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Gov. Justice says plan to eliminate personal income tax is about driving opportunity, jobs

Published: Feb. 22, 2021 at 6:00 PM EST
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CHARLESTON, W.Va. (WSAZ) - A driver of opportunity and jobs: that is what West Virginia Gov. Jim Justice on Monday called his proposal to eliminate the state’s personal income tax during his first of several town halls to discuss the idea.

During his State of the State address, Justice announced the proposal saying there would instead be a sin tax on things like soda or tobacco.

“My goal is to lower your taxes, now,” Justice said. “There is a million different ways this can be done.”

While admitting the task will not be easy and that other taxes may have to be increased for the proposal to become reality, the governor said there is no better time to act than now.

“People are looking at West Virginia now. People are seeking West Virginia now,” Justice said when speaking of the national attention West Virginia has received for its response to the COVID-19 pandemic.

The governor says the state has handled the pandemic in a way that has caused the nation to ‘perk up’ and take notice of the Mountain State.

“I’m telling you and I want everyone to hear me loud and clear, if we don’t do this we will regret it – forever,” Justice said.

The governor said Monday that his proposal does include an increase in the sales tax.

“We will have to do some of that. There is no question that we will have to do some of that,” he said when discussing an increase in taxes.

Monday, Justice pointed to the pros of eliminating the personal income tax outweighing the cons. The governor saying ‘at the end of the day, the net tax burden’ for West Virginians will ‘go down.’

Justice says in terms of an increase in sales tax his proposal focuses on ‘things that hurt us.’ The two items the governor mention during Monday’s virtual town hall were tobacco and soft drinks.

As the next step in making the proposal a reality Justice said, “then I look at our natural resource partners to be able to jump up and try to and just help us. Just help us a little bit. When things are really, really, really good. That’s coal, oil and gas. And I look at our professionals that are doing well in their life … and ask them to step up and help just a little bit.”

The other increase the governor is proposing is to the luxury tax.

During the town hall, Justice described the luxury tax as, “a tax on an item you choose, because you’re wealthy, to be able to buy a luxurious type of item.”

This tax would not include home or vehicles, the governor says.

When asked how long eliminating the personal income tax would take, Justice said he would like to immediately cut the tax in half for all of West Virginia and then pause efforts to “watch for growth.” He said the half cut would be apart of the first phase of the proposal.

Justice said he would like to “use that growth” to take the state “the rest of the way” without raising any other taxes.

A resident from Fairmont, West Virginia, asked the governor the following during the town hall:

“Are you willing to go on record and tell the people of West Virginia that elimination of the personal income tax will be paid for by an increase in other taxes such as the sales tax, reinstating the food tax and a lost of state services such as plowing snow, road maintenance and assisting children going to college, just so those in the upper income brackets can see a net decrease in their tax burden?

Gov. Justice answered the question by saying:

“No chance on the planet. You have seen me every day, you have enough sense to know what my heart is and if I thought for a second that we were going to run out and hurt West Virginians across the board, ya know, in order to help anybody – no way. A decrease in services - ridiculous. There is no way in the world I would be for the food tax. No way on this planet.”

However, Justice followed that statement by saying the state must give people from other states in that upper income bracket an “incentive” to come and settle in West Virginia.

“We want them to come here, don’t we? We want them to bring their companies here. We want them to bring their wealth to West Virginia and make great things happen,” Justice said. “People have come and cut our timber. They took incredible wealth and they left. They have come and they have mined our coal and mined our gas or whatever it may be. They have extracted all kinds of wealth and they left.”

When asked by a woman from Ripley about a potential liquor tax not being included with the increase on soda and tobacco, Gov. Justice said he would be “all in to increase the liquor tax” however, he doesn’t know “if it could help us a lot” but to help “us some, I’d be absolutely for it.”

A man from Martinsburg also asked about gas tax increasing as a result. The governor replied:

“No, our gas tax is high enough right now, it will not have to go higher at all.”

Secretary of Revenue Dave Hardy was also in attendance at the town hall. When asked if other states were looked at for a study of this proposed plan, Hardy replied:

“We’ve looked at virtually every state and, I mean, literally all 50 states through the tax foundation which is what we use for the main research platform,” Hardy said. “But we specifically zeroed in on the nine states that don’t have an income tax. Many of those states, we knew ahead of time for example, Florida, Wyoming, Nevada, South Dakota but we also took a hard look at Tennessee because Tennessee of course in a lot of ways, is like West Virginia.”

Currently, the governor said the income tax is generating about $2.1 billion in funding for the state, or about 43 percent of the yearly budget. During his State of the State address, he proposed covering this gap by imposing a wealth tax for the state’s highest earners along with other budget changes. However, during his town hall on Monday, he said he had made a mistake and did not mean to use the term “wealth tax.”

Justice said Monday he will be hosting several virtual town halls where West Virginians can submit questions about the possible elimination of the personal income tax. The governor says he believes the next one will be in the evening on Wednesday.

Justice also says the numbers are not finalized.

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