Income Tax: Promising proposal also contains perils
Gov. Jim Justice has a way with words, doesn’t he?
“We are on the launch pad right now. In fact, we’re airborne right now,” he said Wednesday during his annual State of the State address. “And that’s why tonight, I am asking all of you to join me to repeal the income tax in the State of West Virginia.”
It sounds wonderful. Everyone wants to take home a little more of their paychecks. And we’ve been given plenty of assurances the repeal would be revenue neutral, meaning lawmakers believe they can find enough other sources of money for the state to make up the difference.
“It’s entirely up to you. My ideas surely can be tweaked. I will listen to any and everybody absolutely. I’ve given you a pathway, a pathway to eradicate our income tax,” Justice told lawmakers.
Let us hope they are prepared to do some heavy tweaking.
Government revenue comes from taxes and fees. It comes from us and the employers for which we work. Justice says the plan to make up the personal income tax money will include the following: a tiered severance tax for coal, oil, and natural gas; an increase in the consumer sales and use tax by 1.5 percent; increased taxes on tobacco and soda; removal of tax exemptions for professional services; creation of a wealth tax, and $25 million in cuts in state government.
Most West Virginians will notice the increased taxes and the removal of tax exemptions on the services they use. A few might also raise an eyebrow at the idea of a wealth tax.
Lawmakers have a lot of questions to ask, too, about the reliance on coal, oil and natural gas severance taxes, when we know the energy industry is diversifying; and whether a) $25 million in cuts will really tackle the fraud, waste, incompetence and redundancy we know still thrives in Charleston, and b) the cuts chosen won’t negatively affect the taxpayers we’re trying to help.
Our government still has to serve us, and do so in the most efficient, transparent manner possible.
Meanwhile, lawmakers and their constituents have difficult decisions to make about the flip from taxing income to taxing spending. If it’s going to happen, it’s got to be done in a way that least damages employers, who would have to either absorb new costs or pass them along to their customers.
There is a lot of promise in Justice’s plan. There is also some peril. If he and lawmakers are serious about listening to each other (and the taxpayers) as they figure out how to do this properly — if they are willing to adjust the route here and there — we might, indeed, be on the right path.