Senate President Craig Blair is feeling pretty good about the rollout of a new tax proposal estimated at $600 million.
Senators introduced and passed a bill that touches on several sections of the tax code. On Thursday morning, Senate leaders met with House leaders and representatives of the Governor’s Office to start determining any common ground.
“Our plan is working within the money that we know we have,” Blair, R-Berkeley, said on MetroNews’ “Talkline.” “The $600 million is basically because of the flatline budget we were working off before.
“We know that $600 million is a real number that we never have to come back and say that we’re going to have to increase taxes or shift taxes to cover the work that we’re doing here.”
Senators said their plan touches on a range of the state tax code while also assessing what the state needs for responsible spending.
They characterize the plan as starting with a 15% decrease in personal income tax. In out years, a 105% improvement of sales tax revenue over the previous year would trigger additional income tax cuts.
“We anticipate that there will be further reductions unless we’re in a recession era. We’ll have the ability to move forward,” Blair said.
The plan passed the Senate in a 33-0 vote late Wednesday afternoon. Democrats joined the Republican majority in voting for the proposal.
“Tying further income tax reduction to sales tax income is smart,” said Sen. Robert Plymale, D-Wayne. “Sales tax is a good indicator of true growth, and I appreciate that we are considering much-needed relief in a responsible manner. This strengthens West Virginia’s position for future economic development growth.”
More elements of the proposal include:
- Elimination of the “marriage penalty” when filing taxes in West Virginia
- A rebate for the payment of taxes on vehicles
- A homestead real property tax rebate for 90% to 100% service-disabled military veterans
- A 50% rebate for the payment of equipment and inventory taxes paid by West Virginia small businesses
The Senate’s Republican majority introduced the proposal during a news conference on Wednesday morning, ran the bill quickly through the Senate Finance Committee and then voted on it in the afternoon, suspending constitutional requirements that normally would mean considering a bill over three days.
Sen. Mike Caputo voted for the bill but objected to its fast-tracking.
“We still have 30 days of session left. I don’t see why we had to suspend rules and pass the bill the day it’s originated in committee,” said Caputo, D-Marion.
“I voted for the bill because it’s the best plan we’ve seen, but I would have liked to have given it a more thorough review. A bill of this magnitude concerns me; I would have preferred the Republican leadership would have chosen not to fast-track it so I could have had more time to hear from my constituents. I am, however, happy to vote for a tax cut for the people.”
The bill was rushed, said Kelly Allen, executive director of the West Virginia Center on Budget & Policy, and it’s not all it’s cracked up to be.
“After being promised a more thorough and deliberative approach from the Senate, it was surprising to see such a substantial tax package rushed through the chamber start to finish over a six-hour period. The effects of the rushed process show up in the fact that the passed legislation varies fairly significantly from the way the proposal was described by members of the Senate,” she said.
“The promised guardrails to ensure that only small businesses can benefit from the business personal property tax rebates are inadequate at best.”
And, she said, despite comments from senators that this bill would provide benefits to households with modest incomes, “the personal income tax cuts overwhelmingly benefit the wealthiest households. And the description of the legislation as safe when it would eventually eliminate the personal income tax altogether without any new offsetting revenues, is in fact fiscally irresponsible and would likely eventually result in other tax increases or severe budget cuts.”
Gov. Jim Justice’s first reaction was receptive. “I just know in my heart right now that we’re on a path that someday we’ll celebrate the end of the income tax in West Virginia,” Justice said in a Wednesday briefing. “I’m really, really happy.”
Justice’s top priority has been a different proposal, a 50% personal income tax reduction over three years.
The House of Delegates overwhelmingly voted in favor of that proposal earlier in the legislative session.
The Senate has taken a different route.
“As we weighed this thing out and we tried to find a way to help everybody we started to recognize that there were some groups that wouldn’t necessarily benefit from the personal income tax, particularly our seniors that don’t receive much income,” Sen. Mike Oliverio, R-Monongalia, said during an appearance on “Talk of the Town” on WAJR Radio.
“So we tried to do a number of things to have this tax cut benefit people across the community — age, income bracket, etc., and that’s where this plan kind of coalesced to do that.”
But he acknowledged the plan could still change.
“I’m very confident there will be a comprehensive package of reforms. Will it look exactly like what we passed yesterday? Maybe not. But will it be close to it? I think so,” Oliverio said.