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Justice Signs Tax Bill Into Law, Lawmakers Discuss PEIA Changes

On this episode of The Legislature Today, Gov. Jim Justice signed House Bill 2526 into law today. The bill includes a 21.25 percent tax cut across all six income brackets, with the governor’s office calling it the largest tax cut in state history. Government reporter Randy Yohe has the story.

On this episode of The Legislature Today, Gov. Jim Justice signed House Bill 2526 into law Tuesday. The bill includes a 21.25 percent tax cut across all six income brackets, with the governor’s office calling it the largest tax cut in state history. Government reporter Randy Yohe has the story.

With the signing of the bill, lawmakers have taken a significant step towards finalizing a budget. However, there are still some coronavirus relief monies yet to be appropriated, and significant debate on how to use them. Reporter Chris Schulz has more.

Yohe also sits down with Del. Matthew Rohrbach, R-Cabell, and House Minority Leader Doug Skaff, D-Kanawha, to discuss changes to the Public Employees Insurance Agency as Senate Bill 268 has passed through both chambers and is on the way to the governor’s desk.

It was also deaf awareness day at the Capitol, an event of understanding and education for all West Virginians.

Having trouble viewing the video below? Click here to watch it on YouTube.

The Legislature Today is West Virginia’s only television/radio simulcast devoted to covering the state’s 60-day regular legislative session.

Watch or listen to new episodes Monday through Friday at 6 p.m. on West Virginia Public Broadcasting.

Gov. Justice Signs Tax Cut Bill

The signing of the bill comes just days after the House approved House Bill 2526, agreeing with the Senate’s proposals to reduce the personal income tax. HB 2526 represents a $754 million cut in taxes.

Gov. Jim Justice signed the much-debated tax cut bill with a group of lawmakers on stage at the Culture Center to celebrate the event with music and a balloon drop.

Justice said of the event’s jubilation, that the road to this tax cut has been rough, and today was a time to celebrate.

“God above gave us the ability to smile and laugh,” Justice said. “And with all of that, he knew this journey was gonna be tough, didn’t he? And he wants it to be that way. He wants to challenge us and we want it to be that way. But he gave us the ability to smile along the way.”

The signing into law comes just days after the House approved House Bill 2526, agreeing with the Senate’s proposals to reduce the personal income tax. HB 2526 represents a $754 million cut in taxes.

“It’s so much better in life and anything we do when we do it as a team,” Justice said. “When absolutely everybody wins, whether it be the House, the Senate, the governor’s office, all the great people in the state of West Virginia, when everybody’s on a team, and everybody wins. It’s a great, great, great day in the state.”

Personal income tax rates will be cut by 21.25 percent across all six tax brackets, retroactive to Jan. 1, 2023.

Additional personal income tax reductions will be limited to no more than 10 percent at any given time, but a formula will activate further tax cuts when the surplus allows.

Taxpayers will receive a 100 percent tax credit on their vehicles when they pay personal property taxes, and small businesses can claim a 50 percent refundable tax credit against personal income taxes or the taxes paid on machinery, equipment and inventory.

Disabled military service veterans will receive a refundable tax credit against their personal income taxes for real property taxes paid on their homes.

Senate President Craig Blair, R-Berkeley, said the proof of progress is in the evidence of economic growth in West Virginia.

“This is part of the process of what’s going on, it’s calculating the numbers, knowing what’s going on, that teamwork has been in place for over eight years,” Blair said. “And you can see it, you can see it on the jobs that are coming to the state of West Virginia, and as you grow your tax base, it actually makes it so that you have the resources to be able to give back and spread the wealth. And that is happening now in the state of West Virginia, it will only become exponential as we move forward.”

Opponents of the tax cut have voiced concerns about the state’s ability to keep up with infrastructure costs with such a high tax cut.

Blair called the tax cut momentous and mentioned that $760 million of the state’s reported $4.8 billion budget will return to the people of West Virginia.

“Four years of a flatline budget provided $588 million of the $760 million, that continued growth to be there, but we’re not counting severance taxes into the equation at all,” Blair said. “We’ll be able to do deferred maintenance, as we’ve got all that built in. That’s why we refused on the Senate side, to go to the 50 percent or 30, 40, 50, those numbers didn’t work and still maintain moving for the state forward, you got to be able to have money to be able to invest in yourselves.”

HB 2526 was signed into law Tuesday afternoon.

W.Va. Senate Unveils, Passes Tax Cut Plan

The Senate gaveled back in right at 4 p.m. to discuss Senate Bill 424, which includes proposed tax cuts. The Senate suspended its own rules to advance the bill to third reading and complete action on the legislation.

Updated on Wednesday, Feb. 8, 2023 at 4:45 p.m.

The Senate gaveled back in right at 4 p.m. to discuss Senate Bill 424, which includes the proposed tax cuts. The Senate suspended its own rules to advance the bill to third reading and complete action on the legislation.

A number of senators – including all three Democrats – rose to voice their support, and the bill passed unanimously. It now goes to the House of Delegates for their consideration.

Original Post:

Senate Republicans gathered in front of the Senate chamber Wednesday morning to present their tax reduction plan for West Virginia.

“What we believe we’ve put together is a very comprehensive, safe tax reduction plan that is as wide as we could possibly make it to capture and help the vast majority of West Virginians across the state of West Virginia,” said Senate Majority Leader Sen. Tom Takubo, R-Kanawha. “What we want to do now is try to be able to give some tax relief back to the West Virginians across the state, but we want to do so in a way that we don’t overspend, that we don’t overstep, and kind of get out in front of our skis and then get in a situation where we hurt anybody.”

The plan would reduce personal income tax by 15 percent across the board next year, and continue reducing personal income tax in the years to come.

“There’s a trigger that as our economy grows here in West Virginia, it further brings down the income tax all the way to zero,” said Senate Finance Chair Sen. Eric Tarr, R-Putnam.

The plan is a departure from Gov. Jim Justice’s plan to reduce personal income tax by 50 percent over the next three years, starting with a 30 percent cut. The House of Delegates approved the governor’s plan weeks ago, but Senate leaders called it “dead on arrival” before it ever reached their chamber.

Tarr clarified that the personal income tax would continue to decrease as the economy grew.

“When our sales tax collections, without ever raising a sales tax, increase 105 percent over the previous year, it triggers a dollar for dollar reduction of that amount of increase,” Tarr said. “If it’s 107 percent, then it’s going to be 7 percent that triggers it down. If it’s less than 105 [percent], there’s no trigger. It creates a smoothing mechanism to safely bring down our income tax to zero.”

The Senate’s tax reduction plan also includes a rebate for the payment of taxes on vehicles, reminiscent of the proposal in Amendment 2 that was voted down in November 2022. Takubo said the vehicle tax rebate would ensure low income households, and those on fixed income, also benefited.

“Regardless if you’re low income or regardless of your fixed income, you usually got to have a vehicle to get around, and we’re gonna give that back in a rebate so that that they also can benefit from this comprehensive tax plan,” Takubo said.

Similarly, the plan would give a homestead real property tax rebate for some service-disabled military veterans, as well as eliminate the West Virginia tax filing “marriage penalty.”

“Many West Virginians don’t realize that the tax code in West Virginia actually helps those that are single and not married couples, and that’s not what West Virginia values are about,” Takubo said. “We should be promoting and helping those financially that want to build a family and have that family unit. So this will eliminate that penalty in our tax code.”

The plan is not limited to personal income, and promises a 50 percent rebate for the payment of equipment and inventory taxes paid by West Virginia small businesses. Tarr said the legislators had heard criticism of a similar action during their push for Amendment 2, and now limited the rebate to small businesses only.

“What this bill does, it does not include corporate net,” Tarr said. “It’s your pass through entities, it’s your sole proprietors, it’s the small businesses of West Virginia. This does not affect the corporate net income tax, which would have included those big boxes.”

Takubo said Senate leadership has been speaking with Justice throughout the session, and believe their plan achieves his goals of, “helping the small folks, the small businesses, those that are less fortunate in the state,” but are still waiting for comment on the plan.

Senate President Craig Blair, R-Berkeley, said he has reached out to House Speaker Roger Hanshaw, R-Clay, to let him know what’s happening.

“We’re family here,” Blair said. “We’ve been working back and forth for over a month long.”

He concluded by saying the Senate is ready to move quickly to get the plan into the House of Delegates as soon as possible.

“One of the goals is to be able to finish this legislation and have it moved into the House of Delegates before day 30,” Blair said. “Today’s day 29. Our goal was to be able to move this on through and get it done. We’ve been working for over a month.”

The Senate plans on reconvening a split session Wednesday evening at 4 p.m. to ensure the plan is passed through the chamber.

Governor’s Reaction

Shortly after the Senate’s announcement, Gov. Justice held his own press conference to give an administrative update. He praised the Senate and Blair for their proposal.

“We’ve got to get everybody on board and get to a compromise or get to a solution here, but we really thank [Blair] and thank all the senators that jumped on board and really tried to help and everything,” Justice said. “Now we’re on a pathway to put real meaningful money right back into people’s pockets, and I know you’ll do the right thing with it.”

In response to questions, Justice said he needs to look at the details of the plan before commenting further. He continued to compliment the Senate’s plan, while also giving credit to the House of Delegates.

“The House, absolutely, we should give so much respect to the House,” Justice said. “We have not done this kind of stuff since 1987. We have finally, finally got this state really moving in a great, great, great way. What we want to do is we want to pull the rug together.”

When asked about the small business rebate, a different version of which Justice focused on in his campaign against Amendment 2, he said the Senate’s changes addressed his concerns.

“In this situation now, the counties will remain whole. That is really, really, really good,” Justice said. “If there’s a way to move forward and be able to do things for our small businesses and be able to move forward and do things for the possibility of additional manufacturing or whatever coming to our state, I don’t think anybody in the world is turning their nose up at anything about that.”

Justice will meet with legislative leaders Thursday morning to further discuss the various plans for the state’s taxes.

*Editor’s note: This story was updated to include Justice’s reaction to the Senate announcement.

Sen. Tarr Says House Tax Bill D.O.A.

Gov. Jim Justice’s 50 percent income tax cut proposal was passed by the House Wednesday. The bill received a cold reception in the Senate.

Gov. Jim Justice’s 50 percent income tax cut proposal was passed by the House of Delegates Wednesday. The bill received a cold reception in the Senate.

Senate President Craig Blair, R-Berkeley, chuckled a bit upon receiving House Bill 2526, proposing a 50 percent income tax cut phased in over three years. The House plan would see the state lose a quarter of its current revenue stream, replaced by surplus revenue and expected population growth.

The bill was referred to the Senate Finance Committee. The chair of that committee, Sen. Eric Tarr, R-Putnam, said the house bill was a no-go for passage. He said it’s not sustainable and would destroy the state budget in about three years.

“Within three years, it’s upside down. So they’re spending a lot of one-time money that’s up there, well beyond what we’ve developed with the flatline budget, to be able to do what should be an in perpetuity tax cut,” Tarr said. “Dave Hardy, secretary of Revenue, when he’s in front of Senate Finance said that, yes, this may not be there in three years and it’s just gonna be the next governor’s problem and the future legislators problem. That’s irresponsible. It’s just risky as all get out. We’re not gonna let that fly.”

Tarr said the Senate’s yet to be introduced tax cut proposal will competitively attract people and business to West Virginia. He said the proposal will highlight the key elements of the failed Amendment 2, but this time, cuts in property and vehicle taxes will come in the form of a rebate.

“We’ve had it in the public eye forever, we address personal property issues with it,” Tarr said. “When you’re looking at it, manufacturing equipment, inventory and vehicles, the governor just set up a Vehicle Rebate plan, so we thought we would use the governor’s plan to address those, but include the species of property that prevent businesses from coming into West Virginia. Then, use what we have, and the remainder because there’s more after that to start triggering down the income tax so that in time the income tax is gone, and then the personal property tax will be effectively gone. It’s kind of clunky that we have to do it that way.”

He explained that it was clunky to implement the bells and whistles of a working mechanism for large scale tax rebates. Tarr said the rebate method may be temporary until the public realizes a constitutional amendment to eliminate property and vehicle taxes is the best way forward.

W.Va. House Passes Bill To Cut Personal Income Tax By Half

West Virginia's Republican-dominated House of Delegates passed a historic 50 percent reduction of the state's personal income tax Wednesday, rejecting a plan from Democrats that would have completely eliminated the tax for the lowest earners in one of the poorest U.S. states.

West Virginia’s Republican-dominated House of Delegates passed a historic 50 percent reduction of the state’s personal income tax Wednesday, rejecting a plan from Democrats that would have completely eliminated the tax for the lowest earners in one of the poorest U.S. states.

The bill — a proposal from Gov. Jim Justice — passed the House of Delegates 94 to 2, with four members not voting. It now heads to the Senate, where legislative leadership has clashed with Justice over proposals to cut taxes for nearly two years.

In a statement immediately following the vote, the Republican governor said the cut would “put money in the pockets of hardworking West Virginians.”

“There is no better incentive than this. Period,” Justice said. “I encourage the Senate to expediently vote in favor as well.”

Justice’s plan would cut the personal income tax across income brackets incrementally over the course of three years: 30 percent the first year, and then an additional 10 percent each year after that. He has described the plan as a “West Virginia tsunami,” and a first step toward eliminating the state’s personal income tax altogether.

House Republicans moved quickly to pass the legislation, greenlighting the proposal just a week after Justice announced the plan during his State of the State address and lawmakers gaveled in for the 60-day legislative session last Wednesday.

“At the end of the day, a prosperous economy is going to fix an awful lot of the problems that we debate in this body,” Republican Delegate Matthew Rohrbach said. Close to 17% of West Virginians live in poverty, and the median household income is $50,884, according to the U.S. Census Bureau.

The personal income tax rate in West Virginia is 6.5%. Neighboring state Ohio’s personal income tax rate ranges from about 2.8% to 3.99%. Kentucky has a flat individual income tax of 5%. There are 15 states have a higher tax bracket than West Virginia, Rohrbach said. Eight U.S. states have no personal income tax at all.

The Democrats’ plan would have cut the personal income tax completely for earners who make less than $80,000 a year, or 72 percent of the state’s residents, according to lawmakers. People who make more than $80,000 would continue pay personal income taxes at the current rate of 6.5%.

“What the Democratic plan is trying to do is: ‘Keep it simple, stupid,’ ” Democratic Delegate Joey Garcia said. “Let’s start with the people who need it the most.”

A family making $80,000 would have saved $4,075 a year under the Democrats’ plan, a family making $60,000 would have saved $2,778; a family making $40,000 would have saved $1,575. The cuts under Justice’s plan for those income groups would be half as much.

Democratic Delegate Larry Rowe said the governor’s plan is not fair because the more money people make, the bigger tax break they get.

“All we’re asking is let them pay their fair share of what they got out of this society,” Rowe said. “When you are able to make a million dollars in income, a whole lot of things clicked to get you in that position. Pay your way, pay it back.”

“We can we can run and skip through the cornfields barefoot and give great big tax breaks, if we’re going to do it,” he continued. “The plan over here is very simple: be fair.”

Republican Delegate Marty Gearheart said the underlying idea of the bill is to put the state on the path to eliminate the income tax entirely. But he said lawmakers have to take a measured approach.

“It fails to respect all West Virginians, particularly those that have worked hard, worked smart and have put their money at risk to be earning an amount of money that is subject to tax,” Gearheart said, of Democrats’ plan. “We want to get rid of that. However, it’s not something that can be done at the snap of a finger. This takes us a long way there.”

He said the way to do that is “a little bit at a time” and not by favoring one group of residents over another.

“It appears to me that those that pay more tax are going to get more dollars in break because they pay more tax,” he said. “They contributed more from an economic standpoint to the state of West Virginia than those that paid less tax.”

Republican Delegate Daniel Linville said those earning a higher income are job creators who could hire additional employees if they see a tax cut.

“I must mention that it’s hard to earn a wage without an employer,” he said.

Senate GOP leaders are expected to offer their own tax cut proposals.

The governor suggested a permanent 10% reduction in the personal income tax in July after the state ended the fiscal year with a record $1.3 billion surplus. The state Senate refused to take up the proposal during a special session that month.

In October, Justice floated another plan, saying he wanted to eliminate a personal property tax that residents pay annually on vehicles. The following month, voters rejected a proposed constitutional amendment designed by state lawmakers that would have enabled lawmakers to eliminate a business and inventory tax, along with the personal property vehicle tax.

Justice Tax Cut Proposal Includes Safety Net

Gov. Jim Justice’s 50 percent income tax cut proposal, a highlight of his State of the State address, comes with a big funding hedge against recession and some state comparisons touting success.

In a Thursday media briefing, Justice said in case of unexpected future revenue surplus failures, he will set aside $700 million for a state income tax rainy day fund.

“If we stub our toe just a little bit, and we need to pull from the personal income tax rainy day fund, it’s there as a great insurance policy,” Justice said. “We don’t want to overspend ourselves and get ourselves in trouble.”

In the briefing, Revenue Secretary Dave Hardy said phasing the 50 percent cut over three years will cut the state’s top income tax rate down to 3.25 percent. He said national studies show other states without personal income taxes flourish economically.

“Tennessee, Florida and Nevada, they are far and away outperforming the states that do have an income tax,” he said. “Their populations are growing faster and their gross domestic economies are growing faster.”

Hardy said the 50 percent cut will give West Virginia a lower income tax rate than any border state.

“We are going to be lower than all those states surrounding us, Virginia, Maryland, Kentucky and Ohio,” Hardy said. “This will create an incentive for people to move into West Virginia and avail themselves of the financial success and prosperity that we’ve had here.”

Hardy presented the governor’s budget and tax cut plan to the House of Delegates finance committee Thursday. Earlier in the day, House Bill 2001, cutting the personal income tax by 10 percent, went to that same committee.

On the Senate side, Finance Committee Chair Eric Tarr, R-Putnam, has publicly said he will not support any tax reform from the governor. Tarr and Senate President Craig Blair, R-Berkeley, have alluded to an effort to resurrect the impetus of failed Amendment 2, eliminating the state inventory and machinery property tax. That tax is constitutionally protected.