McAuliffe to propose decreased corporate tax rate
Gov. Terry McAuliffe announced Thursday that he will propose lowering Virginia’s corporate tax rate to make the state more competitive.
Lowering the corporate tax rate from 6 percent to 5.75 percent would reduce business taxes by $64 million over two years. The rate would become effective Jan. 1, 2017.
“We have to always put ourselves in a very competitive position, right now tax wise we are not in a very competitive position,” McAuliffe told reporters from around Virginia gathered for the annual Associated Press Day at the Capital. “We need to reduce taxes here in the commonwealth in order for us to be competitive.”
North Carolina has a corporate tax rate of 5 percent and is planning to lower it to 4 percent as of Jan. 1.
“The first question we always get is what is your tax rate so when you’re at 6 and our neighbor to the south is 5, I think we need to be in the 5’s.” McAuliffe said. “And that’s why I’m saying let’s go down to 5.75.”
McAuliffe also announced proposals to create a new tax credit and expand existing tax credits. His proposals will include:
- Creating a new research and development tax credit that would have an annual statewide cap of $15 million. The credit would be designed to benefit larger companies that spend more than $5 million in annual research spending, which McAuliffe said the state has had trouble attracting.
- Expanding Virginia’s existing research and development tax credit by raising the statewide cap from $6 million to $7 million and extending the sunset date from 2019 to 2026.
- Increasing the cap on Virginia’s Angel Investor Tax Credit from $5 million to $9 million, with $2 million earmarked for bioscience projects.
- Reducing the number of Virginia retailers who are required to pay accelerated tax payments at the end of the state’s fiscal year in June.
McAuliffe will announce his full budget Dec. 17.