House passes income tax reduction
A couple of weeks ago, the House of Delegates passed a 10 percent across the board reduction in the state income tax. In some ways I consider this a victory for sanity, but I think it’s still a bad idea.
It’s a victory for sanity because it’s an implicit concession on the part of the Republican supermajority in the House that a complete elimination of the income tax would be nonsense. It’s nonsense because such a move would have one of two results. One result would be either devastating cuts to education, law enforcement, health care and other vital state programs. The other would be a plethora of new taxes that would devastate the economy (more about this later). Heck, we might see a combination of those two approaches.
The supermajority claims that this move would be a “first installment” on a long-term plan to eventually eliminate the income tax. But most of their members actually know better, they realize that complete elimination is a bridge too far.
The reduction is a bad idea in my view because it’s targeted to the wealthiest West Virginians. The higher one is on the income scale, the greater the amount of the cut. I don’t think that’s fair.
I offered an amendment that would replace the 10 percent cut with a standard deduction of $7,000 to all filers. This would mean that a person making $20,000 per year would get a cut of $7,000, as would a person making $500,000 per year. This plan would cost the treasury approximately the same amount of money as the 10 percent across-the-board cut will cost.
I think such a provision would not only make the income tax even more fair than it is now, but it would also provide a much greater stimulus to the economy than the 10 percent cut would. Lower income people spend a much greater portion of their disposable income than do higher income people. And the higher up the income ladder a person is, the greater portion (on average) of that person’s disposable income is spent. You can look it up.
Our state’s budget is now healthy enough, I think, to afford the amount of money the 10 percent cut will cost. But the standard deduction would be much more effective at economic stimulation.
The bill is now in the State Senate for its consideration. You may recall that last year a total elimination of the state income tax was passed by the House, and the Senate replaced it with an array of sales and other taxes that gave many industries the vapors.
The House responded with a vote of 100-0 against the Senate plan. That’s the first time in my 26 years in the House of Delegates that I’ve seen a hundred red lights and no green lights on our voting board. (The electronic voting board reflects a “yes” vote as a green light and a “no” vote as a red one.) We’ll see what the Senate does this year.
John Doyle is a delegate for the West Virginia District 67. He can be reached at johndoyle@wvhouse.gov.