As stated in the State of the State Address, at the heart of the 2021 legislature is the State Income Tax Elimination Plan (PIT). Everyone hates paying taxes, but dealing with a $ 1 billion drop in operating income would challenge even the toughest manager.
The proposed solution is to offset the lost income tax revenue by shifting the tax burden to other forms of taxation. It is hoped to recoup $ 902.6 million by increasing the sales and use tax for consumers to 7.9% and removing previously exempted goods and services such as grocery shopping. B. Professional services (e.g. accounting, architecture, engineering, law) as well as selected advertising, health and health services are taxed on fitness memberships, computer hardware and software, among others.
In addition, there would be a new “luxury tax” on certain items such as jewelry, art and all-terrain vehicles, a graduated severance tax on coal, oil and gas, and increased taxes on tobacco products, alcohol and soft drinks. Most of these new taxes would place West Virginia well above our surrounding states (especially those right above the local bridges). After all, West Virginia would certainly rank first in something – the highest consumer sales tax in the United States.
To say that our constituents’ reaction to this plan was united in the opposition would be a serious understatement. So many have tried to share real concern about the devastating impact of the proposed tax increases on working families in our region. Timing is tricky as we are just emerging from a pandemic that has ravaged our community and disproportionately hurt our low-income and minority communities. Many fear that they will bear the brunt of the tax shift at a time when they are still grappling with the events of last year.
Resistance from the local business community was just as fierce, with repeated declarations of the harsh realities of competition in a border district. The prospect of losing our professional service companies such as legal, architectural, accounting and advertising firms to neighboring countries would be a severe blow. Likewise, the new taxes at meetings with the owners of our independent restaurants, brewpubs and entertainment venues – the backbone of our local economy – could abolish those who somehow have weathered the devastation of COVID-related restrictions and closings.
The consensus is clear; Every step towards eliminating PIT must be taken responsibly and in a way that does not collapse our local economy. Our community has worked so hard to rebuild and diversify an economy after losing many manufacturing jobs over the past few decades. We have so much to offer – a first-class health sector, attractive tourism and congresses, and a popular university. While the PIT plan in its current form is unlikely to bring billionaires to Cabell County, it can undermine decades of work and cause our employees and companies to depart even faster. Instead, we need to focus on guidelines that really help our employees: Stay, Rebuild, and Be Successful.
Chad Lovejoy and Sean Hornbuckle, both D-Cabell, are members of the West Virginia House of Delegates.