There’s a sense in the air that the answer to our problems, be it economy, deficit or schools, is to cut, cut, cut. Cut salaries, cut benefits, cut programs. On the surface, the logic of cutting makes some kind of sense. There are deficits at the Federal and State level (no, Virginia’s budget is not in balance if you fail to make payments into the state retirement fund), and spending less is one of the common prescriptions for closing deficits.
The dirty truth, however, is that no long-term government deficit has ever been solved simply by cutting the budget. Budget cuts are net drags on an economy, and a shrinking economy exacerbates budget problems by yielding shrinking revenues for the government, which makes deficits worse, which creates incentives for more cuts, which further drag the economy… It’s a vicious, downward cycle that leads to malaise and bankruptcy.
The fact is that the only thing that has ever truly balanced a major government budget is economic growth. That’s it. All other supposed “answers” are simply second-order results of robust economic growth. So, if you are truly in favor of balanced budgets, you must be in favor of policies that encourage economic growth.
Ah, but there’s a catch. The type of growth matters. If you look at the history of balanced Federal budgets, they came near the middle and end of periods of economic growth in which the bottom 50% of households saw their incomes rise and fortunes improve.
Follow below the fold for a short, and by no means complete, historical survey of balanced budgets. Continue reading
From Senator Mark Herring’s Twitter page today:
SB 1326 creating an ‘R&D’ Tax Credit in Virginia passed the Senate 38-1.
This is good news for getting jobs created in Virginia. Companies that invest in R & D now have incentives to hire more people to help with that R & D, and they can do so starting next year.
Here’s hoping that the near-unanimous Senate vote carries over to the House of Delegates with similar support, since the Governor supports it as well.
The text of SB 1326:
Income tax; research and development expenses tax credit. Allows income tax credits for individuals and businesses for qualified research and development expenses for taxable years beginning on or after January 1, 2012, but before January 1, 2017. The tax credit amounts are (i) 15% of the Virginia qualified research and development expenses, or (ii) 20% of the Virginia qualified research and development expenses, if the research was conducted in conjunction with a Virginia public college and university. The Tax Department shall develop policies and procedures for the application process for the tax credits. There is a $10 million cap on the total amount of credits allowed in any taxable year.
Sen. Herring noted SB 1326 on his webpage:
Among the highlights of Senator Herring’s legislative package is SB 1326, which creates a Research and Development Tax Credit in Virginia. This legislation is the top priority of the Northern Virginia Technology Council and the Virginia Biotechnology Association, with whom Senator Herring has worked closely in the past, including last year on the passage of the Virginia Innovation Investment Act. For his efforts to promote science and technology based economic development, Senator Herring was named “Legislator of the Year” in 2010 by the Biotechnology Industry Organization (BIO).
This legislation was also included among Governor Bob McDonnell’s “Opportunity at Work” legislative proposals. The Governor thanked Senator Herring for carrying this legislation during his State of the Commonwealth address delivered this past Wednesday.
More reason why Mark Herring is working hard for Virginia (and Loudoun County) individuals and families. We should all workk hard to re-elect him in November.