A tax credit for film productions that set up shop in Virginia is largely credited for luring Steven Spielberg's Lincoln to Virginia last year. Now, two state lawmakers want to know if that credit, and many others are worth the cost and are looking to reform the tax code.
A bill that grants oversight to the General Assembly over any new credits passed the House this week and is on its way to the Senate.
Head over to Virginia's Department of Taxation website and you'll find a laundry list of different credits offered up by the commonwealth - almost 200 - from incentives to offer daycare services to your employees, to tax breaks to help start up a winery.
Delegate David Englin said, "Over the years, the Virginia code has just accumulated tax credits after tax credits."
Now an unlikely pairing, Democratic Delegate David Englin and Republican Delegate Ben Cline, have teamed up in the name of tax credit reform.
"We want to encourage businesses to come here, but we need to make sure any tax credits are getting a benefit, whether it's through job creation or through revenues for the commonwealth," stated Cline.
Their House Bill 248 passed this week 98- 0. Under the plan, any new tax credits must have an expiration date of no more than five years.
"It forces us to take a look at them and make those judgments, and tax credits that are serving their purpose, that are creating economic growth for example, or have a good return on investment, we will have the opportunity to continue those credits," said Englin.
A recent state audit showed Virginia lost more than $12 billion to tax credits in 2008. That is money not funding education or road projects. Both Englin and Cline hope this is one step toward larger tax reform down the road with across the board rate cuts and fewer exemptions.
"We need to spend and monitor taxpayer money wisely. That's something we can all agree on," stated Cline.
To put that $12.5 billion in perspective, that's about 15 percent of Governor McDonnell's entire proposed $85 billion budget for this year. That bill now heads to the senate.
