Justice Income Tax Proposal Good Start
Gov. Jim Justice has submitted to lawmakers a state income tax repeal plan with the encouragement that “This is the time to seize our opportunity!”
It starts with a 60 percent reduction in the personal income tax for the first year. For many West Virginians –and perhaps those considering making a home here — that is wonderful news. But lawmakers must now figure out which of the pieces Justice threw at the wall will stick.
Justice’s plan includes a tax rebate totaling $52 million for those in income brackets less than $35,000 a year. In fact, Justice’s plan shows nearly $1.09 billion returning to the people.
Meanwhile, Justice has proposed a series of increases and changes that would make up some of the difference. Those include increasing coal, oil and natural gas severance tax rates on a tiered basis; creating a luxury items tax (the lowest tier on that scale is an additional 3 percent tax on items costing between $5,000 and $10,000); increasing cigarette, e-cigarette and tobacco taxes; increasing beer, wine and liquor taxes; and taxing soda. Justice is also proposing raising the state sales tax from 6 percent to 7.9 percent — the highest rate in the nation, outstripping even California, which has a 7.25 percent sales tax.
Other changes include eliminating sales tax exemptions on: computer hardware/software, many professional services, health and fitness memberships and sales of lottery tickets. Lawmakers understand the employers in the professional fields affected by eliminating all those exemptions will be forced to either absorb the costs themselves and make cuts elsewhere or pass the costs along to their customers. Such a change will cost jobs.
For the most part, however, the changes give taxpayers the opportunity to keep more of their hard-earned money, should they adjust their spending habits accordingly.
Lawmakers have another problem to tackle, though. Justice gave them ideas for $902.6 million in tax increases or changes, and $95 million worth of “options to consider,” such as Senate proposed reductions of general fund payroll due to employment attrition and $60 million projected annual revenue growth. That leaves an approximately $90 million hole remaining unfilled. Forget about what wrangling lawmakers have to pull off this year for the change to be revenue neutral; what happens three years from now if the income tax is phased out entirely?
Justice has placed the ball in lawmakers’ court then, with a good starting point to do the right thing for West Virginians present and future. It is up to them to keep in place only the parts of Justice’s plan they know will do more good than harm, while getting down to business on that elimination of waste, fraud and incompetence they’ve been promising for so long. They’ll have to work to bring new revenue generators to West Virginia, rather than simply relying on those we know will not sustain us forever.
“To truly make this work, we all need to pull the rope together as West Virginians,” Justice said.
He means if we are to make good things happen for the Mountain State, there is work involved.
Lawmakers have his plan. Their work starts now.