Of the tax cut plans on the table, the one proposed by the Senate (SB 424) is by far the most reasonable.
As we previously reported, the plan starts with a 15% decrease in personal income tax. In out years, a 105% improvement of sales tax revenue over the previous year would trigger additional income tax cuts. SB 424 also includes eliminating the “marriage penalty” when filing taxes in West Virginia (when filing jointly bumps a couple into a higher tax bracket than if they’d filed separately); a rebate for vehicle property tax; a homestead real property tax rebate for 90% to 100% service-disabled military veterans; and a 50% rebate for equipment and inventory property taxes paid businesses.
It certainly seems reasonable, but … Do the Senate’s tax cuts seem so moderate because everything else up to this point has been so extreme?
The Senate had previously spearheaded Amendment 2, to give the Legislature the power to eliminate property taxes. People liked the idea of not paying a vehicle tax, but voters resoundingly said “no” to giving businesses a hall-pass on taxes that support counties, schools and emergency services. So the Senate toned it down to a 50% rebate for businesses for SB 424.
Gov. Jim Justice partnered with the House of Delegates to introduce his plan as HB 2526: a gradual income tax cut that starts with 30% the first year, then 10% each of the next two years. As we’ve mentioned previously, Justice’s tax plan ultimately helps wealthier individuals more than middle- or low-income people. Plus, it takes a huge chunk out of the state’s revenue under the mistaken presumption that the recent surpluses will be a regular occurrence. According to the Tax and Revenue Department, Justice’s plan would decrease General Revenue Fund collections by roughly $161.8 million in FY 2023, then by $1.085 billion, $1.23 billion and $1.493 billion in each of the next three years, respectively.
Compared to that, the Senate’s plan seems almost overly cautious.
And that’s the problem: We, as residents of West Virginia, have been bombarded by so many crazy tax schemes in the last year that we’re nearly tempted to yes to one that almost seems rooted in reality.
“Almost” because the reality in West Virginia is that our state agencies, from schools to corrections to health care, have been so chronically underfunded that they are collapsing — hemorrhaging qualified workers and failing to complete their missions. Our infrastructure is dilapidated — water systems decaying, roads disintegrating and bridges deteriorating.
The reality is that now is not the right time to consider cutting taxes. Save that discussion for a year when federal stimulus money hasn’t given us a false surplus and the state budget accurately reflects the funding needed for state agencies and services to thrive. Because only when the state’s finances reflect the state’s reality can we choose the best plan to guide West Virginia’s future.
