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Let’s repeal the ‘car tax’

By Delegate John Doyle - Report From the Legislature | Sep 4, 2020

The personal property tax generates roughly half a billion dollars for local governments in our state.

“Local” governments are counties, municipalities and school districts (the latter get the lion’s share of the money). The tax is levied on individuals and businesses. Businesses pay it on inventory and equipment. Individuals pay it on their cars, boats and other personal possessions.

The tax is enshrined in our state constitution, so repealing it would require a constitutional amendment. A proposed amendment to the West Virginia constitution must be approved by a two-thirds vote of each house of the Legislature, and then be passed by a simple majority at a referendum.

Eliminating the automobile portion of the tax on individuals (the “car tax”) would take about $200 million of that $500 million away from our counties, municipalities and local schools. Should we make this move, I think we must include in the constitutional amendment an ironclad guarantee that every penny lost by a local government must be replaced by the Legislature each year. Without that guarantee, I would oppose repealing the tax.

West Virginia is one of few states that taxes personal property. Most states tax only real property, but almost all of them tax real property at higher rates per assessed value than does our state.

The West Virginia Chamber of Commerce and the West Virginia Manufacturers Association want to eliminate the portion of the personal property tax that falls on manufacturing inventory and equipment, but not any of the rest of the tax. Individuals would still pay the entirety of their personal property tax, as would small businesses (such as retailers). They argue that the personal property tax discourages businesses from locating in our state. It does.

Indeed, there might be an increase in job creation from big business if we eliminate the tax on manufacturing inventory and equipment. But I think we can get a much greater “bang for the buck” by eliminating the car tax. Eliminating the car tax would benefit almost everybody in West Virginia, while the benefits of repealing the personal property tax on manufacturing would go primarily to big corporations headquartered out-of-state.

Additional money in the pockets of West Virginians resulting from the repeal of the car tax would go toward creating jobs here in our state, in two ways. West Virginians would spend it here. And many small businesses would benefit from the repeal of the car tax. Part of the estimated $200 million revenue loss resulting from the repeal of the car tax is expected to come from title transfers of vehicles now owned by small businesses to individuals owning those businesses. The tax would thus no longer apply.

We can, I believe, figure out how to replace $200 million now going to counties, municipalities and schools. But we cannot afford the $500 million that would be lost by repealing the entire personal property tax. I think eliminating the car tax would be a far wiser move than eliminating the personal property tax on big manufacturers.

John Doyle is a delegate for the West Virginia District 67. He can be reached at johndoyle@wvhouse.gov.