Personal Taxes

Governor Jim Justice Reveals West Virginia Revenue Tax Section Out | Information, sports activities, jobs

West Virginia Governor Jim Justice smiles during his annual February 10 address at the Charleston Capitol in which he announced his desire to phase out the state’s income tax. Details of his plan were released on Thursday.

Read Governor Jim Justice’s Income Tax Repeal Plan Summary by clicking here (if it’s not on your screen, please check your Downloads folder).

CHARLESTON – Governor Jim Justice announced specific details on his personal income tax exit plan on Thursday.

According to a summary of the judiciary’s tax reform plan currently being worked on by the West Virginia legislature’s Draft Legislature, expected to be rolled out next week, the judiciary’s plan would reduce the personal income ratio for all applicants by 60 percent starting in 2022.

“We have all the building blocks in our state” Justice said in a statement on Thursday announcing the plan. “The final piece of this puzzle is eliminating our personal income tax. So I propose a plan to make that dream come true, starting with a 60 percent cut in state income tax for the first year. “

A 60 percent cut in all five income tax rates – from 1.2 percent to 2.6 percent under the proposal – would cut tax revenues by $ 1.035 billion. The cut would result from personal income from wages and salaries, as well as pensions, annuities, IRAs, social security and unemployment.

The reduction excludes Plan C corporate profits, Schedule E rents, royalty and transit company profits, Plan D capital gains, additional gains and losses, taxable interest income, dividend income, and other income. The judicial proposal also provides a tax break of $ 53 million for residents who earn less than $ 35,000 a year. The total tax cuts that combine the personal income tax cut and the discount add up to $ 1.087 billion

To fund the personal income tax cut and tax break, Justice proposes increasing consumer sales and excise taxes from 6 percent to 7.9 percent and generating $ 475 million in tax revenue. Consumer sales tax exemptions for professional services would raise an additional $ 180 million.

“For this to really work, we all have to pull the rope together as West Virgins.” Justice said.

Services losing exemptions include computer hardware and software, legal advice, accounting services, select advertising, electronic computing, health and fitness memberships, lottery ticket sales, and other professional services.

The judiciary’s proposal creates the state’s first luxury goods tax, which would raise an estimated $ 20 million. It was unclear what items would be considered luxuries, but items between $ 5,000 and $ 10,000 would be taxed at 3 percent, with rates falling as costs increased, with items over $ 1 million taxed at 1 percent would.

Following an idea he first put forward in 2017, Justice would convert the various severance taxes on coal, natural gas and oil into a tiered system that taxed fossil fuels more when prices are high and taxed less when prices are falling.

Changing the severance tax on natural gas from 5 percent to a tiered system would raise $ 12.5 million, while increasing the severance tax on wet natural gas from 5 percent to 6.5 percent would raise $ 5 million. Moving the severance tax for thin-seam coal to a tiered system could raise $ 7.5 million, while moving to a tiered system for steam and metallurgical coal could raise $ 16 million. A tiered oil settlement tax could bring in $ 1 million.

The judiciary would also increase excise duties on cigarettes and tobacco products. E-cigarettes; Beer, wine and schnapps as well as non-alcoholic drinks. The combined tax revenue is estimated at $ 185.6 million.

The total of the proposed tax increases is $ 902.6 million. When you factor in the decreased income tax revenue of $ 1.035 billion and the tax break of $ 52 million, there is a gap of $ 185.1 million. The judiciary has increased the possibility of a fiscal 2022 cut in the state budget by $ 25 million.

He also estimated a $ 10 million reduction in wages and salaries due to government employee retirement and attrition, and projected annual revenue growth of $ 60 million, removing that hole from $ 185.1 million to $ 90.1 million US dollar was reduced.

Proponents of the tax reform have long called for the abolition of income tax. Eight states have no income taxes, including the energy states of Texas and Alaska, according to the non-partisan tax foundation.

Jared Walczak, vice president of government projects at the Tax Foundation’s Center for State Tax Policy, noted on Twitter that the sales tax hike is still keeping West Virginia from having one of the highest sales tax rates, but many of the taxes are hard on small businesses .

“At first glance, this reduces liability for many (West Virginian) taxpayers, but puts much of the burden on businesses.” Said Walczak. “That complicates growth expectations… It’s really exciting that policy makers in (West Virginia) are interested in major tax reform and shifting to a stronger consumer base is growth-enhancing and rewarding. It is good to get this discussion going. But the compromises … are important and deserve attention. “

Jessica Dobrinsky, a policy development officer at the Conservative Cardinal Institute for Politics in West Virginia, said her organization is still considering the proposal but is glad the conversation started.

“We welcome the governor’s interest in tax reform and look forward to seeing the details of the governor’s plan once the bill goes through the proper legislative process prior to enactment.” Said Dobrinsky. “Economic data shows that countries without income tax are seeing stronger growth in wages and populations. This may be the answer West Virginia has been looking for if done responsibly. “

In contrast, the West Virginia Center for Budget and Policy, a progressive think tank, said the justice plan simply shifted the tax burden from the rich to the middle class and poor.

“Governor Justice’s plan is as regressive as we feared” said Kelly Allen, executive director of WVCBP. “While this brings huge tax cuts to the wealthiest West Virginians, the tax shifts would fall most heavily on the vast majority of low- and middle-income West Virginians. The plan also cannot fully offset the lost revenue from cuts in income taxes, which means inevitable cuts in public services amid an ongoing pandemic. “

Justice said he presented the plan to the West Virginia legislature Thursday, despite a House of Delegates spokesman saying the plan must first go through the bill and be formally presented by leaders in the House and Senate for a possible one Introduction in the next week is likely to be before an invoice number or invoice language is available.

In its address to the legislature on February 10, the judiciary proposed an exit from income tax for the first time. Since then, the judiciary has held three virtual town halls to promote parts of the plan and answer questions from the public. A virtual town hall planned for Thursday evening has been postponed.

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