Categorized | News, Opinion

Is Republican Delegate Albo Raising Taxes in a Recession?

It would appear so. HB 1604 introduced by Delegate Dave Albo (R-Fairfax) seeks to tax out of state businesses that perform services outside of the state for Virginians “if the taxpayer has exploited the market provided by the Commonwealth to the extent that any benefit or use of such sale is to a person or location in the Commonwealth.”

Now, I will say that I was not aware of this bill until I received an email from Delegate Albo concerning my post on the subject at Old Dominion Blogs – a blog aggregator I run to allow readers to view a short sample of (presently) 76 Virginia Political Blogs from across the political spectrum. Obviously, as ODB is a blog aggregator, it was not my post, but one written by another blog carried on ODB. Perhaps The Mason Conservative, although other Conservative Blogs have expressed opinions on the matter.

In the email, Albo stated:

Saw your article on my corporate tax bill. It implied it was a tax increase when it does not increase taxes on any Va Corp. In fact it is a tax cut on many. Current law charges a Corp tax on a va business providing a service in Va. But if an out of state Corp provides the same service it pays zero. How is that fair? My bill fixes this by applying the Corp tax on services equally to all. Some more facts. States like MD GA and CA charges out of state corps. So currently if a Va Corp like AOL performs a service in MD, it pays an MD tax. But if an MD Corp performs that same service in VA it pays zero.

(Note: I am including the text of the email to be sure Delegate Albo’s explanation is included.)

Well, after receiving that, I read several articles on the Web concerning this issue. Namely, the Washington Post, which said:

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.”

And the same article quoted Ben Marchi of Americans for Prosperity:

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.

The Washington Examiner said:

Corporations affected could include those that employ lawyers or computer programmers who work in the state. The bill would close a loophole that allows certain corporations that provide such services in Virginia to escape paying state income tax on earnings from the sales.

 

Charles Kelley, Deputy State Director for AFP-Virginia summarized the objections quite succinctly:

Del. Albo’s idea to tax companies outside of the state conducting commerce in Virginia is exactly the wrong approach. We ought to be encouraging those from outside Virginia to come here for business, not discouraging them. Whether operating in-state or out-of-state, a tax increase on a business is just that…a tax increase.

If Delegate Albo says he will seek the votes of ‘reasonable’ legislators to support his idea, and some of those same legislators are already questioning the Governor’s extensive plan for Virginia to take on more debt to fund transportation, what makes him think there are legislators that will be ‘reasonable’ enough to vote for a tax increase, especially in an election year and after such a mandate from the people to cut spending in the 2010 elections??

However, if the goal of Del. Albo’s legislation is to generate a revenue stream for transportation in Northern Virginia, this is the complete wrong way to go about it. There are over a billion dollars in “mystery” funds just found in the VDOT coffers that haven’t yet been fully allocated, a plan on the table from the Governor to fund transportation projects by increasing Virginia’s debt, and numerous budget reduction suggestions put out by us last year available at: http://bit.ly/g2tah0. With that said, a tax increase should be the very last resort, if even one at all, when there are a myriad of other options available.

Understandably, citizens in Northern Virginia may be more amicable to a tax increase but a majority of the rest of the state will not be, especially when the tax increase ends up costing them more out-of-pocket and presumably will go to fund transportation in another region of the state. While this may pad the pockets of VDOT and pave the roads of NOVA, it ends up hurting the end users, who are consumers and businesses in Virginia who utilize the products and services these out-of-state business provide statewide. It would seem that a top priority for all elected officials ought to be finding ways to ease the burden on citizens and the businesses from which they buy services, not adding to it, which is a hands-down, textbook example of exactly what Del. Albo is suggesting we do here.

Charles Kelley
Deputy State Director, AFP-Virginia

And fellow blogger Chris at The Mason Conservative was not too thrilled with the bill, either:

Albo has always been looking to get other people to pay for bigger government and the mistakes made by both parties in Virginia.  Instead of fixing the problems, I guess we just want to perpetuate them and have non-Virignians pay for them?  And I can’t wait for Albo to explain what makes a “reasonable Republican.”

The biggest problem with this change to the Corporate Tax Laws of Virginia is that the taxes will simply be passed along to Virginians in the form of higher fees for the services provided. Most Conservatives understand this basic reality. In addition, it will create some legal questions that will no doubt enrich the pockets of Virginia’s attorney’s.

Consider this situation: An out of state Internet Design Company, PowerAdvocates, Inc. in St. Louis, Mo. provides web site design services for Dave Albo’s law firm.

They designed Albo’s site in St. Louis and host the website on a server in Scottsdale, AZ. The only Virginia connection is a check from Albo.
And when you consider that the work is done from another state, loaded on a server in a third state, Delegate Albo still thinks his web designer, PowerAdvocates, Inc. should pay Virginia taxes? I am sure Albo can afford to pay a bit more to cover the higher costs PowerAdvocates will be passing on to his law firm. But what of Virginia’s struggling businesses?

And if Arizona decides to follow Virginia’s lead and require Virginia Businesses to pay taxes for web sites hosted in Arizona and doing business in Virginia, wouldn’t this be fair? After all, businesses located in Arizona must pay taxes.

Albo’s main point, in a subsequent email was that this does not raise taxes on Virginians. Unfortunately, the taxes will equate to higher fees for the services Albo proposes we tax. That is not debatable.

This bill is simply bad for Virginia. Albo is to be commended for at least attempting to create additional revenue for Virginia, but there are far more cuts that need to be made before we resort to increasing taxes on anyone, Virginian or not.

And the General Assembly should kill this bill at first opportunity.

About Tom White

Tom is a US Navy Veteran, owns an Insurance Agency and is currently an IT Manager for a Virginia Distributor. He has been published in American Thinker, currently writes for the Richmond Examiner as well as Virginia Right! Blog. Tom lives in Hanover County, Va and is involved in politics at every level and is a Recovering Republican who has finally had enough of the War on Conservatives in progress with the Leadership of the GOP on a National Level.

4 Responses to “Is Republican Delegate Albo Raising Taxes in a Recession?”

  1. are there really republicans in NOVA?! cause I just got a mailing from my state sen in va beach and it sounded like what a republican should (i.e. don’t raise taxes in a recession…especially one where this area has yet to feel the impact of the military cuts!!)

  2. This is well said; ought to be the watchers entry for this coming week! Sandy

  3. Hi there! Good thing that you�ve provided your info with us. I am also learning about child support laws. And thinking of getting help from Fresno child support attorney, to get rid of my problems. But no luck still now. Property attorneys Fresno

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Tom White Says:

Nothing is more conservative than a republican wanting to get their majority back. And nothing is more liberal than a republican WITH a majority.

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