Five local legislators fielded questions from members of the Morgantown Area Partnership and the Board of Realtors Thursday morning during the annual legislative breakfast.
Sens. Mike Caputo and Dave Sypolt and Delegates Evan Hansen, Barbara Evans Fleischauer and John Williams addressed the audience — some attending in-person and some attending virtually.
Several questions focused on the failed personal income tax repeal efforts, which sharply divided the House and Senate. Proposals by the Senate and Gov. Jim Justice used a variety of tax hikes to offset most of the revenue lost by phasing out the income tax and relied on economic growth to fill in the gaps.
The House plan would have phased down tax rates gradually — in as many as 13 years — making use of a special fund fed from other tax revenue to accelerate the phase-down. It provided for no offsetting tax hikes and relied solely on growth.
Looking at the possibility of that effort returning in 2022, Caputo, D-Marion, said, “I think it’s dead on arrival right now.”
Sypolt, R-Preston, said, “The idea behind reducing and eliminating eventually the personal income tax is to draw people to West Virginia. … The House plan being so gentle would not have the shock effect necessary to actually effectuate that desired outcome of bringing people in.”
He said the income tax is paid by 800,000 people, while the sales tax is paid by 36 million people who visit or pass through the state. “I think that by broadening the base of taxes across more people, then we can each pay the same amount and get the same results.”
The four Democrats agreed the lost income tax revenue would create consequences. “Someone’s going to feel the heat for that,” Caputo said, “whether it’s the business community or whether it’s the consumer. Without increased population, we cannot fill that void in state revenue.”
Hansen, Fleischauer and Williams are all D-Monongalia.
Williams said the government has a role in providing services and a safety net. “My fear with cutting the income tax was that we wouldn’t have a way to fill that gap.” And it’s counterproductive to cut one tax and replace it with another. “I do think we want to make West Virginia an attractive place but I think there are other ways to do that without slashing the income tax.”
Fleischauer said there would be no way to eliminate the income tax without unreasonable burdens on business and on the schools.
Hansen agreed, saying levying new taxes on professional services would hurt many of those businesses. “My company can’t just eat a 5%-to-10% loss on every invoice we send out. So those costs are going to be passed along to customers.”
There are other ways to draw people, all agreed. The Democrats mentioned the ever-failing Fairness Act; that continued failure sends a signal West Virginia isn’t a welcoming place. Energy and environmental policies grounded in science and recreational opportunities are also important.
All agreed improved infrastructure is important. “High-speed internet has to be at the top of the list to attract people and develop the economy,” Caputo said. “Then, and only then, when we grow, I think we can start looking toward eliminating some of those taxes.”
On the broadband issue, the five fielded some questions about HB 2002, the expansive broadband bill passed during the regular 2021 session.
Hansen and Fleischauer said they worked to amend it to make sure local governments could take steps to provide local broadband service.
There’s a debate, Hansen said, on whether it’s best to pump more money to existing providers or to facilitate other entrants into the space, including units of local government. Competition is needed and if the providers aren’t doing their job there’s a role for local governments and co-ops to play a part.
“We worked very hard with local constituents to make sure that language got into the bill,” Fleischauer said.
Asked when some fruits of that bill might start appearing, Sypolt and Caputo agreed they don’t know, though Sypolt hopes to start seeing some movement by the fourth quarter of this year.
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