MORGANTOWN, W.Va. (WV News) – Dr. John Deskins, director of the Bureau of Business & Economic Research at West Virginia University College of Economics, said trying to get rid of income tax is a delicate balancing act of priorities.
The abolition of income tax could make a state more attractive to some people looking to move, but any taxes levied or levied to offset lost revenue could potentially outweigh the benefits, Deskins said.
“What we’re doing here is what economists are doing, in large part – weighing costs against benefits,” he said. “The upside, of course, is that people have more cash to buy on-the-go with no personal income tax. That’s a good thing and that will help the economy in and of itself.”
As of 2021, seven states – Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming – will not have state income taxes. Two other states, New Hampshire and Tennessee, do not tax earned wages.
Governor Jim Justice and Republican leaders in West Virginia Legislature have made tax reform, which includes the elimination of the state’s income tax, a priority during the current legislature, which ends at midnight on Saturday.
Each component of the various plans has its own potential economic impact, Deskins said.
“We are going to have higher sales taxes and that in and of itself is detrimental to the economy and it can become increasingly difficult to make more online purchases and cross-border shoppers who avoid state sales tax,” he said. “Then we’ll have business taxes in several cases, and that’s going to hurt the economy itself. We’re going to have a cross-border sales tax base where sales tax is extended to services – that’s going to hurt the economy. Then we’ll have ‘There will be spending cuts, and.” that harms the economy. ”
Legislators have a lot of weighing and balancing to do in the final days of the session, Deskins said.
“In my opinion, the legislation somehow has to make it because the ultimate decision is whether the benefits of no income tax will fundamentally outweigh the costs of higher general sales tax, in other cases with high corporations and with the damage done with the reduced spending, “he said. “Personally, I don’t think it’s clear. I think it’s a tough question and I’m not sure what will happen, given the economic impact of this proposal, good and bad.”
Justice unveiled the latest version of its tax reform package during a summit meeting with lawmakers on Monday afternoon.
The new plan, which the governor referred to as the “Justice 4 All” plan, incorporates most of the same elements of the governor’s original plan, but with adjustments to many of the specific numbers.
In an interview with WV News last week, the judiciary has not ruled out the possibility of a special legislative period being called if the legislature does not pass a tax package by the end of the current session. However, he believes that now is the time to take such a bold move.
“The main focus of the world right now is West Virginia,” he said, citing the positive media coverage the state has received for dealing with the COVID-19 pandemic and COVID-19 vaccines. “I’ve been in the business a long time and I’m telling you the opportunity flashes and it doesn’t sit there waiting for you.”
Chief Executive Charles Young can be reached at 304-626-1447 or email@example.com