Income Tax Story Archives - West Virginia Public Broadcasting

A Discussion Of The State Budget And When To Stop Driving This West Virginia Morning

On this West Virginia Morning, government reporter Randy Yohe spoke with Senate Finance Chair Eric Tarr, R-Putnam, and House Finance committee member Larry Rowe, D-Kanawha, to get the latest on the state budget.

On this West Virginia Morning, government reporter Randy Yohe spoke with Senate Finance Chair Eric Tarr, R-Putnam, and House Finance committee member Larry Rowe, D-Kanawha, to get the latest on the state budget.

We also continue our series “Getting Into Their Reality: Caring For Aging Parents” as News Director Eric Douglas speaks with insurance expert Paul Moss about when older drivers should give up being behind the wheel.

Also, West Virginia lawmakers advanced a bill Monday that restricts medical care for transgender youth.

West Virginia Morning is a production of West Virginia Public Broadcasting, which is solely responsible for its content.

Support for our news bureaus comes from West Virginia University, Concord University, and Shepherd University.

Listen to West Virginia Morning weekdays at 7:43 a.m. on WVPB Radio or subscribe to the podcast and never miss an episode. #WVMorning

House Speaker: 'No Idea' Why Amendment 2 Is Controversial

In the tax reform battle between West Virginia’s governor and Senate president, the speaker of the House of Delegates has remained largely silent. Until now.

The 58th Speaker of the West Virginia House of Delegates, Roger Hanshaw, R-Clay, supports passing Amendment 2. He said the constitutional provision is antiquated and needs revision.

“The provision of our state constitution, that’s at issue in Amendment 2, comes from the antebellum Civil War era of Virginia. We don’t do anything today the same way we did it in 1863, so we shouldn’t necessarily have the same tax structure that we had in 1863,” Hanshaw said. “The purpose of Amendment 2 is to just give the people’s elected representatives the opportunity to discuss what the proper tax structure for this state should be. I have no idea why that’s controversial.”

Hanshaw said he sees the state on a trajectory for fairly substantial sustained budget surpluses at least over the next three to five years. He said there is merit in considering the House Finance Committee’s hybrid plan of phasing in cuts of income, vehicle, and business and inventory taxes.

“You take the proposal that would eliminate, eventually, the tax on business, equipment, inventory and personal property tax on automobiles, as well as the governor’s proposed income tax cut, and phase that in over a period of years, which is actually how most states doing this successfully have done it,” Hanshaw said. “The plan that is out there under consideration now does work mathematically. The one place where we want to really be sure we’re careful and that we’ve thought the circumstances all the way through to their end is — to what extent do we rely upon our natural resource severance taxes?”

Hanshaw said he’s puzzled over comments of losses of county school and emergency services amid a Charleston power grab. He said most legislators live far from Charleston and need the same services for their families.

“We all still want water to come out of our faucets and fire service to come to our homes when we have an emergency. We have to be responsible enough to know that,” Hanshaw said. “If the legislature wanted to make life difficult for counties and municipalities, there’s plenty of room and opportunity to do that. The legislature has plenty of taxing authority and has the ability to push any number of mandates, well thought out or otherwise, off onto the counties. And we don’t do that because we live here too, so that argument is a bit misplaced, in my opinion.”

Hanshaw said he does get frustrated over lapses in communication among government leaders. He said three personal profiles show a “divergence of philosophy.”

“I’m a practicing attorney by trade, [Senate] President Blair is a contractor by trade, a master plumber, and electrician, and Gov. Justice is a businessman by trade. So your approach to government service is formed in significant part by how you’ve shaped your life and those other roles,” Hanshaw said. “The practice of law is a business of communication, it is about communicating your ideas or your clients position. So that’s always come pretty easy to me. Others who are in a position of having unilateral decision making authority in their business and are able to make things happen just by decreeing them, they approach government service differently.”

Hanshaw said the only job that the legislature has is to be a civil and deliberative body.

Senate Endorses Property Tax Cut; Justice Plan Stalls

Gov. Jim Justice’s effort to reduce the personal income tax by 10 percent stalls in the state Senate.

Updated on Saturday, July 30 at 9 a.m.

Gov. Jim Justice issued the following statement late Friday night after the West Virginia Senate declined to take up his proposal to permanently reduce the personal income tax by 10 percent:

“I continue to believe with all in me that West Virginia can be like Florida, Texas, and Tennessee – with a booming economy and population, built on people moving into states with no personal income tax. We have the best people, best natural resources, four of the best seasons, and are located within a rock’s throw of two-thirds of our country’s population. Without a personal income tax, our potential is limitless.”

Gov. Jim Justice’s effort to reduce the personal income tax by 10 percent has stalled in the state Senate.

Thursday, the West Virginia House of Delegates passed House Bill 301, which would lower the personal income tax by an aggregate of 10 percent across all wage earners in the state.

Instead of taking up that bill, the state Senate passed a resolution that says lowering property taxes is a more effective way of helping the people of West Virginia than lowering income taxes.

In November, voters will have the opportunity to vote on giving the legislature the power to make changes to property taxes. It is called the Property Tax Modernization Amendment.

Part of the resolution reads:

“Ratification of the Property Tax Modernization Amendment would give the Legislature the authority to exempt certain classes of personal property from taxation. Specifically, passage of Amendment Two would allow for the elimination of personal property tax on the following six categories of personal property: machinery and equipment, furniture and fixtures, leasehold investments, computer equipment, inventory, and motor vehicles”

The resolution also suggests that if voters approve the property tax amendment to the state constitution,

“…the Senate also supports establishing an immediate process to refund to taxpayers the amount of personal property tax attributable to the taxpayer’s motor vehicle on their 2020 personal property tax ticket.”

According to the resolution, the relief for businesses choosing to do business in West Virginia is estimated to be approximately $500 million if that happens. Justice said the effort to reduce the income tax in the state would have reduced revenue by $254 million. West Virginia closed the last fiscal year that ended on June 30 with a $1.3 billion revenue surplus.

Neither the House of Delegates nor Justice have responded to this change by the Senate.

Editor’s Note: This story was updated to reflect Gov. Jim Justice’s statement.

House Of Delegates Passes Personal Income Tax Reduction, Heads To Senate

The West Virginia House of Delegates passed House Bill 301 Thursday. If it becomes law, the bill will reduce personal income taxes in the state by an aggregate of 10 percent.

For the average West Virginian, that amounts to about $240 a year. In total, though, the reduction cuts $254 million in revenue from the state budget.

The bill was originally proposed by Gov. Jim Justice and was the reason for calling the legislature into special session before the abortion question took center stage. Justice has promoted the bill as a way to encourage people to move to the Mountain State.

The bill now heads to the state Senate.

House Democrats tried several times to amend the bill, worrying that revenue reduction is fine in a fiscal year with large amounts of surplus revenue but questioned what would happen in a year when things weren’t so flush. Justice reported more than $1.3 billion in revenue surplus this year.

“I would just emphasize to us as a body that we’re going down a road for a permanent reduction in revenue, based on the grace of the federal government in giving us money that we didn’t have before,” Del. Larry Rowe, D-Kanawha, said. “The reality of this folks, and having been here a number of years, I can tell you the reality is, it’s not fun to raise taxes. It feels good to lower taxes. But if you go too far, you end up having a great deal of difficulty in trying to balance the budget that we have.”

In response, Del. Eric Householder, R-Berkeley, the House Finance chairman, said, “After seven decades of population decline, do you think we want to try something different and a different strategy? So I think keeping our young, high achievers and our entrepreneurs at home is a good place to start.”

Another concern was that West Virginia voters will consider a constitutional amendment this fall that will give the legislature the power to alter or remove personal property taxes – many of which are used to fund school systems.

Del. Daniel Linville, R-Cabell, made a motion to delay voting on the bill one day so the House could spend more time analyzing the numbers.

“We also know that we have a constitutional amendment that’s going to be before the voters,” Linville said. “We also know that we have a duty to act responsibly. And I believe in my heart that we can do both. I think we could do this plan. And we’re able to make meaningful reductions, or even total elimination of the people’s personal property equipment and inventory taxes if they choose to ratify that in the Constitution. But there’s concerns. We’ve been running the numbers over and over and over again, and we want to make sure we have as conservative an estimate as is possible that we can afford both.”

That amendment failed.

Ultimately, the bill passed along party lines with a vote of 78 to 7 with 15 absent.

W.Va. Revenue Secretary Explains Tax Cut Proposal

Next week, in a special session called by the governor, the state legislature will look at reducing the state’s personal income tax by 10 percent overall with people in the lower rates getting slightly higher percentages.

Next week, in a special session called by Gov. Jim Justice, the West Virginia Legislature will look at reducing the state’s personal income tax by 10 percent overall with people in the lower rates getting slightly higher percentages.

News Director Eric Douglas spoke with Cabinet Secretary for the Department of Revenue Dave Hardy to get an understanding of what the cuts would mean to the state and the average person.

He explained that if you made $1 million, your reduction would be 8 percent. But at the lower level, your first $10,000 of taxable income receives a 33 percent reduction. If you make $20,000, you receive a 19 percent reduction and a 14 percent reduction for $30,000. Taxpayers won’t see 10 percent exactly until $60,000.

For a person making $50,000 a year, that means an 11 percent cut and about $240 in tax savings.

This interview has been lightly edited for clarity.

Douglas: I believe the governor said this is effectively about a $250 million a year cut.

Hardy: $254 million to be exact.

Douglas: So that’s a $254 million reduction in revenue. Where’s that money coming from?

Hardy: It’s a $254 million reduction from record breaking revenue. We had a $1.3 billion plus surplus in the fiscal year that we just finished. Our revenue growth was $1.1 billion in a 12-month period. To put that in perspective for you, that’s more than the state’s rainy day fund, and the rainy day fund took 30 years to build.

So in one year, our revenue grew in excess of the entire state rainy day fund. But we are under the ARPA guidelines — American Rescue Plan Act guidelines — that limit how many tax cuts or what type of tax cuts you can make until the end of 2024. So we did a calculation. And we recommended to the governor that $250 million roughly was the most that we felt like we could cut and return to West Virginians’ pockets.

Douglas: Those ARPA guidelines were put in place so state legislatures didn’t use the federal money to start making tax deductions.

Hardy: Well, yes, they were put there, because the way ARPA is set up, you have to grow a certain amount each year, to even be able to consider a tax cut. Well, we exceeded the growth rate spelled out in ARPA. So we were able to return part of this tax cut, or the revenue to the West Virginians.

Let me tell you, it wasn’t just federal money or anything to do with federal money that made us have such a remarkable year. Our severance tax revenues this year were 180 percent. So we had a record breaking year. And when I say a record, I mean a record by $300 or $400 million in excess. Natural gas in West Virginia is doing very well right now. And the metallurgical coal market has also increased substantially.

Douglas: So how confident are you that this will continue? If you’re making a $254 million reduction in revenue, what if five years from now we’re not bringing in those kinds of numbers, and then we’re in a hole?

Hardy: I’m confident that we can take the $254 million cut and still be healthy going forward. Again, it sounds like a tremendously large number, but when you put it in perspective of the state’s budget, the state’s general revenue this year was $6 billion. It’s $254 million out of $6 billion. And ARPA guidelines restricted us on how far we could go. But we thought it was a very safe cut to make, or we wouldn’t have recommended it to the governor.

Douglas: The governor and the legislature have been talking about reducing this and completely doing away with the personal income tax, which I’m guessing that’s about $2.5 billion.

Hardy: About $2.6 billion.

Douglas: I’m guessing you’re not anticipating that happening anytime soon.

Hardy: We go through the state’s finances month by month, and quarter by quarter and year by year. I wouldn’t anticipate making a decision on that today. I do know the governor’s number one goal is to phase out the state income tax in West Virginia. He feels like if West Virginia would do that, that we would have a much greater potential for population growth and attract people to move to our state.

Douglas: What do you anticipate happening next year? How do you expect this to affect the state?

Hardy: I think the state is going to have a very healthy fiscal year next year. I think the severance tax is going to continue to do very well. And I think West Virginia’s economy is doing well. Right now we have a record low unemployment rate. And so I think we’ll do well next year. And I think we can have a healthy budget. The West Virginia Legislature and the governor, particularly the governor, because he’s the one that proposes the budget, have kept our state budget very tightly constrained over the last five years.

If you look at our budget from 2017, and look at our budget today, I’m not going to call it a flat budget, but it has been very, very limited in growth. And mainly the only growth in the spending side has been the governor’s bill to give state employees deserved pay raises. So you look at the revenue side, but you also have to look very carefully at how tightly the expense side has been controlled by the governor and the budgets that he’s proposed to the legislature.

Douglas: So what’s the average citizen going to see?

Hardy: Here’s how it’ll work. The state tax department will issue new withholding tables, which means that during the second half of 2022, you will have less money withheld out of your paycheck. Because the state tax rates have gone down, if you are an estimate payer, and a lot of people are, they pay estimates on Sept. 15 and then they pay the next one on Jan. 15. You can adjust your estimated payments down. Then next spring, when you file your tax return in the spring of 2023, you’ll get a much larger refund. So you’ll see it in three different ways because the first six months of this year, you’ve paid under the old tax tables.

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The state legislature will look at the question in a special session on Monday. A statement from the Democratic leadership in the legislature indicated enthusiasm for the discussion as a way to reduce the burden on working West Virginians in light of inflation.

“West Virginians need help now,” Senate Minority Leader Stephen Baldwin, D-Greenbrier, said. “As inflation has grown this year, Democrats have proposed ideas to provide the people with relief now — gas tax relief, sales tax relief, tax credits for families, workforce investments and even a tax rebate.”

House Minority Leader Doug Skaff, D-Kanawha, agreed.

“The governor announced this plan without discussion with or input from legislators — and we are the ones who have been hearing from people across the state on what would help them the most,” Skaff said. “The limited special session call also precludes us from discussing other avenues for meaningful tax relief for West Virginians. His lack of communication aside, we look forward to reviewing this plan to see how we can provide much-needed relief to the citizens of our state.”

See the proposed legislation.

See the existing tax code. Scroll down to section 4E.

Justice Proposes Tax Cut, Will Call Special Session

Gov. Jim Justice said in a Wednesday afternoon revenue briefing that he will call a special session after proposing a personal income tax cut.

He first announced a $1.3 billion state surplus for Fiscal Year 2022. He said the record setting revenue amount exceeds the current rainy day fund by more than 30 percent.

With that surplus, Justice said he still wants to eliminate the state’s personal income tax but, for now, he’s proposing a 10 percent personal income tax cut, retroactive to Jan. 1, 2022.

He said the tax cut will be aggregated with levels of tiering based on income. He said this will return $254 million to the taxpayers of West Virginia.

Justice said he will call the special legislative session on the tax cut to coincide with the upcoming legislative interim meetings set for late July.