The personal income tax: More drama
In my last column, I reported that Governor Jim Justice had unveiled a plan to eliminate the personal income tax immediately and rely on serious budget cuts to K-12 and higher education, law enforcement, health care, environmental protection and other public services to make up the gap in our state’s annual budget.
Much has happened in the intervening month. First, the governor’s plan met with serious resistance from the public. Folks were not too keen on devastating education, defunding the state police and putting up with polluted drinking water (to name but a few consequences of his proposed budget cuts).
The governor completely overhauled his plan, relying primarily on other taxes instead of budget cuts to finance his plan, and eliminating the income tax over two years rather than immediately. Some of the other taxes would be brand new, others expanded versions of existing taxes. This idea, too, landed with a thud. This time, it was his presumed allies in the business community who hit the ceiling. When they realized that they would assume much of the burden of the new taxes, they had the vapors.
While many Republicans in the state Senate support the governor’s plan “B” (known as “Justice 2.0” in the hallowed halls), few Republicans in the House of Delegates have warmed to it.
Delegate Eric Householder (R-Berkeley), Chair of the House Finance Committee, came up with his own plan. Embodied in House Bill 3300, It would eliminate the income tax over a 13-year period, reducing it by $150 million each year. No new taxes would be proposed, so Householder’s is a version of the governor’s original plan, although taking effect over a much longer time period.
I think all three plans are nonsense. They violate many fundamentals of sound tax policy. Justice 2.0 eliminates a tax (the personal income tax), which is both predictable for the taxpayer and reliable for the state, replacing it with a bevy of nuisance taxes that are neither. Justice 1.0 and the Householder plan are both fiscally irresponsible to a frightening degree. Those plans both rely on “natural growth” in our state’s budget to make up for lost revenue.
“Natural growth” in the budget is a mirage. Over a period of years, that “natural growth” is merely a reflection of inflation. Keeping the budget completely flat over the next dozen years really amounts to serious budget cuts. We’d not be able to afford any pay raises (for teachers, school service workers, troopers or other state employees) during this entire time.
On March 29, the Householder plan was voted on by the House of Delegates. I, along with three other Democrats, offered an amendment that would have given every West Virginia taxpayer a one-year rebate of $150 from the income tax bill of each. That amendment was rejected on a party-line vote. Following that action, HB 3300 (the Householder plan) passed the House, also by a party-line vote. We’ll now see what the Senate does.
John Doyle is a delegate for the West Virginia District 67. He can be reached at johndoyle@wvhouse.gov.