Gov. Justice submits legislation to repeal personal income tax
CHARLESTON, W.Va. (WSAZ) - After holding several virtual town halls and spending weeks talking with legislators, Gov. Jim Justice took the first step in pursuing his State of the State proposal to repeal the state’s personal income tax on Thursday.
According to Justice’s office, the governor has submitted a bill to the West Virginia Legislature that he says will “seize a once in a lifetime opportunity to transform West Virginia’s tax structure.” The bill will likely formally be introduced in the House of Delegates and Senate on Friday.
“At the end of the day, who in the world would vote against putting more dollars in every single West Virginian’s pocket?” Justice said.
West Virginians pay around $2.1 billion every year into the state income tax, and that funding makes up about 43 percent of the state’s budget.
To make up for the lost revenue, Justice is proposing a 1.9 percent increase in the state sales tax. The state would also raise taxes on coal, oil and natural gas, in addition to creating a luxury tax and implementing sin taxes on items including soda, alcoholic beverages and cigarettes. For the bill abstract click here.
“We may never have an opportunity like this ever again,” Justice said. “Because of how we’ve handled the COVID-19 pandemic – how we’ve saved lives, had the best vaccine program in the nation, and kept our economy on the move – the spotlight of the world is on West Virginia right now. This is the time to seize our opportunity!”
Justice said the remaining budget difference will come over time from more people and businesses moving to the state, including raising wages, raising home values, bringing in more businesses and making the state more attractive to home buyers. His proposed flat budget for the next three years will also cover the gap.
“You can’t just make that up overnight,” said House Minority Leader Doug Skaff (D-Kanawha). “You have to have solid concrete evidence that we have some sort of revenue streams to help offset that. The last thing we want to do is take away one tax that you’re paying out of your left pocket, and increase another tax that you are paying out of your right pocket. That is just not good policy and that is just not good for West Virginians.”
“You’re going to see more growth, because you are going to see people who want to come to our state because obviously we have something to offer, it is more attractive, and I think you are going to see more and more growth in our budget if we are able to get this across the finish line,” said House Finance Committee Chair Del. Eric Houseolder (R-Berkeley).
The governor claims every West Virginian will benefit from his plan. The governor’s office said all income brackets less than $35,000 a year will receive a tax rebate check under the plan. Low income and high-income taxpayers will all see a net positive benefit if this plan is enacted.
“We have all the building blocks in our state. We have an economy that’s truly on the launchpad, some of the greatest people you’ll find anywhere, who are smart, kind, faith-based, and hardworking people, along with four of the best seasons on Earth with more natural beauty than you could possibly imagine. But now we need to make a big move to put us over the top, so when people look at another population map 70 years from now, West Virginia will be right up there with the very top states in the country,” Justice said. “The last piece of this puzzle is the elimination of our personal income tax. That’s why I am proposing a plan to make this dream a reality starting with a 60% reduction in state income tax for year one.”
Justice said the proposal would benefit boarder communities, like the city of Huntington. Mayor Steve Williams said around 25,000 people come from outside the city to work every day, many from Ohio and Kentucky, and he hopes the tax incentives make people move to live and work in West Virginia.
“That’s why we are placing a major effort on ensuring we are sprucing up our neighborhoods to make it attractive, because company is coming,” Williams said. “We have the opportunity to be able to put our best foot forward.”
Williams expressed concerns in the possible loss of revenue from people going to other states to buy products without the increased sales tax. He wants to make sure the legislation is thoroughly debated, to ensure critical services, including public education, are not hurt by this proposal.
“My concern is we are still in the midst of the pandemic and we really don’t know what the ongoing and lasting affects are going to be,” Williams said. “My fear is the last thing in the world that you want to be doing is changing your tax system in the middle of a pandemic when we don’t know what is coming forward.”
According to a news release from the governor’s office, from 1950 to 2016, the total population of the United States doubled. In that same time frame, 49 of 50 states saw their population increase. The only state that lost population in that span was West Virginia. Between 2010 and 2020, West Virginia’s population decreased by 3.8 percent, the steepest rate of population decline in the country.
“The evidence is out there that so many states that are no income tax states are doing much better than we are right now,” Householder said. “That’s what we need to focus on.”
One of the nine states without an income tax is Florida. Since 2015, Florida has seen massive economic growth, including being the location of one of every 11 new jobs that has been created across the country, Florida Chamber of Commerce chief economist Dr. Jerry Parrish said.
“We have the incentive to bring more people in and let them make more money,” Parrish said. “The more money they spend on taxable goods, the more goes to the state government.”
Parrish said most states across the country are actually increasing their income tax, making states without an income tax more attractive for people looking to work remotely or open a business. Florida makes up for the lack of an income tax with sales tax and other local taxes.
If West Virginia eliminates the income tax, it will be the most northern and eastern state without an income tax, Justice said. He views this as an opportunity that the state can’t pass up on, with many people looking to move to places that had success managing the COVID-19 pandemic and have outdoor recreation resources.
“This will be a drain to a Baltimore or a D.C. maybe,” Justice said. “Or a Philadelphia or New York or wherever it may be. People will come to West Virginia across from Ohio and Pennsylvania, they will absolutely come. And there will be so much more potential goodness here it is unbelievable.”
“When you increase property values and the demand on that property, then you increase the property taxes that go along with it to be able to provide more of the essential needs, especially education,” said Senate President Craig Blair (R-Berkeley).
Blair said investing in broadband, roads and other critical infrastructure is needed to get people to seriously consider moving to West Virginia. He views this proposal as an opportunity to “press down on the accelerator and get us to where we need to be in this state, and have the economic opportunities for all our people, not just the select few that happen to have a good-paying job.”
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