The West Virginia Farm Bureau is the latest group to express serious concerns about Governor Jim Justice’s large tax proposal.
Charles Wilfong
“Running a farm or ranch is challenging under the best of circumstances as farms operate a significant tax hike in a world of unpredictable markets, weather disasters, fluctuating input costs, and the judicial plan,” said Charles Wilfong, president of The West Virginia Farm Bureau wrote in a Charleston Gazette mail today.
The judiciary should be familiar with these concerns. His family business has significant farms and farms 50,000 acres in four states. During his 2016 gubernatorial campaign, Justice consistently referred to agriculture as “sleeping giants” and suggested identifying a “niche crop” for West Virginia. The governor is a seven-time national corn cultivation champion.
Here the governor is at odds with the West Virginia Farm Bureau, an influential organization that represents 17,000 farming families.
The governor’s plan would cut personal income taxes by a billion dollars while collecting a number of other taxes, particularly sales tax.
The income tax cut would not apply to many companies that are essentially organized as sole proprietorships under the tax code. As a result, many have come to the conclusion that their businesses would be affected by the VAT hike but would not get the benefit of the income tax cut.
The governor has stated that the categories of businesses currently exempt from the income tax cut would benefit if the state completely eliminated income tax. However, so far there are no details on how or when this would happen.
“Unfortunately, his plan would also impose costs on family farmers,” wrote Wilfong. “In contrast to many other companies, farms operate as raw materials companies, so they cannot pass additional tax costs on to the consumers of their products.”
The Farm Bureau took up its position just days after the judiciary rejected the lobbyists’ backlash.
The West Virginia Beverage Association was the first group to publicly oppose the tax plan. Mid-week the broad-based West Virginia Business & Industry Council sent a memo to lawmakers highlighting some specific concerns about the plan.
Governor Jim Justice
The judiciary followed up these groups in his last town hall, describing them as greedy lobbyists.
“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 event Thursday night. “They are good people. But they think selfishly in order to tell you the truth. “
The judiciary has proposed countering part of the huge income tax cut with higher taxes on various goods and services, including advertising, professional services and tobacco products, Wilfong said.
Wilfong pointed out that farm income is one of several categories of income tax that would not benefit from the governor’s tax proposal. Income taxpayers who would not take a break under the governor’s plan include:
- Schedule C Business Profits;
- Schedule E rents, royalties, and pass-through corporate profits;
- Schedule D Capital Gains; and
- Schedule F Farm Income.
“Many family businesses are transit companies, and for any tax reform that would help agriculture, those revenues must have a reduced tax rate similar to that of regular employee income,” wrote Wilfong.
The West Virginia Farm Bureau says it would like to participate in the plan change.
“We know the tax reform plan still has a long way to go before it becomes law. We want to be at the negotiating table to make sure it’s a good product that will protect agriculture and help West Virginia grow, ”Wilfong wrote.
“A decision to add tax to West Virginia farms would make our farms less competitive and could deter the next generation from getting into the production farming business. We urge the governor and lawmaker not to tax our farms. “
These are similar to the concerns raised earlier this week by the West Virginia Business & Industry Council, which covers retailers, manufacturers, gas and mining companies, building contractors, auto dealers, professional services, hospitals, brokers, foresters, beverage and beer wholesalers. Telecommunications provider and more. That broad base makes it influential to West Virginia lawmakers.
Mike Clowser
“The proposal reduces an individual wage earner’s personal income tax liability based on their income level, but does not benefit any company,” the organization wrote in a memo signed by Chairman Mike Clowser.
“The majority of businesses in West Virginia operate as sole proprietorships, limited companies, limited partnerships, or partnerships. To our understanding of the proposed legislation, the owners of these companies will not benefit from the plan. “
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 used to fund government services like 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.
Justice refers to the extra taxes than pulling the rope.
He said these companies should be willing to pay the same taxes as electricians and plumbers. And he promised that the population growth from his tax plan would bring even more business to West Virginia.
“Please don’t let a bunch of lobbyists running Washington run ruling West Virginia today,” said the governor.
He later added: “You cannot let the lobbyists take your opportunity. And if you do, you can’t blame me. You can’t blame me. I’m really trying to really help you. “