by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The Virginia GOP’s problems are largely of its own making. Outgoing Virginia Gov. Bob McDonnell tarnished the Republican brand in his state and destroyed the party’s advantage on the tax issue earlier this year when he put his signature on a bill that raised taxes by $5.9 billion. Terry McAuliffe, his successor, made his support for McDonnell’s tax hike a key component of his message. Let’s just say that if you are a Republican and Terry McAuliffe is running on your tax plan, it’s a safe bet that it was probably a bad idea. Not only was McDonnell’s tax package dumb politics—a Roanoke College poll on the proposal found 49 percent opposed and only 33 percent supportive—it was terrible policy to boot.
Republicans in North Carolina went in the opposite direction, passing a historic tax reform package that included the largest income tax rate reduction in the country in 2013. The legislation dropped the top personal income tax rate by 25 percent, taking it from 7.75 percent, previously the highest rate in the Southeast, to 5.75 percent and flattening what had been a progressive income tax system. The Tar Heel State’s tax reform also reduced the corporate tax rate from 6.9 percent to 5 percent (eventually down to 3 percent, if revenue targets are met) and eliminated North Carolina’s death tax, making Pinehurst and the Outer Banks even more attractive to retirees from around the country.
According to a poll released by Americans for Prosperity earlier this month, 60 percent of North Carolina voters approve of the corporate tax rate reduction, and 70 percent approve of the lowering and flattening of the state personal income tax. It appears that the North Carolina tax reform package wasn’t just excellent policy, it was good politics—a reverse McDonnell, if you will. So not only is North Carolina’s BBQ superior to Virginia’s, so are its Republican politicians.