Maryland learned the hard way that high taxes encourage businesses to relocate to states where the tax burden is lower. Virginia and North Carolina have been the prime beneficiaries of out-migration stemming from Gov. Martin O'Malley's tax-hiking spree, which will cost Marylanders nearly $20 billion by 2018. So when Virginia gubernatorial candidate Ken Cuccinelli took the opposite tack, and proposed a $1.4 billion reduction in state income taxes to attract employers, it should not have created a firestorm.
But Cuccinelli barely had time to explain how his pro-growth, smaller government policies would result in greater prosperity and higher revenue when the perennial tax-hikers' "Amen corner" started up.
Democratic House Caucus Leader David Toscano ridiculously claimed that tax relief would "threaten our AAA bond rating." Alexandria Mayor Bill Euille called it "unrealistic" and "ideological," throwing in the old chestnut about "cuts to public safety and education" for good measure. A Democratic blogger even accused Cuccinelli of trying to "raise taxes on the working and middle classes" even though his plan does just the opposite.
The RINOs were no better. Retired Del. Vince Callahan, who spent decades in Richmond separating taxpayers from their money, decried the "Draconian cuts" that would be necessary if the personal income tax rate was lowered by less than 1 percent and the corporate income tax rate declined by 2 percent. Failed gubernatorial candidate Bill Bolling, who supports an expansion of the state's Medicaid program and has already been offered a position by Cuccinelli's Democratic opponent, told The Washington Examiner's Steve Contorno: "As governor, you can't just propose tax cuts willy nilly to score some cheap political points."
But Bolling and his fellow Chicken Littles are the ones guilty of using "cheap political points" to keep the gravy train going. A mere $1.4 billion of tax relief in an $87 billion state budget is neither Draconian nor a threat to Virginia's bond rating. It would not jeopardize public safety or education; over the past decade both sectors have enjoyed funding levels far in excess of inflation and population growth.
Lowering taxes is not crazy, extreme or irresponsible. It is sound public policy. Seven states have no income tax, and North Carolina is considering eliminating it to become more competitive. Cuccinelli has just taken the first modest steps in that direction. But the controversy shows just how far Virginia has strayed from its fiscally conservative roots.