×

Governor’s Tax Cut Won’t Move Needle

It’s a story common for regions of West Virginia that border Pennsylvania, Ohio and Kentucky.

A recent college graduate of West Virginia University lands their first job in Pennsylvania. When it comes to deciding which state is more appealing on the income tax front, the choice is clear: Pennsylvania.

The same goes for Ohio and Kentucky. How many professionals work in Wheeling, Parkersburg or Huntington, yet live in Ohio or Kentucky because of a lower personal income tax burden?

And now, instead of proposing a meaningful plan to make West Virginia more competitive with its neighbors, Gov. Patrick Morrisey appears content to nibble around the edges. His call for a 10% cut to the personal income tax will do nothing to help win his self-proclaimed “economic backyard brawl,” as the Mountain State’s tax rate would still be higher than Pennsylvania, Ohio and Kentucky.

That’s a losing strategy at a time when West Virginia can ill-afford to cede more population.

To be clear, this is not an argument against tax relief. As we have stressed for years, West Virginians deserve it. Families across the Mountain State continue to face financial challenges, and policymakers should always be looking for ways to allow residents to keep more of what they earn. Lower taxes also are an important economic development tool.

But strategy matters. And right now, a 10% across-the-board reduction in the personal income tax amounts to little more than a symbolic gesture.

Consider our competition: Ohio has steadily reduced its rate in recent years and now sits at a flat 2.75%. Pennsylvania’s rate is 3.07% and Kentucky lawmakers have lowered their rate to 3.5%. Only Maryland and Virginia have higher rates.

So while the majority of our neighbors are making decisive moves, West Virginia is proposing to inch forward. That approach simply does not match the moment.

The governor has framed economic development as a backyard brawl among neighboring states — a competition where businesses and workers can easily cross borders in search of lower taxes and regulations. If that analogy holds true, then West Virginia is losing — badly. A 10% income tax reduction does not suddenly change the scoreboard.

With a 10% cut — West Virginia’s top rate still would sit at 4.34%, and businesses considering where to expand or relocate are not likely to view our state dramatically differently.

Likewise, workers deciding whether to live in Wheeling or Weirton or across the river in Ohio will continue to notice the same disadvantage in their income tax burden.

For years now, this newspaper has argued that if West Virginia truly wants to reset its economic trajectory, lawmakers must think bigger. Incremental cuts to the income tax may provide temporary political wins, but they fail to deliver the transformational change this state requires.

If eliminating the personal income tax is the goal, then state leaders should present a serious, transparent and long-term roadmap to get there. That means identifying replacement revenue streams, committing to responsible spending reforms and setting measurable benchmarks (these benchmarks, at least, already have been set) that citizens and businesses alike can understand. It means honesty about the challenges involved in making that happen while demonstrating the courage to pursue meaningful reform rather than halfway measures.

Other states have done exactly that. Consider the economic advantages Tennessee has seen since eliminating its personal income tax.

But instead, what is being proposed here risks placing West Virginia in the worst possible position: sacrificing revenue without gaining a competitive advantage.

That should concern lawmakers on both sides of the debate. Thankfully, to this point, at least, the West Virginia House of Delegates agrees.

Fiscal responsibility matters, particularly as the Legislature wrestles with competing budget proposals and ongoing funding obligations. But every year that passes without bold action widens the perception gap that West Virginia is a higher-tax, harder-place-to-do business. That perception matters as much as the numbers themselves.

Gov. Morrisey deserves credit for recognizing that affordability and economic growth must remain central priorities.

He also is correct that West Virginia cannot afford complacency in a rapidly changing regional economy, one in which the majority of our neighbors are making bold moves.

But if this truly is an economic backyard brawl as the governor has framed it, then a modest tax cut is the equivalent of a 2-yard screen pass on fourth and long. It doesn’t move the chains.

If state leaders want to change West Virginia’s current trajectory and attract investment, retain young workers and finally reverse decades of population decline, the answer is not cautious steps that leave us behind.

West Virginia doesn’t need a small adjustment. It needs a real plan — and the courage to go big enough to win.

It will be worth watching over the final weeks of the legislative session to see if anyone has that courage — or if we’ll simply continue to be left behind.

Starting at $2.99/week.

Subscribe Today