MORGANTOWN – The governor’s income tax cut proposal met overwhelming bipartisan support in the House of Delegates Thursday and headed to the Senate, where its shape and fate remain uncertain.
Gov. Jim Justice issued a long, celebratory statement after the vote, adding some cajoling of the Senate to his comments.
HB 301 keeps the state’s five personal income tax brackets the same but proposes rate cuts for each bracket, with an aggregate cut of 10% across the brackets.
Viewing the rate reductions in terms of percentages, incomes of $10,000 for residents filing singly or married couples filing jointly would see a 33% cut; $25,000, 16%; $40,000, 12%; $60,000, 10%; $100,000, 9%; $500,000, 8%.
The cost of the bill is estimated at $255.2 million, to be covered by part of the $1.3 billion budget surplus.
Before passage, the bill faced challenges from both sides of the aisle.
Delegate Daniel Linville moved to delay action for a day because the Senate has openly opposed the bill, preferring its own property tax elimination plan, and he wanted an extra day for negotiations.
Delegate Jason Barrett, R-Berkeley, supported Linville, saying overwhelming passage sends the message to the Senate that negotiations are done. But Finance vice chair Vernon Criss, R-Wood, said the governor sent the bill down and they need to do the work they were called into session for and send the bill to the Senate.
Linville’s motion failed in a 4-78 vote.
Next came a series of amendments from Democrats. All failed.
Minority Leader Doug Skaff, D-Kanawha, proposed a $250 rebate for each resident taxpayer, to be sent by Sept. 1. The rebate would be given in lieu of the income tax cut, he said, and cost about the same amount. Delegate Kayla Young, D-Kanawha, proposed a secondary amendment to provide the $250 rebate any year that the surplus tops $1 billion.
Finance chair Eric Householder, R-Berkeley, argued that Young’s amendment unduly burdens future Legislatures and that Skaff’s amendment provides one-time relief while the bill provides annual relief.
Young’s secondary amendment fell 16-66 and Skaff’s fell with the same count.
Delegate Larry Rowe proposed two amendments. The first amendment would reduce the first year’s cut from 10% to 5%. He said that would keep $125 million in the budget. “There are other financial needs that are very immediate and very desperate.”
He cited needed school safety upgrades at 345 schools as one of those needs. The amendment failed in a voice vote.
His second was the same one he offered in Finance Committee, to eliminate the tax cut for the top bracket – incomes above $60,000. He again focused on millionaires reaping a windfall while low earners see only a small benefit. This also failed in a voice vote.
With amendments concluded, Householder explained the bill prior to the vote.
But Delegate Shannon Kimes, R-Wood, moved to send the bill to the Government Organization Committee instead, citing the alternate Senate plan, which he prefers.
The House proposal has failed before, he said. “I feel like deja vu. We need to get out the legislative microwave and reheat this.”
He wanted to see the House negotiating team replaced so they could have more effective talks with the Senate, he said.
His motion failed 10-71 and, with all debate essentially exhausted during the amendment process, there was no further discussion.
The vote was 78-7. All seven votes against came from Democrats, and four of those were local: Delegates Barbara Evans Fleischauer, Evan Hansen and Danielle Walker, all D-Monongalia, and Joey Garcia, D-Marion. Delegates Amy Summers, R-Taylor, and John Williams, D-Monongalia, were absent.
The Senate will formally receive the bill when it convenes at 1 p.m. Friday.
After thanking the House, Justice said, “This is a good deal for all West Virginians. This tax cut will come as an immediate relief to families who are paying the price for rampant inflation across the country while also setting us up to bring generations of prosperity to West Virginia.
“In contrast,” he said, “the tax plan proposed by the Senate favors big companies over small businesses and hard-working West Virginians by giving millions in tax cuts to corporations with the elimination of the business personal property tax. It puts control over county budgets in the hands of the Legislature, with no guarantee that the money will continue to flow if West Virginia sees an economic decline.
“My proposal minds our store,” he said, “and capitalizes on the incredible economic successes we’ve seen this year by giving back the maximum we can right now while staying within the guidelines of the federal government.”
The Senate plan to eliminate vehicle property taxes roughly equates to his plan, he said. But it stops there. “This is only our first step in reducing the personal income tax. Their plan would be a one-time only cut. My proposal also sets West Virginia up to continue eliminating the personal income tax by 10% or more each year until it gets to zero.”
“At the end of the day,” he said, “what the Senate is proposing is ‘Build the field and wish and hope they come.’ That’s not wise. Reducing the personal income tax has been proven time and time again in many other states as an economic and population driver beyond belief.”
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