Other corporate groups have spoken out against the governor’s grand tax plan.
The West Virginia Bankers called on members to notify lawmakers that they are in opposition. And the National Federation of Independent Business Group in West Virginia issued a statement entitled “Current Plan to Eliminate WV Income Tax Needs Labor.”
These groups join the West Virginia Chamber of Commerce, which today sent a letter to lawmakers saying 90 percent of the responding members were against the plan.
“Our membership policy is clear – reject the plan as it is currently presented,” the chamber wrote. A chamber member who responded to the poll described the proposal as “one of the most ruthless, unfair and job-killing laws ever devised”.
The West Virginia Business and Industry Council and the West Virginia Farm Bureau also have serious reservations about the plan.
“While our members like the idea of eliminating state income tax, the devil is in the details, and as of today, Governor Justice is not going to help the vast majority of small businesses and could make things worse for many of them.” stated Gil White, the state director of the National Federation of Independent Business.
This is because most small businesses continue to be taxed at the current tax rate. The governor’s plan specifically excludes pass-through companies such as suburban companies and sole proprietorships. Most small businesses are organized as transit businesses, which means that income is passed through the business to the owner, who pays taxes at the individual tax rate.
NFIB members are also concerned about the proposal to increase West Virginia sales tax from 6 percent to 7.9 percent while extending sales tax to services such as accounting and advertising.
“A rise in sales tax would drive up the cost of doing business in West Virginia and encourage people living on the border to shop in Kentucky, Ohio, Virginia, Pennsylvania or Maryland,” White said.
“In addition, the extension of sales tax to professional services would result in additional paperwork and costs for these companies and put them at a further disadvantage.”
The West Virginia Bankers Association today expressed similar concerns. The association urged members to turn to lawmakers to maintain the existing tax exemptions for professional services and “return to tax reform”.
“The governor’s proposal will have a deeply negative impact on the West Virginia economy, and particularly on the banking industry,” the association said in a newsletter. “This legislation will drive consumers out of West Virginia across state lines and significantly increase the cost of doing business for banks that use professional services on a daily basis.”
The judiciary expected this kind of kickback and is not happy about it.
“You are going to see an orchestrated effort from those out there who are likely to think penny-wise and pound-poor,” Justice said at the start of the town hall event Thursday night to promote the tax plan. “They are good people. But they think selfishly in order to tell you the truth. “
The governor is proposing a 60 percent cut in state income tax, suggesting this will be a splash that will fuel population growth. He wants to completely remove the tax within three years and rely on this growth.
Income tax makes up about $ 2.1 billion of the state’s tax base, about 43 percent of the general fund for government services such as education and healthcare.
An overview of the governor’s plan estimates the initial personal income tax cuts of $ 1,035,650,000 and discounts of $ 52 million for lower-income residents – but also tax increases of $ 902,600,000 to offset most of those breaks .
The proposal would also impose a number of other taxes, including on soft drinks, tobacco, beer and wine. And Justice suggests taxing some professional services for the first time, including law firms, accountants, gyms, and more. He also advocates a “luxury tax” on some items that cost more than $ 5,000. And he proposes a tiering of severance taxes on coal, oil and natural gas that pays more when the markets are better.
When asked about the compromises, the judiciary has consistently touted the possibility of population growth due to the reduction in income tax. And that will provide more customers for businesses, he said.
The Chamber of Commerce letter sent today found that Governor Justice was proposing a series of similar tax increases in 2017 if a budget deficit was expected. When the governor came up with his plan, he stated, “If you don’t do this, you are dead. You are incredibly dead.”
Legislators have not approved the plan this year, hit a tight budget, and have done so for the past few years.
The governor blew up the Chamber of Commerce on Monday, which has long been an ally.
“If you think you can buy your way into the shallowness of the Chamber of Commerce, just think about where the Chamber of Commerce has taken West Virginia over the past 50 years,” he said.
“They led us to the last dead, to the last dead, to the last dead.”