Phasing Out Inventory Tax
Critics of the process of making West Virginia more welcoming to job creators sometimes accuse reformers of promising too much. This improvement or that one did not result in an economic renaissance, they say, so why should Mountain State residents do more?
No one ever said remaking the state’s economy would be a magic-bullet, single-stroke event, however. It is a process that, especially as other states adapt to compete, must be ongoing.
Part of that process must be doing away with West Virginia’s personal property tax on business inventories and machinery. That will be a top priority during this year’s regular session of the state Legislature, leading lawmakers said Friday. Their comments came during the annual Legislative Lookahead event sponsored primarily by the West Virginia Press Association.
Many businesses consider the tax the most onerous one they have to pay in the Mountain State. Ours is one of just 10 states to tax business inventories.
But eliminating the levy is a daunting task. It raises about $530 million a year.
About 90 percent of that goes to school systems, municipalities and counties. Jerking that fiscal rug out from under them would be irresponsible.
A strategy that may be implemented during the legislative session that begins this week is phasing out the tax. One proposal is to reduce it by $140 million, cutting $20 million a year during a seven-year period.
That is appealing in large measure because it is achievable. Surely lawmakers and Gov. Jim Justice can find $20 million to replace revenue foregone by taking the first step of that initiative.
If anything, they should be looking for ways to accelerate the process — while ensuring schools and local governments do not suffer.
Will phasing out the inventory tax result in a headlong rush of businesses creating new jobs in our state? Of course not.
But it will help many existing businesses be competitive, safeguarding existing jobs. And it — along with other business-friendly actions by legislators and the governor — will make the state more attractive to new employers. Continuing that process is imperative.