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The Wall Street Journal, in an opinion piece published Tuesday, confirmed what Gov. Jim Justice and members of the state House of Delegates already know: cutting the personal income tax rate will benefit West Virginia through new growth and, if done prudently, will not negatively impact the state's economy.
Justice has proposed, and the House has passed by an overwhelming 95-2 margin, a plan to cut personal income tax rates in half over three years through House Bill 2526. If enacted, the state's top income tax rate would go from the current 6.5% to 3.25%, lower than any of its neighbors other than Pennsylvania.
Here's what the Wall Street Journal's Editorial Board had to say on tax cuts: "Statehouses across the country are continuing to cut taxes in a movement that shows no sign of slowing down. By year-end, nearly half of all states will have cut their income-tax rates within a three-year period. The good results so far confirm that we're in a virtuous economic-political cycle. … At least six states have kicked off their 2023 legislative sessions with income-tax cut proposals. … Large GOP majorities in West Virginia and Utah are considering significant cuts after hesitating last year."
According to the editorial, states started cutting taxes in 2021 as revenue collections increased. Since then, the Journal says 21 states have lowered income taxes, and those states are "betting that returning revenue to taxpayers will spur faster economic growth."
That's what Justice has been saying: income tax cuts not only will help grow West Virginia's population, but the move also will bolster the economy by giving money back to residents as opposed to enacting new and costly programs.
The Journal also addresses concerns that critics have that tax cuts will harm the economy. "Tax-cut critics always predict that a revenue bust is around the corner, pointing to disappointing results after Kansas cut taxes in 2012. Yet governors of late have moved carefully, often cutting less than official revenue estimates would allow."
That's exactly what Justice is proposing -- a phased-in plan that would lower the tax rate 30% the first year, and 10% the following two years. He's also proposed putting $700 million of the state's more than $2 billion surplus into an emergency fund, just in case.
Here's another fact Justice knows: people are willing to move to states with lower tax rates.
"From Florida to Texas and Idaho, the states that draw the most new residents from other states tend to have much lower tax rates. Population losers like New Jersey, New York and California are among the most punitive taxers," the Journal states. "Competition is moving states toward better tax codes, and the trend is compounding. Americans in states that haven't joined the tax cutters at least have more places to move to."
One of those places must be West Virginia. The Legislature can make that happen by crafting a pro-growth tax system.
The West Virginia Senate's 34 members need to move on HB 2526 immediately -- and the leadership needs to come from senators in the Northern Panhandle, where residents now can enjoy all our state has to offer while living in Ohio or Pennsylvania. Cutting income tax rates is the right plan.