Personal Taxes

W.Va. Home advances personal revenue tax invoice | Information

CHARLESTON — The West Virginia House of Delegates passed a bill cutting personal income tax rates by 10% in a 76-20 vote Friday.

House Bill 4007 now heads to the Senate. If passed into law as it currently reads, the bill would implement a 10% reduction to current income tax rates Jan. 1, 2023. If the state ends the fiscal year with a surplus, the bill would establish a fund that takes 50% of that surplus and puts it toward further cuts to the income tax rate.

After advancing through the House Finance Committee in about three minutes Monday, the bill was debated on the House floor both Thursday and Friday. House Democrats questioned how much the plan would help the average West Virginian.

According to the US Census Bureau, the average annual income for a state resident is $26,480. According to figures from the West Virginia Center on Budget & Policy, an individual making less than $20,000 a year would save $7 annually under a 10% cut. People earning between $20,000 and $55,000 would save less than $100. A person earning more than $443,000 a year would save $3,880.

The state’s wealthiest residents overwhelmingly benefit from Republicans’ plan, with the richest 20% of West Virginians receiving 70% of the total tax cuts. Democrats defended the progressive personal income tax, which makes up nearly half of the state’s entire general revenue, as the most fair tax on the books.

Delegate Brent Boggs, D-Braxton, said he believed this was a time where lawmakers should not be seeking parity in how much people pay. Emerging from a pandemic, passing a bill disproportionately benefiting the wealthy would send the wrong message to the majority of West Virginians.

“Seventy percent of this tax cut goes to 20% of the taxpayers. That’s troubling to me,” Boggs said.

Everyone loves tax breaks for the people, Boggs said, but those who need it most right now don’t stand to benefit from the proposal in front of lawmakers.

“Maybe there’ll be a time when the wealthy fall on such hard times we need to give them more (relief) than we do the others, but I don’t see that happening anytime soon,” he said.

Delegate Larry Rowe, D-Kalawha, offered an amendment Thursday that would have limited the deduction for individuals or households earning more than $100,000 in annual income. It was voted down, but Rowe said Friday supporters should still step back and look at who really needs to benefit from tax relief.

“This is not significant to the people who need the help,” Rowe said.

The bill’s sponsor, House Finance Chair Eric Householder, R-Berkeley, fielded questions from Delegate Kayla Young, D-Kanawha, about the federal government possibly seeking to recoup the funds used for this tax cut. House Speaker Roger Hanshaw, R-Clay, acknowledged Tuesday there were legal questions facing the bill.

Householder said the funds used for this cut are not American Rescue Plan Act dollars. The federal legislation governing that pandemic aid program prevents states from using the one-time funds to enact permanent tax cuts. Young asked if there was any chance the state would be on the hook if the federal government asked for the money back.

“I don’t believe we are,” Householder said.

Boggs ended his floor speech with a prediction that when the legislation eventually returns from the Senate, it will look nothing like the bill passed Friday. Last session, the House similarly passed a phaseout bill, but Senate Finance Chair Eric Tarr, R-Putnam, returned to the House legislation that mirrored Gov. Jim Justice’s plan to completely repeal the personal income tax and raise a series of other taxes to pay for it. The house shot down that proposal 100-0.

“It’s inevitable,” Boggs said.

Joe Severino covers politics for HD Media. He can be reached at 304-348-4814 or Follow @jj_severino on Twitter.

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