Governor Jim Justice, center, gathered business leaders and lobbyists Monday to raise support for his personal income tax cut plan. (Photo provided) Eric Householder, chairman of the House Finance Committee, will lead the committee’s vote on Monday on an original income tax phasing out bill. (Photo provided)
CHARLESTON – As Governor Jim Justice sought corporate support for his efforts to lower income tax rates through business tax hikes on Monday afternoon, Republican leaders in the House of Representatives revealed a more modest exit from income tax.
The House Finance Committee voted Monday afternoon to vote an original bill to lower the income tax rate for all applicants over a number of years without increasing consumer sales and using taxes or excise duties, removing sales tax exemptions or creating a tax on luxury goods.
Under the plan proposed by the House Finance Committee, the first year of personal tax cuts would begin January 1, 2022. The tax rates would drop in the first year from 6.5 percent to 6 percent for the upper bracket, with the lower bracket changing from 3 percent to 2.8 percent.
Once the new personal tax rates are established in tax year 2022, the Treasury Department would review personal income tax collections for tax year 2021 and deduct $ 150 million to determine tax rates for tax year 2023.
Annual discounts must be $ 150 million, and any change in tax brackets must result in a tax break for all tax brackets, with an emphasis on eliminating the lower tax brackets first.
“It is a slow, moderate, common sense approach to give tax breaks without raising taxes or shifting taxes.” said Eric Householder, chairman of the House Finance Committee, R-Berkeley, after Monday’s meeting. “It’s also a great tool for controlling the rate of growth in spending in state government.”
The original bill would create an Income Tax Reduction (ITR) fund to expedite the elimination of income tax. The ITR would help protect the state in the event of an economic downturn.
“It’s basically a tax cut of $ 150 million a year, but it can also be accelerated with the Income Tax Reduction Fund created in the bill.” Head of Household said. “If we pass on bills or invoices that generate income, you can redirect some of the money into this ITR fund. Once you see $ 400 million in the fund, you can send $ 100 million as a tax break, and then you always have a $ 300 million safety net, the equivalent of a two-year income tax break. “
Revenue for the ITR fund would come from a portion of other new tax revenue, such as internet sales tax for providers filing with the state after Jan 1, the expansion of keno and the restricted video lottery, and sports betting and iGaming. Other sources for the ITR Fund would be a portion of tax revenue from personal income, consumer sales and use, severance pay, tobacco and e-cigarette, corporate net income, insurance premiums, business and occupation, and a portion of any special income funds.
The bill would also change where tax surpluses would go at the end of a fiscal year. According to the current country code, 50 percent of the surpluses must go to the state’s two rainy day funds. Under the House Finance Committee, the Regentag funds would receive 25 percent of the surplus and 50 percent would go to the new ITR fund.
At the same time that the House Finance Committee was distributing its exit from income tax, the judiciary was holding a meeting with business executives, lobbyists and local officials at the Charleston Cultural Center to try to get support for House Bill 2027 and Senate Bill 600, the governor’s tax plan.
“This is a plan to get rid of income tax in a very, very short time without harming or harming the government.” Justice said. “If we miss the sneaky whiffleball, you will miss the greatest moment in our history … you are missing out on our opportunity to immortalize West Virginia in a way you cannot imagine.”
According to the judiciary’s proposal, income tax rates for most workers would be reduced by 60 percent starting in July of fiscal year 2022, with a tax break for those earning less than $ 35,000 a year. Justice’s entire tax proposal and tax break would cut state tax revenues by $ 1.088 billion. While the governor’s plan lowers personal income taxes for individuals, personal income tax rates remain unchanged for small businesses, sole proprietorships, and transit businesses.
To fund the personal income tax cuts, Justice proposed proposed tax increases of $ 902.6 million, including increases in sales and use tax for consumers. a tiered settlement tax for fossil fuels; a tax on certain luxury goods; and increased taxes on cigarettes, tobacco products, e-cigarettes, beer, wine, liquor, and soda. The judiciary would also remove sales tax exemptions from professional services such as legal services, accountants, computer hardware and software, and other categories.
The judiciary’s tax plan has been defeated by the West Virginia Business and Industry Council, the West Virginia Chamber of Commerce, the West Virginia Farm Bureau, the National Federation of Independent Businesses, and national groups. The State Tax Council sent a letter to lawmakers on Monday in which it spoke out against the judiciary’s tax plan.
“We are writing … to counteract the massive shift in the tax burden from private individuals to companies through the increase in the sales tax rate and the increased taxation of company inputs in HB 2027.” wrote Senior Tax Counsels Patrick Reynolds and Frederick Nicely.
“Without a clear company-to-company exemption, the expansion of the VAT base to include professional services, advertising and other services predominantly bought by companies will lead to inefficiencies through“ pyramid ”tax on consumption and make the tax less tax for consumers transparent. “ Reynolds and Nicely carried on.
The judiciary warned lobbyists about special interest groups trying to convince lawmakers to reject its tax reform plan.
“There is a wave out there that doesn’t understand … where we are going and what opportunity we have here” Justice said. “If you listen to the rubbish floating around out there, you are making a big mistake. Absolutely, lobbyists influence and put pressure on our lawmakers in many ways. “
Steven Allen Adams can be reached at email@example.com
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