By Glenn Davis
August’s weather was hot, Virginia’s economy is hotter.
According to Federal Reserve Bank of Richmond’s most recent data, the state’s unemployment rate hovers around 3 percent — down substantially since last year and better than the national average. While public-sector employment is falling, private-sector firms are doing their part to add jobs and beef up payrolls.
Everyday Virginians, meanwhile, are seeing their paychecks rise. Not only are there more career opportunities to be had, but take-home pay is also on the uptick — and with it, consumers’ purchasing power. When customers have more money to spend, our consumer economy kicks into a higher gear.
Because of the Tax Cuts and Jobs Act, which President Trump signed into law last December, the average middle-class family in Virginia will see a more than $730 boost in after-tax income this year. This translates to a monthly rent payment or a long-overdue vacation, not to mention countless gas tank fill-ups and grocery store runs.
Better yet, the outlook for the labor market hasn’t been so bright in years. The Tax Foundation estimates that federal tax cuts will result in nearly 5,800 additional full-time equivalent jobs in our state. We’re talking farmers and landscapers and delivery truck drivers — all hired because employers have more resources at their disposal.
So how can we make Virginia’s economy even hotter? Build on the Tax Cuts and Jobs Act. As we speak, Congress is debating Tax Cuts 2.0, which would do just that.
First and foremost, the second phase of tax cuts would make the new tax law’s individual income tax cuts permanent, allowing Virginia workers to hold on to their income boost for decades to come.
Because of Democratic obstruction — the kind of obstruction that has labeled any tax cut benefits as “crumbs” — the individual tax cuts are set to expire within the next decade. Congressional Republicans should do everything in their power to prevent that from happening.
They should also look for new ways to ax taxes. One possibility is extending tax relief for small businesses, which remain the engine of our economy.
The Tax Cuts and Jobs Act cut rates and increased deductions, but it left millions of service businesses out in the cold. Accounting firms and other service businesses employ thousands of Virginians and millions of Americans, and they could certainly use a lighter tax load.
Let’s not underestimate the power of small business. In America, there are more than 30 million small businesses. That’s right: 30 million!
In Virginia alone, we’re talking almost 724,000 small businesses, which are responsible for employing 1.5 million workers — roughly half of our state’s workforce.
When these job creators are rewarded with a reduced tax burden, they can in turn use their tax savings to reward employees and job-seekers alike. A business with more money is better equipped to invest in research and development, new product lines, and office renovations, not to mention hiring.
Why not give them that chance? We can keep Virginia’s economy hotter than the sun through Tax Cuts 2.0.
It’s a win-win for employers and employees everywhere.
Glenn Davis represents the 84th District in the Virginia House of Delegates and may be contacted at DelGDavis@house.virginia.gov.
Because of the Tax Cuts and Jobs Act, which President Trump signed into law last December, the average middle-class family in Virginia will see a more than $730 boost in after-tax income this year.