Governor Jim Justice’s grand tax proposal was presented in the House of Delegates, and the governor is telling the West Virgins to close their eyes and just imagine the results.
“My plan will take a unique opportunity to transform the tax structure of West Virginia. Raising wages, increasing house values, creating more businesses, more people and improving lives for all West Virgins, ”the governor promised in a promotional and explanatory document shared with lawmakers, lobbyists, associations and more this week.
The last page of the document makes an even bigger claim for West Virgins who want a star:
“DisneyWorld could become a reality in West Virginia.”
Pixie Dust aside, it’s not clear where this claim came from other than a citizen asking the judiciary about the possibility during a recent virtual town hall. The governor replied in the affirmative that he would like to see a large theme park here.
“This is very important to me,” said Justice. “I really believe there is a real chance to land real entertainment – to land the next Disney, the next Dollywood. ”
After weeks of endorsing the idea of a major income tax cut, the governor announced last week that a draft was ready. Today the House Bill 2027 “In relation to the reduction of income tax” was introduced in the House of Delegates.
It was assigned to the House Finance Committee, but there appeared to be no immediate plans to include it.
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.
- The tax rate on the first $ 10,000 of taxable income would increase from 3 percent to 1.2 percent
- For the $ 10,000 to $ 25,000 income bracket, the rate would rise from 4 percent to 1.6 percent
- For the bracket between $ 25,000 and $ 40,000, the rate would increase from 4.5 percent to 1.8 percent
- For the range between $ 40,000 and $ 60,000, the rate would increase from 6.0 percent to 2.4 percent
- And for the $ 60,000 bracket, the rate would go from 6.5 percent to 2.6 percent.
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 .
In its current structured form, the proposal still runs a deficit of $ 185 million.
The tax increases represent a compromise to the proposal. The governor proposes an increase from the current 6 percent sales tax to 7.9 percent.
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.
“For this to really work, we all need to pull the rope together as West Virgins,” he said in the document distributed this week.
The document contains charts with household income that show what the overall tax situation could look like with the changes.
The table starts with a person who makes $ 10,000 a year and assumes they don’t smoke, drink, or buy lottery tickets. This level would not be subject to income tax, but the citizen would be entitled to a $ 350 discount. The sales tax hike for this person is estimated to only cost an additional $ 92. That adds up to an estimated profit of $ 258, according to the governor.
At the highest end, a family of three with a household income of $ 100,000 would experience a state income tax cut of $ 2,889. Assuming the family didn’t drink, smoke, or buy lottery tickets, the table estimates they would pay an additional $ 431 in sales tax. That would make the family $ 2,548, according to Justice.
There are other charts for taxpayers who smoke, drink, or buy lottery tickets.
“The governor’s plan will enable all West Virgins to put more money in their pockets,” the document promises the judiciary.
The West Virginia Center on Budget & Policy think tank concludes that the average taxpayer in the bottom 60 percent of West Virginia households would see a net tax increase based on the governor’s proposal.
In conversation this week, Capitol legislators had many questions. Including: Which professional services are subject to new taxes under this plan? And what are the specific definitions of the items subject to the new luxury tax.
Senator Bill Ihlenfeld, D-Ohio, questioned aspects of the plan when he appeared on Watchdog Radio this week.
“There are many parts in this bill that a lot of people have in their arms,” said Ihlenfeld, describing shopkeepers, tobacco sellers, and more. For example, Ihlenfeld said he received a call from a supermarket owner in Hancock County who was very concerned.
“He said the tobacco tax hike would mean that he would just shut down.”
The governor went to considerable lengths to sell the proposal, Ihlenfeld said, describing two meetings the governor had with Democrats. Former Senator Paul Hardesty, a Democrat who has advocated the business of justice in the past, has also spoken to lawmakers, Ihlenfeld said.
But Ihlenfeld said that groups that are subject to higher taxation also speak up.
“He has decided to take over many very powerful groups with highly paid lobbyists who will be very strong against his proposal,” said Ihlenfeld.
“I don’t think the way he put this together will ultimately go away.”