How Bad Is Virginia’s Economic Outlook For Businesses and Families

Remember those halcyon days when Virginia was one of the best-run states in the country? According to the latest data from the ALEC-Laffer State Economic Competitiveness Index, it wasn’t all that long ago. As recently as 2013, Virginia had the 5th best economic outlook in the U.S. Between 2008 and 2013, Virginia ranked as high as 3rd and no lower than 8th. Then in 2014, the year Governor McAuliffe took office, Virginia dropped six slots to 11th and has only reached as high as 10th once since then.

Now, the latest data indicate Virginia has fallen again, all the way from 10th to 17th in three years. In fact, over the last 10 years, Virginia has fallen fourteen slots from 3rd to 17th. Only one other state, Maryland, has dropped further in that timeframe, and our northern neighbors started at 21st.

We can point to at least two factors that led to Virginia’s initial drop in 2014. First, Virginia’s top corporate income tax rate jumped from 6% to 7.6% in 2013.

Then, after several years of personal tax burdens remaining steady, in 2014, they rose $1 per $1,000 of personal income. Each year since then has seen some sort of increase for a cumulative $6.49 increase per $1,000 since 2013. The largest jump of $1.78 occurred just this year, which is part of the reason Virginia has seen a new low in economic outlook this year.

Also, over the last 10 years, the difference in personal income tax liability between those making $50,000 and those making $150,000 had held steady at $6.45 per $1,000 of personal income. When the Democrats took over the General Assembly last year, that difference jumped to $7.60.

Penalizing Virginia businesses and Virginia families for making more money is a great idea...if you want fewer businesses and fewer families in Virginia. Just ask California. The latest census showed a population decline in the Golden State for the first time in recorded history. So where would all these disaffected Virginians go? Well, while Virginia has been cratering over the last eight years, North Carolina has jumped from 22nd to 5th. Not too shabby.