CHARLESTON – The West Virginia Senate Finance Committee chairman made one last attempt Wednesday to devise a plan to eliminate income tax. Governor Jim Justice and the House of Delegates could accept this.
The Senate voted between 18 and 16 for House Bill 3300, which phased out West Virginia income tax and lost five Republican state senators.
Senate Finance Committee Chairman Eric Tarr, R-Putnam, tabled an amendment to HB 3300 that erased the committee’s original proposal in favor of a plan that sought to move closer to a new proposal presented by the judiciary on Monday evening became a summit meeting between House and Senate majority and minority leadership.
Tarr, Justice, and other proponents of the phasing out income tax believe that now is the time to phase it out in order to attract new residents.
“The reason this route was chosen was because the main problem affecting this condition is population loss.” Said Tarr. “This is our time to shine … this is the time we can actually do something that will move the population growth needle. And it’s not a guess. “
The Tarr amendment, based on the governor’s Justice 4 All plan, would phase out income tax over a period of years, starting at 50 percent for the five income tax rates. Future cuts would be based on the amount of undesignated revenue in the approved general revenue budget each year starting January 1, 2022. In years when there is no unrestricted income, there would be no tax break.
Income tax is roughly 43 percent, more than $ 2 billion of the state’s general revenue budget of $ 4.5 billion. Tarr said his change would cut income tax revenues by $ 818 million for the first full year.
Both the Senate Finance Committee change and the Tarr change create a stabilization and future economic reform fund.
When the balance of the SAFER fund reaches $ 100 million, $ 50 million will be deposited into the general income fund, keeping the fund between $ 50 million and $ 100 million. The transfer would lower income tax rates by 12.5 percent in the following fiscal year.
The revenue for the SAFER fund would come from the state’s rainy day fund cap, with any revenue above these caps going into the new fund. This would include increases in tobacco taxes, steam and e-cigarette taxes, and other tobacco products. A new scratch-off ticket would be created for the lottery, the proceeds of which will go to the SAFER fund.
The change introduces a tax refund program for individuals and families earning less than $ 35,000 per year. The judiciary proposed the rebate program in House Bill 2027 and Senate Bill 600, the governor’s personal income tax plan that never made it out of either chamber.
“There are about $ 40 million in discounts here” Said Tarr. “These discounts are being used there to ensure that every single West Virginian benefits from this plan, and they are.”
State Senator Mike Caputo, D-Marion, questioned how effective the rebates would be given the number of other tax increases in the Tarr Amendment.
“Nobody can cover these numbers with candy, sugar, or sugar because it just won’t work for me.” Said Caputo. “Trying to sell a bill of materials to believe that $ 50 in your pocket a year makes you better today than you did yesterday? I’m sorry, but I can’t buy this. “
Tarr’s plan also provides for the governor’s upgraded staggered severance tax rates for coal and natural gas. The tiered severance tax plan was part of the judiciary’s original proposal, but met opposition from the coal and natural gas industries. The judiciary proposed a new tiered plan at the Monday summit that was more acceptable to the industry. These funds would go to the SAFER fund.
The plan passed by the Senate Finance Committee would have increased consumer sales and use tax from 6 percent to 8.5 percent, while the governor’s plan increased it to 7.9 percent. The tarr change increases sales tax to 8 percent.
The Tarr plan would also tax prepared groceries, groceries sold through vending machines, and soft drinks at 8 percent, although the 2.5 percent grocery tax refund on groceries included in the Senate Finance Committee’s version has been removed, which a The crux of the matter was for justice.
The Tarr Plan continues to remove sales tax exemptions from various professional services such as accounting, legal advice, engineering and architectural services. It continues to tax legal services, resulting in contingent billing fees. It eliminates tax exemptions for the sale of electronic computing, computer hardware and software, health and fitness memberships, and broadcast and print advertising.
The Senate Democratic caucus rejected the bill after seeing the Tarr amendment just before the session on Wednesday night.
Democratic lawmakers offered motions to table the bill and resubmit it to the Senate Finance Committee. The members requested a tax bill for the bill according to the rules of the Senate. State Senator John Unger, D-Berkeley, challenged a chairman’s decision finding that the bill contained a tax bill.
“You are not going to hide the tax implication information from the people of West Virginia.” Said Unger.
“I think that hurts the state” said State Senator Mike Romano, D-Harrison. “It sounds great and sounds good, but everyone has an inkling of how it will develop. We shouldn’t have to guess because this Republican majority has been given the mandate of transparency in the government. “Where is the opportunity to study this calculation? “
The bill goes back into the house, where leadership has voiced skepticism about the Senate and governor’s plans. The original House version of HB3300 did not include a tax increase, but did allow income tax to be phased out over more than a decade.
(Adams can be contacted at firstname.lastname@example.org)
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