Randy Yohe Published

A Final Preview Of Amendment 2

Vehicle Taxes

Amendment 2 looks to be the most contentious issue on Tuesday’s ballot.

If West Virginia voters say yes to Amendment 2 on the November ballot, the West Virginia Legislature will have the authority to eliminate business equipment and inventory taxes and the property tax on vehicles.

Rebecca MacPhail is president of the West Virginia Manufacturers Association. She supports Amendment 2 and modernizing property taxes. She said maintaining these business property taxes puts West Virginia at a competitive disadvantage. She notes that when neighboring Ohio was facing a recession and bleeding out manufacturing jobs, it phased out its machinery and inventory tax between 2005 and 2008.

Then, between 2009 and today, Ohio’s added 70,000 manufacturing jobs,” McPhail said. “I think that’s compelling. Is that a silver bullet? No. Is it an impediment, absolutely.”

Former legislator and current Marshall County Commissioner Mike Ferro opposes Amendment 2. He said it will lead to giving up a dedicated revenue source and taking away constitutional protections. He said studies by local economic development experts show the inventory tax is not a factor. He sees similar evidence with the state when it comes to recruiting major corporations like Nucor and Berkshire Hathaway.

“Our Economic Development Council and (Secretary) Mitch Carmichael, they’re bringing in big businesses and the inventory tax does not matter to them,” Ferro said.

McPhail said West Virginia is the only state to enshrine an untouchable tax in its constitution. She favors the Senate tax reform plan as a strong beginning to a needed legislative dialogue.

“It will lead to having a serious policy discussion about how we can best implement tax reform,” McPhail said. “Reform that’s going to provide long term growth and sustainability versus these up and down cycles at the county level.”

Ferro said he worries about what happens if the Senate plan runs into a state revenue downturn three years down the road. He agreed with at least one tax guru who surmised that with a state revenue shortfall, counties would economically suffer.

“A tax shift would occur, more than likely, with real estate,” Ferro said. “Assessments could be going up from 60 to 80 to 100 percent and perhaps the homestead exemption for seniors being lost.”

Amendment 2 also gives the legislature the authority to eliminate the vehicle tax. Ferro said he and county commissions across the state favor Gov. Jim Justice’s vehicle tax rebate plan over a constitutional change.

“You’re talking about $150 million or so,” Ferro said. “They’re gonna take it out as your general revenue. Not as simple as you pay your taxes, you get your receipt emailed and you get your money back, but county commissioners would be willing to work with the legislature on that.”

McPhail said from her point of view as a West Virginian, the vehicle tax is progressive and onerous.

“It is an inconvenience to vehicle owners to have to dig through and not only pay the tax, but find the receipt and take it when it’s time to renew your tags at the DMV,” McPhail said. “I think some of the proposals out there to address that in a different way without eliminating the tax would only add to that inconvenience and the amount of work that taxpayers have to do to get their money.”

Both Ferro and McPhail favor tax reform but each see different avenues to success. Ferro said Amendment 2 is a power grab. McPhail said it’s a good start.