MORGANTOWN — Gov. Jim Justice has called for the Legislature to convene in special session starting at noon Monday. Just one item is on the call: his proposal to reduce West Virginia’s personal income tax by an aggregate of 10%.
The tax cut would be retroactive back to Jan. 1 and amount to $254 million, he said Wednesday, which is the maximum recommended reduction that can be safely made while remaining in compliance with American Rescue Plan Act guidelines.
“I’ve been the biggest proponent of completely eliminating our state personal income tax,” Justice said. “It will drive job growth, population growth and prosperity in West Virginia. But the most important thing to do is get started right away. In the past year, gas prices have gotten out of control and inflation is through the roof. West Virginians need help right now.”
Justice originally announced his plan on July 6, along with the news the state ended Fiscal Year 2022 with a $1.308 billion surplus.
“Once we get the ball rolling,” he said Wednesday, “we can keep coming back and chipping away at our personal income tax until it’s completely eliminated. When you look at states like Florida, Texas and Tennessee, they have no personal income tax and their state economies are growing like crazy. There is a direct correlation. People are moving to no-income-tax states because they can keep more of their hard-earned paycheck, which spurs ever greater economic activity.”
Justice has put his proposal into a two-page bill. The state personal income tax brackets will remain the same, while the tax rates — which haven’t changed since 1987 — will drop at every income level, he said.
There are five tax brackets. For individuals and couples filing jointly, the rate for incomes up to $10,000 will go from 3% to 2%.
For above $10,000 to $25,000, it will fall from 4% to 3.7%. The tax would be $200 plus 3.7% for income above $10,000.
For over $25,000 to $40,000, it falls from 4.5% to 4.2% and the tax would be $755 plus 4.2% for income above $25,000.
For over $40,000 to $60,000, the rate falls from 6% to 5.5% and the tax would be $1,385 plus 5.5% of income above $40,000.
For over $60,000, the rate goes from 6% to 5.98% and the tax would be $2,485 plus 5.98% of income over $60,000.
Looking at how much the rates change, incomes of $10,000 see a 33% cut; $25,000, 16%; $40,000, 12%; $60,000, 10%; $100,000, 9%; $500,000, 8%.
The House speaker and Senate president chose not to comment on the governor’s plans. As previously mentioned, the plan is similar to House Finance chair Eric Householder’s. Senate President Craig Blair said his caucus would prefer to pass personal property tax legislation first, if the voters approve the property tax amendment on the November ballot.
Democrats, on the other hand, were somewhat more enthusiastic.
“West Virginians need help now,” Senate Minority Leader Stephen Baldwin, D-Greenbrier, said. “As inflation has grown this year, Democrats have proposed ideas to provide the people with relief – gas tax relief, sales tax relief, tax credits for families, workforce investments, and even a tax rebate. Those suggestions have largely been dismissed or ignored by the governor and the majority party.”
House Minority Leader Doug Skaff, D-Kananwha, said, “The Governor announced this plan without discussion with or input from legislators – and we are the ones who have been hearing from people across the state on what would help them the most. The limited special session call also precludes us from discussing other avenues for meaningful tax relief for West Virginians. His lack of communication aside, we look forward to reviewing this plan to see how we can provide much-needed relief to the citizens of our state.”
Sen. Richard Lindsay, D-Kanawha, said, “We are glad that the governor agrees with us that everyday West Virginians need relief from inflation. People across our state are hurting, and they deserve immediate, meaningful relief.”
TWEET David Beard @dbeardtdp
EMAIL dbeard@dominionpost.com
