NoVa Republicans propose plan to fund transportation
A trio of moderate Republican legislators from Northern Virginia has proposed taxing out-of-state corporations that sell services in Virginia as a way to raise up to $200 million for the state's traffic-clogged roads.
Dels. David B. Albo, Thomas Davis Rust and Joe T. May consider their bill, which is expected to be introduced Friday, a compromise that could pass both the Republican-controlled House and Democrat-led Senate.
Out-of-state corporations that could be taxed include law firms, computer programming companies and those that provide Web site design services. Most other states, including Maryland, already tax those corporations.
Albo sent the proposal to his Republican colleagues in the House Wednesday with a note explaining that it is not a tax increase.
"This is not a tax increase on Virginians,'' Albo said. "They've got to vote for this. I can get 51 votes in the House and I'll get every reasonable Republican."
But some conservatives will consider taxing corporations that are currently not taxed a tax increase.
Ben Marchi, state director for Americans for Prosperity, said the proposal will reduce the state's competitive edge and put Virginia's transportation problems on non-Virginians.
"This is a disgusting display of arrogance from tone-deaf politicians who clearly did not hear the voters this past November,'' Marchi said.
Senate Majority Leader Richard Saslaw (D-Fairfax), who had not yet seen the proposal, predicted it would receive a chilly reception from the Republicans' conservative colleagues.
"I'd be shocked if they got it out House," Saslaw said.
And if they did?
"I'd have to take a look at the whole thing," he said.
Virginia has struggled over where to find money for its infrastructure, with Democrats and Republicans at odds over raising taxes or finding other ways to raise money. The state's transportation budget shortfall, in the billions, has led to thousands of job cuts and hundreds of unfinished projects.
Albo got the idea for the bill from a recent study of Virginia's corporate income tax by the General Assembly's investigative arm, the Joint Legislative Audit and Review Commission. The group estimated the state could collect as much as $250 million more each year if it applied the corporate income tax to out-of-state businesses that sell services in Virginia.
"This is nirvana,'' Albo said. "I can't believe this plopped in our lap."
The study noted that many other states, including some of Virginia's competitors, tax such businesses and that failing to tax the out-of-state businesses might actually create a disincentive for such corporations to open physical offices in Virginia and hire workers in the state.
Extending the tax to out-of-state corporations was among a series of options for changes to the state's corporate income tax structure that JLARC suggested for legislative review.
Anita Kumar and Rosalind S. Helderman
| January 6, 2011; 2:55 PM ET
Categories: Anita Kumar, General Assembly 2011, House of Delegates, Rosalind Helderman, State Senate
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