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Waiting To See Justice Tax Plan

As of today, we’re one-third of the way through the 2021 legislative session. We still have the whole month of March and about a week and a half of April left to go.

The one thing I keep hearing as we trudge on through the slaughterhouse where the legislative sausage is made is people wondering where Gov. Jim Justice’s tax reform bills are.

Justice spent part of last week talking about his plans to reduce the personal income tax, holding virtual town halls to discuss those plans and take submitted questions. The first town hall was announced with barely several hours’ notice, which didn’t lend itself to many questions. The second town hall was more successful as far as that went.

Yet, it would seem that the public has more of an idea of Justice’s plans than lawmakers do. I’ve been told by multiple legislators that they haven’t seen any drafts of Justice’s proposals and haven’t so much been asked to participate in the planning. The day the bills drop is likely the first time any lawmakers will see the whole plan.

Even the virtual town halls are more theater than truly informational. Justice has developed an ability to seem transparent while not being very transparent at all. He has revealed several parts of his tax reform plans, but even those revelations are not truly clear.

For example, he wants to cut everyone’s personal income tax rates in half starting in fiscal year 2022 (July 1, 2021). But how high will he raise the consumer sales and use tax? He said only by 1.5 percent during his State of the State. That’s now changed to a range between a 1.5 percent increase and a 1.9 percent increase. Which is it? Or is it a sliding scale?

Justice has walked back his remarks calling for a wealth tax, which honestly is a nebulous term to begin with. It’s now a luxury tax, but what would be defined as a luxury? He wanted to remove tax exemptions on professional services, but what does that mean? Is it all professional services, or will attorneys be able to wiggle their way back out? What will be the new tax rates for tobacco products and vape products?

We’ve gotten some idea on how Justice would make the personal income tax revenue neutral. The personal income tax accounts for between $2 billion and $2.5 billion — half of our general revenue budget. But some of those plans – keeping the budget flat for the next three years, cutting $25 million from the budget, cutting state employee positions through retirement and attrition, etc. — still leave a lot of maybes and rely on assumptions.

Anyone who knows me knows I’m a big tax reform guy and I’m certainly fine with trying new things. The idea that some have that we need to leave the current system alone (and even raise taxes) is largely what keeps us ranked last. But if the governor has more specifics, he had better start bringing lawmakers into the planning.

Justice would also have more trust and support among Republican lawmakers if he would stop trashing them and giving ammunition to their political opponents.

Twice this week, Justice said that past laws repealing the prevailing wage for public construction contracts and creating a right-to-work law didn’t bring companies and jobs here.

In the case of the prevailing wage, I think it’s too soon to tell. One study from 2018 found that prior to 2016 when the law went into effect, school construction costs were higher. Another report released in 2019 found that prevailing wages created no savings. As for whether the law created more jobs, neither study addressed that.

In the case of right-to-work, the law had been held up in court after the West Virginia AFL-CIO challenged it. The state Supreme Court upheld the law last year. Even though the law was in effect during the legal tug-of-war, I imagine most companies were waiting to see the outcome. Again, it’s going to take a few years to see if both laws were helpful.

Justice has long been against prevailing wage repeals and right-to-work. He won election as governor on the Democratic ticket in 2016 with union endorsements. He is a Republican now, but you’ve got to give him some points for consistency.

Nonetheless, many of the Republican lawmakers who worked on those bills are still in the Legislature. I suspect they’re none too happy to hear the governor trashing their efforts. That could come back to bite Justice when trying to push his tax reform bills through.

Circling back to transparency, with COVID-19 cases coming down, perhaps it is time to start opening up the governor’s briefings to in-person press.

When this is brought up by other reporters, Justice balks. He says he answers every question presented, he never lies, and what about the press in other parts of the state?

Look, if they want to keep live-streaming and allowing reporters to participate by Zoom, I’m fine with that. The governor’s office has proven they can do that, and that communications team is hardworking. But everyone in that room with Justice is vaccinated. There are school rooms with less space than the Governor’s Reception Room.

There is a lot that gets missed when the press are limited to one question and no follow-up question, especially when Justice doesn’t understand the question and gives you an answer completely unconnected to the question you asked.

It’s time for the relationship between the governor and the press to return to some form of normalcy.

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