The centerpiece of Youngkin’s policy prescription is a package of one-time tax cuts totaling some $1.8 billion and recurring tax cuts amounting to about $1.4 billion per year, according to campaign officials who previewed details of the proposals for The Washington Post on the condition that the aides not be named.
Youngkin’s team proposes using some of the money to pay for one-time rebates of $300 for individual taxpayers and $600 for couples filing jointly, as well as for suspending a recent increase in the state gasoline tax and enacting a tax holiday for small businesses.
Youngkin’s plan also calls for doubling the state’s standard income-tax deduction, making it $9,000 for an individual and $18,000 for a couple filing jointly. Campaign aides said that change would save the average married couple about $518 a year.
His Democratic opponent naturally went straight to the how-to-pay-for-it argument.
The campaign of Democratic nominee Terry McAuliffe, who is seeking a comeback after serving as governor from 2014 to 2018, dismissed Youngkin’s proposals as out of touch with the state’s fiscal reality.
“All of Glenn Youngkin’s Trumpian tax plans have one thing in common: they would lead to drastic cuts to public education and drive Virginia’s economy into a ditch,” McAuliffe spokeswoman Christina Freundlich said in a written statement.
Now, that is the standard argument against any proposed reduction in taxes. Color me skeptical on its import. Yes, there will be some short-term damage done to the pool of money in which the General Assembly swims, but the right tax reforms can spur economic growth in a way that makes the revenue reduction merely temporary.
Unfortunately for Virginians, Youngkin’s plans are not the right reforms.
There was a time when Republicans understood the difference between supply-side reforms to the tax code and Keynesian tax cuts. Youngkin’s plans reveal that time has clearly passed. Temporary tax reductions and rebates are older than Youngkin himself, yet he relies on them for most of his first year cut.
Meanwhile, raising the personal exemption neither changes the incentives at the top of the income scale nor address the plight of those already too poor to pay income taxes as is. The result is a tax code more complex than the status quo – including with sales taxes, due to the growing disparity between what would be taxed as groceries versus everything else. In no way can any of these tax reductions be considered supply-side reforms.
Now, that doesn’t mean they’ll have no impact. Keynesian tax cuts do have their time and place. The trouble is that the time and place are nowhere to be found in 2021. America (and Virginia) are not facing the dark clouds of recession but rather the high winds of increased inflation. The last thing a policy maker should want to try in that environment is a Keynesian tax cut. The only type that would pass any kind of muster would be one with non-economic benefits such as a child tax credit increase, such as what Mitt Romney proposed  earlier this year. Such a thing is nowhere to be found in Youngkin’s plan.
I will freely confess that my concern over state and local election boards falling under the control of the Amanda Chases of the world would have led me to vote against Youngkin even if he did have a useful tax reform plan. Thankfully for me, he spared me that difficulty by choosing to pour Old Keynesianism in a new bottle.