While Gov. Jim Justice hit the road again to promote an income tax proposal, Republican legislators were hearing an economist’s broader message about unleashing the power of the free market.
“As long as you get your policies right, you’re going to grow,” economist Russ Sobel, a former professor at West Virginia University, told GOP lawmakers in an early-day caucus Monday.
One of Sobel’s books, frequently cited by Republican lawmakers, is “Unleashing Capitalism.”
Justice has expressed urgency about his proposal to cut personal income taxes by 30% next year, 10% the year after that and 10% more the year after that. The House of Delegates has already overwhelmingly passed a bill reflecting that.
“We’re going to drive growth here like you can’t believe,” Justice said on “Talk of the Town” on WAJR Radio. “And literally West Virginia needs people. That’s what we need for our schools, our roads, all of our benefits. We need people in West Virginia.
“And I don’t know how long we’re going to have to sit on our hands and not grow until we realize that all we’ve got to do is pick up any publication in the land and it’ll tell you personal income tax drives people to your state.”
Justice said he’s ready to talk about the tax plan at any time with senators.
“Listen, I’ll meet the senators on the top of the dome at any time,” Justice said.
He added, “I’m standing there 1,000 times over saying the same thing. They’ve got to say something back other than, ‘We’re just going to look at it. We’re going to just study it. We’re just going to basically kill time.’”
The Senate has advocated for a more deliberate approach and, on regular session day 20, invited Sobel to talk more broadly about tax philosophy that could help West Virginia grow.
The economist’s appearance, said Senate President Craig Blair, “has nothing to do with the current situation. Maybe someone would want to paint it that way, but this was in place long before.
“This is for generational thinking,” said Blair, R-Berkeley. “You cannot make instant fixes and expect an outcome that’s going to work. You have to do things and give it time for it to settle in.”
Sen. Rollan Roberts, R-Raleigh, agreed that the Senate needs to take a contemplative approach. Roberts was walking into the morning event with his own copy of Sobel’s book.
“I know there is a frenzy that is trying to be worked up that ‘We have to make a decision today,’” Roberts said. “The answer is, no we do not. And whatever decisions we make are going to impact a generation of West Virginians.
“We need to understand the entire ramifications of decisions we’re making because we want to do the best for West Virginia in the future.”
Last fall, senators pushed for a constitutional amendment that would have allowed exemptions on personal property taxes on vehicles as well as on what businesses pay on machinery, equipment and inventory. The governor campaigned around the state against that, saying it would be irresponsible and handcuff local governments.
Sobel addressed the question of whether personal property tax cuts or income taxes are provide more economic stimulation by saying both could be effective although studies generally don’t compare the two strategies.
“So both are good ideas, but they have completely different effects. So income taxes tend to target labor, labor mobility, people move around, encourage small businesses, all that stuff. The capital reduction obviously encourages capital investment, labor productivity.”
He added, “the best thing to think about is that if you could do all of one or all of the other, it’s probably better to do a little bit of both than to do all of one or the other. They’re both good ideas, and there’s no compelling evidence on which of the two is probably better.”
These questions are political too, and Sobel acknowledged that he doesn’t have an answer for that. But he did have some lighthearted advice.
On the personal property tax issue, he said, “My understanding is the governor came out against that. I don’t know why he would. There’s too much of the politics behind that that I don’t know. It’s obviously a great idea being able to adjust those rates and have you guys have the authority to do that. The politics of that, I don’t know. At least it’s already been out there once.
“Maybe you need to take a dog around the state. Get a cuter dog than his. Maybe get a little doodle — the capital investment doodle.”
