Brian Moran's Plan: Investments in Small Business, Job Creation

(-- promoted by code)

Brian Moran Rolls Out Economic Recovery PlanIt takes a strong combination of Democratic leadership to be the best-managed state in the nation, to save and maintain Virginia's AAA bond rating, and to keep Virginia the best state for business, three years running.

Making obvious that he's got the experience to step right in where Governors Warner and Kaine left off, Brian Moran released his Economic Recovery Plan today, "talking up tax relief as a way to help small and minority businesses through the economic crisis", as the Richmond Times-Dispatch put it. "Creating local jobs by cutting taxes", adds the Washington Post.

Brian’s plan focuses on stimulating the economy through investments in small business and job creation, including a tax credit for job creation. Brian will focus on small businesses because he knows that they represent more than 97% of the Commonwealth’s employers and make up approximately half of the private workforce in Virginia. "We must stimulate job creation by giving a tax credit to those who create more jobs," said Moran. "That job creation will stimulate our economy and get us back on the right footing."

Specifically, he will create a small business job creation tax credit of $2,000 per new employee for small businesses that hire new employees and retain them for at least one year. He will eliminate the corporate income tax for small businesses making less than $200,000 per year. Brian Moran will create a Stimulus Watchdog to coordinate the federal dollars flowing into Virginia and ensure that they are invested wisely, not wasted.

Brian also calls for assembling an Economic Strike Force.

Mark Warner came to office in a difficult time and created an Economic Strike Force by executive order. Brian Moran worked with Governor Tim Kaine to pass this into law and make it permanent. As governor, Brian will reinvigorate Virginia’s Economic Strike Force to focus on recruiting businesses to Virginia’s hardest hit communities. Moran will visit the regions of the Commonwealth most devastated by high unemployment in both rural and urban areas of the Commonwealth during his first 100 days in office and will work with each area to create economic development plans to help them get back on their feet.

Read Moran's entire Economic Stimulus and Recovery Plan here.

"People are struggling today, and they need us to take real action to fix our economy," Moran said. "We're going to grow this economy from the bottom up, not the top down".

Crossposted at Raising Moran.

Promising $2000 is an Ambiguous Sinkhole

Where the McAuliffe concept relates a job credit to the actual compensation of the new employee, this promise simply provides a gratuitous amount unrelated to the potential return on investment. This lack of specificity makes it impossible to judge whether this is a giveaway or has the potential to pay for itself through potential increased tax revenues.

Moreover, eliminating the corporate income tax for small businesses does nothing for the multitude of entrepreneurs who are sole proprietors. Safe to say that most small businesses making less than 200,000 a year are not LLC's, so this amounts to another empty promise.

If Virginia wants to keep that "best-managed state in the nation" title, the Moran team needs to find some policy wonks with some business knowledge.

How come?

How come no recommendation for this positive post with the potential to launch a positive discussion, Dan?

Done

I just hesitated when I saw you hadn't posted it on your blog.

I did recommend it immediately.

Where are all of the Pro-Deeds, Pro-McAuliffe posts

on VBDems?

Just askin'

Must be in the same place all the pro

Moran posts are on Blue Virginia. ;P

On the corp tax

Well, unfortunately, the Virginia Department of Taxation does not split their stats in the $200k range (it's just 100k to 499k). But even if we take the brackets below $100k, that represent 92.5% of returns filed (66,937 in total) and $45.8 million in assessed tax (these are 06 numbers, most recent available detail tables). For comparative purposes, the FY06 special sales tax on fuel nets us $54.2 million. So we are not talking a small chunk of change here. The effect may be to encourage those sole proprietors, you think are getting left out, to incorporate. So, is $45 million an empty promise? If so, I would hate to see what a full promise was.

To do provide this benefit through the individual income tax would severely skew tax assessed by income bracket. Virginia basically works out to a flat income tax because the progressivity is so minor. If you eliminate Schedule C income from the equation (when it is less than $200k), then wage earners are really punished by the code (they are already punished by the benefits we provide to investment earnings). And depending on how you work it, you could reduce the salary you take to put more money in the nontaxable category. You would have this big dip in average taxes paid once you got to higher income brackets.

Plus, you know the single issue here that bother me: There are plenty of HOAs and Condo Associations that have to pay taxes on investment income from their reserves. They are organized at nonstock corporations. So this does benefit those people who live in places governed by HOA/Condo Associations. The less this investment income is taxed, the more that goes back into the reserves, the less we have to raise dues in order to meet our capital replacement reserve requirements.

The Proposal Simply Rings Hollow

It is not focused and purposeful. If we implement an incentive, we want to understand the outcome we desire, be able to measure progress, and consider unintended consequences. In this environment, it also must be at least revenue neutral. There is none of that here.

However your discussion of HOAs and Condo Associations is noted. I am a board president. It isn't just the tax laws that are dubious, the Virginia Condominium Act is written to protect developers and leave owners out to dry. I have meant to discuss this, but until tax season is over, I will be lucky to get much cobbled together.

Long record

The "problem" with having a candidate with over 12 years of service in the Commonwealth is the volume of accomplishments to spell out!

Brian Moran has also consistently received high ratings from the Virginia Foundation for Research and Economic Education (Virginia FREE). In 2007, he scored a 75 and was named the most effective legislator in the minority party in the Virginia House of Delegates, aka the GOP House of No, according to this powerful coalition of over 5,000 corporate citizens representing most of Virginia's major business interests.

"The Effectiveness rating is the result of an annual survey of Virginia FREE member governmental affairs professionals to determine, in their informed opinions, how effective each legislator is in accomplishing his or her objectives in the legislature - without regard to the legislator's position on business issues." It means that a legislative leader, Brian actually accomplishes what he sets out to do. To be an effective legislator it also means that he can work across partisan lines and that he knows how to play nice with others while at the same time looking out first for the best interests of Virginia residents over those of special interest groups.

Great!

Great positive policy post, Eileen!

Because Brian Moran is a proven Democratic leader for the people of Virginia, he's been there to work with Governor Warner and Governor Kaine to bring thousands of jobs and millions of dollars in investment to the commonwealth. Moran has bridged the gap between government and business before, and will do so again as our next governor.

I love the Corp Tax Idea

It is unfair, IMHO, that my HOA has to pay taxes as a nonstock corporation (only on the investment income, not on membership revenues). But still! What's more galling is the 35% flat rate the feds charge you if you file an 1120-H. We are using this money for our capital replacement reserves. It's for the communities benefit. See, totally unfair!

Norfolk Commissioner of Revenue Sharon McDonald

Norfolk Commissioner of the Revenue Sharon M. McDonald - "Brian Moran understands the challenges that local governments face - the need to balance our budgets and provide the services that our citizens deserve. He has a fiscally responsible approach to help localities face these challenges, and I am confident that with his leadership as Governor, the partnership between Richmond and the localities will be significantly reinforced."

Arlington Co. Commissioner of Revenue Ingrid Morroy

Ingrid Morroy, Commissioner of Revenue, Arlington County - “Throughout his 20-year career in public service, Brian has woken up every day fighting for people who don’t otherwise have a voice. And he’s been a champion of progressive values while maintaining the fiscal responsibility that keeps Virginia a good place to do business.”