W.Va. Gov. Justice announces ‘Justice 4 All’ plan to eliminate state personal income tax

West Virginia Governor Jim Justice is holding a summit on the state personal income tax bill.
West Virginia Governor Jim Justice is holding a summit on the state personal income tax bill.(WSAZ)
Published: Apr. 5, 2021 at 5:05 PM EDT
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CHARLESTON, W.Va. (WSAZ) – West Virginia Gov. Jim Justice introduced a fourth plan on Monday in his quest to eliminate the state personal income tax.

He has called it “Justice 4 All,” as the plan introduced during his income tax summit with legislative leaders looks to ensure no one is financially hurt by the proposal.

The summit was announced on the heels of debate regarding West Virginia House Bill 3300, which is the House’s version of Justice’s plan to eliminate the state’s personal income tax.

However, Justice’s original proposal and the new Senate version of this bill would raise a number of taxes to help make up the difference – meaning under those versions you would pay slightly more for goods and services out of the thousands of dollars you would save in income tax.

“Every single West Virginian will end up with more money in their pocket than they started,” Justice said about the new plan. “It’s not complicated. It’s not.”

Under the Justice 4 All plan, the governor said the income tax would not be reduced as rapidly. In the first year of the gradual reduction, half of every person’s income tax bill would be eliminated along with one-third of business tax.

Sales tax would be raised by the amount in Justice’s original proposal at 1.9 percent, slightly lower than the 2.5 percent in the Senate version. Justice also adjusted taxes on coal, soft drinks, alcohol, tobacco and the lottery in an attempt to find a compromise. Justice said he would reinstate nearly $52 million in rebate checks to make sure the state’s lowest earners would not be hurt by these increases.

Senate President Craig Blair (R-Berkeley) said he believes in the numbers Justice presented in his new compromise plan, incorporating parts of all three previous versions, and the bill will have more support in the Senate due to reductions in coal severance taxes. Blair said this bill has the power to attract more people and businesses to the state, which will create higher paying jobs, boost property values and make West Virginia a place people want to move to.

“The fact that you pick up people traveling to this state. What is the percentage of tourism increase that we have had over the past four years in this state?” Blair asked. “It’s unbelievable. I don’t know,” Justice responded. “It’s really big,” Blair concluded.

But other lawmakers were not as supportive of the governor’s plan. Speaker of the House Roger Hanshaw (R-Clay) said delegates are normally concerned about people in border counties going to another state to buy goods and services with a lower sales tax.

House Finance Chair Del. Eric Householder (R-Berkeley) said the House version of the bill does more to stimulate economic growth and has a high favorability rating despite its minimum 12 year timeline to phase out the income tax. He said it particularly helps attract high earning individuals to the state and promotes business development.

Senate Finance Chair Sen. Eric Tarr (R-Putnam) expressed concerns about the reliability of severance taxes compared to the income tax or the food tax he reintroduced in his version of the bill. Tarr said the Biden administration is looking to cut down on coal and other fossil fuels to help the environment and that would hurt the state’s revenue.

“Regardless of what creates the surplus, it doesn’t matter if it is coal, it doesn’t matter if it’s sales,” Tarr said. “It doesn’t matter what it is, but whatever that surplus comes in across the budget that it would create. That bucketing mechanism, whether it be coal or something else, would fund the reduction of the personal income tax. But, you have to do that surplus, at least in my opinion, on a smoothing mechanism, so it is not a dollar for dollar on your surplus. Because, if you have a great surplus one year and a small one the next, you have to account for stability.”

Lawmakers agreed eliminating the income tax would create more job opportunities, especially with out-of-state companies looking to do business in West Virginia, but they weren’t sure if this is the right time to rush through a major issue at the end of the legislative session.

“We’re here on day 55 and our focus is to balance a budget, a flat budget to help the people,” House Minority Leader Doug Skaff (D-Kanawha) said. “The timing is what I question. I have told you this. We are coming out of a pandemic. I get the pros and cons of it, that’s why you think we need to act today, because of these people who look at you and how well we’re doing, and the vaccines, and ahead of the curve, and people might want to move to West Virginia because we’re right there. But the reality is that some of our numbers and the surplus has been inflated.”

“People want certainty,” Skaff continues. “They want reliability. They want to get their feet back on the ground. They want to know that their business can have a climate to believe in. So, I question the urgency today, that we have to hurry up and do this. I would be all for us meeting numerous times, numerous times through the next few months, through the whole summer. Let’s get this right. Let’s do it right. It’s take part of the Senate plan, part of the House plan, your plan. Let’s get this right and I’d be all there.”

Senate Minority Leader Stephen Baldwin (D-Greenbrier) said he wants to make sure a reduction in revenue from eliminating the personal income tax does not result in cuts to critical programs, like education and health care. Justice said he is committed to ensuring people still have all the resources they might need, and universities like Marshall University and West Virginia University, continue to grow through additional funding.

Justice ended the summit by asking lawmakers to keep working on this effort to put money back in people’s hands.

The Senate version of HB3300 is up for amendments and a vote on Tuesday. WSAZ attempted to ask that bill’s author, Sen. Tarr, after the summit if there would be any changes to the bill ahead of the vote, but he declined to comment.

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