Personal Taxes

West Virginia Home Approves Revenue Tax Discount Plan, Potential Lack of Revenue Challenged

The West Virginia House of Representatives has passed a bill that will reduce income tax every year until it is completely eliminated. The measure would represent an annual loss of revenue of at least $ 150 million and, if fully implemented, ultimately cost the state more than $ 2 billion per year.

Legislators in the lower chamber voted between 77-23 Monday, largely on a partisan basis, to send House Bill 3300 to the Senate, which could make changes to the measure. The move comes as Governor Jim Justice pushes his own plan forward despite opposition from corporate groups and some lawmakers.

House Bill 3300 was launched last week by the House Finance Committee and does not offer tax increases to offset the loss of revenue expected under the proposal each year.

The bill would also create a “personal income tax reduction fund” that would draw dollars from other sources, including the lottery. This fund would accelerate the rate of income tax cuts until they were completely eliminated. Income tax would be completely eliminated by 2030, according to an analysis by the West Virginia Center on Budget and Policy.

Doug Skaff, Chairman of the Minority House, D-Kanawha, expressed concern about the possibility of massive cuts to the state government in the future. Skaff argued that it should take more time for lawmakers to review the plan set out in House Bill 3300.

“We all want to lower income tax. But why do we have to do that on day 48 today? “Said Skaff. “Let’s kick this thing into summer. Let’s study it in between times and put together a non-partisan working group. Let’s get it right, let’s do it responsibly, let’s not tie and buckle the hands of future lawmakers and lawmakers for years to come. “

However, home finance chairman Eric Householder, R-Berkeley pointed out the plan, arguing that residents would continue to benefit from it over the years.

“This is a new green deal for West Virginia. Not what you think of, but a real green business with money in your pockets, ”said Eric Householder, chairman of House Finance at R-Berkeley.

Sean O’Leary of the West Virginia Center for Budget and Policy told West Virginia Public Broadcasting last week that the state budget could possibly afford the first year of lost revenue under House Bill 3300, but the following years would likely cost government agencies and programs.

“Nobody said a word about how we’re going to pay that $ 150 million a year. It has to come from somewhere, ”said O’Leary.

O’Leary cited rising Medicaid and PEIA costs, as well as new laws allowing education savings accounts – which will cost $ 126 million a year – as additional reasons to be cautious.

“We have to pay for these things. And we’re going to get rid of $ 2 billion in just a few years. Nobody answered that question [about how we pay for this tax reduction],” he said.

On Monday lawmakers passed an amendment by Householder that would delay the transfer of funds to the Income Tax Reduction Fund until July 2022 instead of January 2022.

Delegates also rejected two amendments to House Bill 3300.

The first from Del. Mick Bates, D-Raleigh, attempted to use hypothetical adult cannabis income for the personal income tax reduction fund. Bates’ amendment was rejected by 29 votes to 71.

Another amendment by some Democrats, including Del. John Doyle, D-Jefferson, aimed to get rid of the entire House Bill 3300 and only offer a $ 150 tax deduction to all applicants – was also rejected by 23-77 votes.

Since Wednesday is the 50th day of the legislature and is known as “crossover day” – a deadline for bills to come out of their chamber of origin – House Bill 3300 has been viewed by some as a placeholder to start the conversation about reducing personal Income continue VAT

The bill was offered as an alternative to the governor’s plan, which the judiciary continues to promote despite the lack of house buy-ins. It would cut income tax by 60 percent for all applicants, but also tax hikes calling for consumer sales, tobacco, alcohol, and soda, among others, to go up.

Jared Walczak, vice president of government projects at The Tax Foundation, said proposals like lowering income taxes are always a negotiation – between political parties, various legislatures and the governor.

Walczak said that because of this, any bill that makes it to the finish line will likely look different from what we’ve seen so far.

“We see that the governor has his proposal here, the House has a proposal, there are senators who have different ideas about it,” said Walczak. “If there is a major reform package it will no doubt borrow elements from each of these proposals. One would not expect one to go through without change.”

Prior to the session, Senate President Craig Blair, R-Berkeley, pointed out the idea of ​​reducing income tax. He and other Senate leaders have not yet announced their position on the matter, stating that they will take a look at what has been sent to them by the House of Representatives.

The 60-day regular session of the West Virginia Legislature ends on Saturday, April 10th at midnight.

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