‘Cut the income tax in half, we’ll get more revenue!’
So said Governor Jim Justice in his State of the State address to the West Virginia Legislature, when it convened the 2023 Regular Session on Jan. 11.
And he said we don’t need to raise another tax to make up the money. Instead, the overpowering economic improvement we’ll get from reducing the tax will cause our existing taxes to bring in more money.
This is the same pie-in-the-sky phony economics that caused the state of Kansas to almost declare bankruptcy 10 years ago. After a newly elected Republican governor persuaded the legislature to cut taxes in half, Kansas had to lay off state troopers, human service caseworkers, teachers and many other public servants. Public schools in that state went to a four-day week.
At the next election, ruby-red Kansas threw out that Republican governor and stunned the nation by electing a Democrat as governor. That new governor worked with a still-Republican legislature to restore many of the previously repealed taxes.
Reducing taxes does spur economic growth, but not enough to make up for the entirety of the revenue lost by the reduction. So a prudent approach to reducing taxes, is to allow that some public services must also be reduced. Public employees must be laid off.
There are two practical political problems with this. Public employees (who vote) don’t like the idea of their careers being threatened. And the majority of the public doesn’t want to see services cut.
Also, reducing different types of taxes results in different size hits to the treasury. Sales taxes, because they are paid primarily by lower and middle income people (who tend to buy locally), see a relatively small reduction in revenue. By contrast, reducing income tax rates favors primarily upper income folks, who spend more of their money out-of-state. Cutting income taxes reduces revenue more than cutting sales taxes by the same amount.
I don’t advocate reducing taxes on lower and middle income folks, because I think it moral. I argue that it’s practical, because it creates more jobs and saves more money.
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The West Virginia Public Service Commission (PSC) has announced that it will hold two public hearings three days from today, on Monday, at the Jefferson County Court House in Charles Town. At 5:30 p.m., a hearing will be held on the proposed Rippon Solar Energy Facility. That hearing will be followed at 6:30 p.m. by a hearing on the proposed sale of several private water utilities in Jefferson County to West Virginia American Water (WVAW).
The PSC had originally decided to not hold a public hearing in Jefferson County on the proposed sale of the water utilities. I wrote to the PSC, and (on my next-to-last day in office) personally spoke with Charlotte Lane, the PSC chairperson. I thank Chairperson Lane and her fellow commissioners for agreeing to hold this public hearing.
I oppose the sale of the local utilities to WVAW, and will say so at this hearing. I urge all to attend.
John Doyle is a 26-year former member of the West Virginia House of Delegates. He can be reached at rjohndoyle@comcast.net.