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Economists, Administration Issue Words of Caution for Tax Reform Committee

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Delegate Eric Nelson says there are three main goals for the Joint Committee on Tax Reform: to ensure West Virginia’s tax code is fair, simple and structured to promote economic growth. The House Finance Chair also serves as the co-chair of the special interim committee.

Members held their second meeting in Charleston Monday as they move forward with the first study of the state’s tax code in 9 years. The most recent study came in 2006 under Gov. Joe Manchin. Before that, the system hadn’t been reviewed since 1999 under Gov. Cecil Underwood.

Members were given an overview of the current structure, what taxes and tax credits are in place and what goods and services are exempt.

They also had a history lesson on West Virginia’s tax code, reaching as far back as the turn of the 20th century to explain the policy and political decisions that resulted in the state’s personal income tax, broad sales tax and property tax system in place today.

Those three taxes make up the largest portion of the state’s income, aside from lottery funds, and they help provide almost all of the services the state offers.

So, with a committee full of first time leaders–after the Republican take over– and even some first time legislators, all of the presenters urged extreme caution as they move forward.

“I don’t think the end result of any study has to be a comprehensive 800-page bill which substantially or fundamentally changes the tax structure immediately,” Revenue Secretary Bob Kiss, former Speaker of the House and House Finance Committee Chair, warned.

He was joined by attorney Michael Caryl and economist Dr. Calvin Kent in issuing words of caution throughout the six hour session. Caryl was involved in the Manchin review while Kent worked on the studies under both administrations.

“Everything is interconnected,” Kent said, “and if you do change one tax, you’re going to wind up with ripples that are going to affect other taxes, which may be very negative.”

Nelson says he hears their words of warning and is taking them seriously.

After talk from both House and Senate leaders that this committee may have legislation ready for a special session this fall, or at least by the 2016 session, Nelson is backing away from those notions.

“I think that there’s always an interest in making positive moves in a timely fashion,” he said Monday. “As we started getting more involved with this and talking with different people a timeline is the last thing we want to put on the table.”

The Joint Committee has scheduled its next meeting for May 18 where they’ll hear about the changes other states have made to their tax codes in the recent past. Presenters will include the National Council on State Governments, the Tax Foundation and the Council on State Taxation.

Nelson said the committee also intends to hear from those affected by tax changes, but only mentioned industry as being on the agenda so far. He maintained, though, all interest groups will have a voice.