Personal Taxes

West Virginia Senate Adopts Earnings Tax Discount, Finances

In a more than three-hour session on Wednesday evening that grew fiery at times between members of the Republican majority and the Democratic minority, members of the West Virginia Senate passed a measure calling for cuts in income tax and a budget bill.

After Governor Jim Justice held a summit meeting with senior lawmakers from both parties on Monday, Senator Eric Tarr, R-Putnam, offered an amendment to House Bill 3300 on Wednesday – a marquee proposal for that session calling for a reduction in income tax.

After Tarr’s amendment, state income tax would be lowered over the years and tax breaks would be offered to low-wage earners (from a discount of $ 250 for those earning $ 10,000 or less, to a discount of $ 50 for those who are between $ 30,000 and $ 34,999 to earn ).

The initial loss of revenue under the bill, which would go into effect January 1, 2022, would be $ 818 million in the first year.

That loss of revenue would be offset by increases in consumer sales tax (which would go from 6 to 8 percent), cigarettes (which would go from $ 1.20 to $ 2.20 per pack), and a tiered severance tax system on coal, oil, and gas. A new sales tax on professional services would also be included.

The bill would create a fund to take revenue from some of the newly created flows, including increases in cigarettes and tiered severance taxes.

After the fund – referred to as the SAFER Fund by the Senate Finance Committee – hits $ 100 million, $ 50 million would be released to drive additional income tax cuts.

“The reason this route was chosen is because the main problem affecting this state is population loss,” said Tarr of the recent plan to cut income tax.

Democrats argued they had little time to review Tarr’s change in measure.

“It was mentioned there [were] Negotiations with 134 people. Well, do it 133 – because I sure wasn’t invited, “said Senator Mike Caputo, D-Marion.

“I looked at my crystal ball. You will have 18 votes. But I’m not sure this is right for West Virginia,” Caputo said later.

Members of the minority, including Senator John Unger, D-Jefferson, attempted unsuccessfully to submit the bill until a tax bill was attached, as required by Senate rules.

“You are not going to hide from the people of West Virginia about the tax implications,” Unger said after his challenge was overridden by Senate President Craig Blair, R-Berkeley.

House Bill 3300 cleared the upper chamber the closest, with Sen. Bill Hamilton, R-Upshur, Sen. Patrick Martin, R-Lewis, Eric Nelson, R-Kanawha and Sen. Rupie Phillips – an 18-16 R-Logan vote and Senator David Stover, R-Wyoming, are voting against the measure.

Programs, agencies largely restored in budget changes

After the passage of House Bill 3300, the legislature incorporated Senate Bill 125, the version of the Upper House Budget Act. The financing measure remains largely unchanged compared to the current financial year, but includes a reduction of 1.5 percent for almost all agencies and programs.

Legislature considered a number of amendments to restore funding to a variety of agencies and programs that were cut in the budget version of the Senate Finance Committee.

A number of Democratic amendments to restore funding to the state broadband office, library commission and other programs were rejected.

A change in Tarr and Senate Justice Chairman Charles Trump, R-Morgan reinstated $ 3.78 million to the Educational Broadcasting Authority – the agency that oversees public broadcasting in West Virginia. The agency’s current allocation of $ 3.83 million had previously been zeroed by the Senate Finance Committee.

The Tarr and Trump amendment also provided year-end surpluses to resume proposed cuts to Marshall University and West Virginia University, which had previously been cut by millions each.

The funding change for the Educational Broadcasting Authority, Marshall, and WVU was passed 30 to 4 votes, with Senator Mike Azinger, R-Wood, Senator Robert Karnes, R-Randolph, Senator Patrick Martin, R-Lewis, and Senator Randy Smith , R-Tucker voting in the opposition.

The Senators also passed an amendment by Senator Robert Plymale, D-Wayne, on one vote, adding $ 50 million to the state broadband improvement fund.

After agreeing on a final version of Senate Law 125, the Senators put that measure into the 2022 House Law before voting between 24 and 10, with Plymale joining the majority to send the Budget Law back to the lower chamber.

The House will now consider the latest version of the budget and the latest Senate ideas for reducing income tax. The 60-day legislative period ends on Saturday, April 10th at midnight.

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