by Rachel Byrne
Gov. Jim Justice released his proposal to make changes to our state’s tax system a little over two weeks ago. This proposal, which the governor has stated would bring businesses and attract people to our state — which lost 10,476 residents in the past year — will cause an estimated $185 million shortfall in the general revenue fund.
The governor has proposed an immediate 60% reduction in the state’s personal income tax rates. Though this may sound sexy to some, the tax reduction will blow an estimated $1.036 billion hole in the state budget. So how do we make up these shortfalls without huge cuts to education, public health and infrastructure?
The proposed tax reductions are offset by huge sales tax increases in the governor’s proposal — increasing the state sales tax from 6.0% to 7.9%, making it the highest sales tax in the country. For cities like Morgantown, there is an additional 1% municipal sales tax on top of the increased rate, totaling 8.9% for Morgantown residents.
So what do these sales tax increases mean to the average West Virginian? The typical household in West Virginia, with an average income of $43,000, would save $458 from the income tax cut, but would pay an extra $736 in increased sales and other taxes, for a net tax increase of $278.
The governor’s proposal also includes increases to the state’s tobacco taxes; state taxes on beer, wine and liquor; state taxes on soft drinks and other sugary beverages — taxes which are paid disproportionately by people with low incomes.
According to the West Virginia Center on Budget and Policy, with an estimated $1.088 billion in tax reductions and an estimated $902.6 million in sales tax increases, the plan would still create a $185 million hole in the budget in the upcoming fiscal year. This would require immediate cuts to the budget that we can only assume would impact low- and middle-income families the most.
We’ve seen this story play out before and when the budget comes up short, we’re most likely to see cuts to education, public health and infrastructure — three critical factors people look at in choosing whether to move to or stay in West Virginia.
In virtual town halls over the last two weeks, Gov. Justice has attempted to answer the many questions West Virginians have about his proposal. He’s noted that his plan will bring in “more businesses, more people, and make life better for all West Virginians.” While we have reasons to be skeptical reducing the income tax will bring people and businesses to the state, we can be sure the plan will cause pain for current West Virginia households and small businesses right away.
As a young person who has chosen to live in West Virginia, I’m often asked why I’ve stayed. The greater Morgantown area is a vibrant and welcoming place to live, and when I made the choice to live in West Virginia permanently, never once did the amount of state income tax I would pay come to mind.
Instead, I stayed for the employment opportunities in a rapidly growing local economy, a community filled with diverse and welcoming voices, and the educational opportunities right in my back yard.
I’m not alone in this. When I talk to my friends, family, colleagues and neighbors about West Virginia, there’s a rising theme — “Why do we stay?”
I hear folks worried about the public school system losing funding, the lack of infrastructure and the quality of our roads, concerns about a legislative agenda to stop harm reduction programs in a state ravaged by an opioid crisis, and a Legislature that has yet to pass the Fairness Act or Crown Act, but prioritizes legislation that would make teaching diversity and inclusion in public school and workplaces illegal.
Through all these concerns, never once have I heard about the personal income tax. I think the governor would do well to listen to West Virginians on this one. We want a budget that prioritizes people, not tax cuts for the rich.
Rachel Byrne is the first vice-chair of the Monongalia County Democratic Executive Committee and a Morgantown resident.
