Tag: Personal Income Tax

Gov. Justice Unveils Yet Another Personal Income Tax Reduction Plan, But Progress On Issue Remains Elusive

On Day 55 of the West Virginia Legislature’s 60-day session, Gov. Jim Justice gathered top lawmakers of both parties to try to hash out the differences between three very different plans to reduce the personal income tax. Instead, the governor offered up another version of his plan before lawmakers chimed in — and consensus on the issue remained elusive.

Billed as a way to urge lawmakers to agree on what has been, to date, a stalemate, the governor’s “summit” began with Justice critiquing the plans put forth by the Republican-led House and Senate.

“I do not agree with the House plan from the standpoint that it takes a long, long time,” Justice said of House Bill 3300, as passed by the lower chamber last month.

Under that plan, the personal income tax reduction would take place over the course of roughly 12 years and would reduce revenue by at least $150 million year over year — totaling more than $2 billion in lost revenue upon full implementation. The proposal from the House offers no new sources of revenue.

Justice said the House plan would not effectively entice people to move to West Virginia — one of his stated motivations in reducing the personal income tax.

“I think from the Senate side, they went big enough,” Justice said, noting, however, that he sees certain tax hikes as burdening the wrong parts of the population.

A strike-and-insert amendment to House Bill 3300 — adopted by the Senate Finance Committee and slated for a vote in the full Senate with amendments pending Tuesday — differs greatly from the House plan, but also departs from Justice’s proposal that was announced last month.

Under the upper chamber’s plan, there would be increases to the consumer sales tax from 6 percent to 8.5 percent, the reinstatement of the food tax at 2.5 percent and a new hotel occupancy fee, among other revenue increases.

“My plan did just this — it tried to make every single living, breathing West Virginian cash-positive,” Justice said, arguing that his original plan took on what he called the “Charleston swamp.”

But those words from Justice, as he acknowledged disapproval from some business groups and lobbyists, served as a pivot. Justice then unveiled a brand new set of ideas on tax reform — with some aspects of his original plan remaining intact and others dramatically changed.

After passing out literature to lawmakers on the stage, the governor announced a new proposal he called the “Justice 4 All” income tax plan. He then explained the latest iteration of his plan, moving the personal income tax reduction down to 50 percent (it was a 60-percent reduction in his original plan).

Under Justice’s new plan, the consumer sales tax would still jump from 6 percent to 7.9 percent. Proposed increases to beer, liquor and wine that were included in Justice’s original plan would be eliminated, the governor said.

After the governor introduced his new plan, lawmakers began to speak up and offer their own thoughts on the various proposals.

“One of the principal concerns that the members of the House always debate at length is how any proposed plan would differentiate West Virginia from neighboring states specifically as it relates to the border-county issue,” said House Speaker Roger Hanshaw, R-Clay.

After a somewhat extended back and forth with Justice about concerns over border

counties, Senate President Craig Blair, R-Berkeley, said he would get behind the governor’s new plan.

“I’d vote for this in a heartbeat — and I do believe what you’ve got here is an improvement,” Blair said about Justice’s latest set of ideas.

“Are we prepared to do this today? No,” said Blair, signaling his eagerness to find compromise. “But maybe tomorrow. The sooner the better.”

Senate Finance Chairman Eric Tarr, R-Putnam, questioned why the governor’s plan had focused on taxes on coal and gas, when he sees President Joe Biden’s proposed policies on natural resources as a potential hindrance.

“There is concern within the Senate of using volatile and less predictable taxes to offset a reduction in a very stable revenue source,” Tarr said, noting that the Senate plan didn’t consider severance taxes on natural resources.

Justice responded by saying that his plan didn’t hinge on severance taxes as much as it does economic growth. The governor took issue with the Senate’s plan to reinstate things like the food tax.

“The biggest thing that I think the Senate plan will be a tremendous obstacle is just this — like it or not like it — it puts an incredible burden back on those that are struggling the most. They’re going to perceive it that way,” Justice responded.

House Finance Chairman Eric Householder, R-Berkeley, said he was giving the governor “the way out” with the plan that has already passed the lower chamber.

“The House, right now, has the common-sense approach — a moderate approach — that doesn’t wreck the West Virginia economy,” Householder said. “And it burdens no one. Yes, it may take 12 years. But I think it’s a more common-sense approach.”

It was nearly an hour and a half into Monday’s summit before Justice heard from Democrats — whose small numbers in the House and Senate have been able to offer little influence on legislation this session.

House Minority Leader Stephen Baldwin, D-Greenbrier, applauded Justice for bringing members of the two parties together — and for championing the tax rebates for low-wage earners included in the both of the governor’s plans, including the new “Justice 4 All” proposal.

Baldwin also asked Justice what cuts to the state budget might be included under the new plan, including $25 million of funding to programs that have not yet been identified.

“I heard you talk about the potential cuts over time in the House plan,” Baldwin said. “We’ve obviously seen what the potential cuts are — in terms of the Senate plan for the budget moving forward — which I think are some pretty important things to you. So what might those look like?”

Justice said he had met with Tarr about potential cuts that would reel back wasteful spending, that the governor said would be “easy.”

“Now, I don’t really know what they are. And, you know, we’ll have to all look at that and see what they are,” he said.

House Minority Leader Doug Skaff, D-Kanawha, also thanked Justice for the opportunity to speak at the summit, and said he is open to the idea of reducing the personal income tax. However, Skaff said things felt too rushed and he made it clear that consensus wasn’t there yet.

“I question the sense of urgency today that we have to hurry up and do this. I’d be all for us meeting numerous times, through the next few months through the whole summer,” Skaff said. “Let’s get this right. Let’s do it right, let’s take part of the Senate’s plan, part of the House plan, your plan — let’s get this right.”

“I know we’ve only got five days left — and we can talk about this for 500 years,” Justice said in closing out the two-hour summit. “But it takes a lot of effort from everybody. I have given you every single thing in my soul to try to get us across the finish line.”

West Virginia House Approves Personal Income Tax Reduction Plan, Potential Revenue Losses Flung Into Question

The West Virginia House of Delegates has passed a bill that would reduce the personal income tax each year until it is fully eliminated. The measure would equate to at least a $150 million annual loss in revenue and would ultimately cost the state more than $2 billion each year upon full implementation.

Lawmakers in the lower chamber voted 77-23 mostly along party lines Monday to send House Bill 3300 to the Senate, which could make changes to the measure. The passage of the measure comes as Gov. Jim Justice continues to push his own plan despite opposition from business groups and some lawmakers.

Originating in the House Finance Committee last week, House Bill 3300 offers no tax increases to recoup revenue losses anticipated each year under the proposal.

The bill would also create a “personal income tax reduction fund” that would pull dollars from other sources, including the lottery. That fund would speed up the reduction of income taxes until it would be fully eliminated. According to an analysis from the West Virginia Center on Budget and Policy, the personal income tax would be completely eliminated by 2030.

House Minority Leader Doug Skaff, D-Kanawha, expressed concern over the possibility of massive cuts to state government in the future. Skaff argued the Legislature should take more time in considering the plan outlined in House Bill 3300.

“We all want to reduce the personal income tax. But why do we have to do it today on Day 48?” Skaff said. “Let’s kick this thing into the summer. Let’s study it over interims and put a bipartisan work group together. Let’s do it right, let’s do it responsibly, let’s not handcuff and strap the hands of the future legislatures and legislators for years to come.”

But House Finance Chair Eric Householder, R-Berkeley, touted the plan, arguing that residents would continue to benefit over the course of years.

“This is a new green deal for West Virginia. Not the one you’re thinking of, but a true green deal that puts money in your pockets,” said House Finance Chairman Eric Householder, R-Berkeley.

Sean O’Leary of the West Virginia Center on Budget and Policy told West Virginia Public Broadcasting last week that the state budget may be able to afford the first year of lost revenues under House Bill 3300, but subsequent years would likely come at a cost to state agencies and programs.

“No one said one word about how we’re going to pay for this $150 million a year. It’s got to come from somewhere,” O’Leary said.

O’Leary noted rising costs to Medicaid and PEIA as well as new legislation that allows for education savings accounts — which will come at a $126 million price tag per year — as other reasons to tread carefully.

“We’ve got to pay for these things. And we’re going to get rid of $2 billion in just a handful years. No one’s answered that question [about how we pay for this tax reduction],” he said.

On the House floor Monday, lawmakers adopted one amendment from Householder that would delay funds being transferred to the personal income tax reduction fund until July 2022 instead of Jan. 2022.

Delegates also rejected two amendments to House Bill 3300.

The first, from Del. Mick Bates, D-Raleigh, sought to use hypothetical revenues from adult-use cannabis for the personal income tax reduction fund. Bates’ amendment was rejected on a 29-71 vote.

Another amendment from some Democrats, including Del. John Doyle, D-Jefferson, sought to strike out the entirety of House Bill 3300 and simply offer a $150 tax deduction to all filers — was also rejected on a 23-77 vote.

With Wednesday being Day 50 of the legislative session and known as “Crossover Day” — a deadline for bills to come out of their chamber of origin — House Bill 3300 has been seen by some as a placeholder to continue the conversation on reducing the personal income tax.

The bill was offered as an alternative to the governor’s plan — which Justice continues to promote despite a lack of buy-in from the House — that would reduce the personal income tax for all filers by 60 percent, but also calls for hikes to taxes on consumer sales, tobacco, alcohol and soda, among other increases.

Jared Walczak, vice president of state projects at The Tax Foundation, said proposals like reducing the personal income tax are always a negotiation — between political parties, different legislative bodies and the governor.

Walczak said because of that, any bill that makes it to the finish line is likely to look different than what we’ve seen so far.

“We’re seeing that here, the governor has his proposal, the House has a proposal, there are senators who have different ideas about this,” Walczak said. “If there is going to be any significant reform package, it will undoubtedly borrow elements from each of these proposals, you wouldn’t expect one to get through without change.”

Ahead of the session, Senate President Craig Blair, R-Berkeley, touted the idea of reducing the personal income tax. He and other leaders in the Senate have yet to reveal their position on the issue, stating they want to have a look at what has been sent over to them from the House.

The West Virginia Legislature’s 60-Day regular session ends Saturday, April 10 at midnight.

Justice, Manchin Squabble Over Coronavirus Relief Revenue Provision, Income Tax Reduction Plan

West Virginia Gov. Jim Justice took aim at U.S. Sen. Joe Manchin Monday over a provision in the $1.9 trillion coronavirus relief package moving through Congress that would keep states from using that funding to offset tax revenue losses due to changes in state law.

The squabble between the two politicians comes as Justice hopes to reduce the state’s personal income tax by 60 percent for all filers, which translates to more than $1 billion loss in state revenue. Under Justice’s plan, the state would also increase consumer sales taxes, as well as taxes on cigarettes, tobacco, beer, liquor, wine and other products.

But even with roughly $900 million in proposed tax hikes under Justice’s plan, the state would be about $185 million short in revenues, which is where the federal relief funds come into the equation.

In the federal relief package passed Saturday by the U.S. Senate — known as the American Rescue Plan Act of 2021 — one provision would prevent states from using the federal relief dollars to “either directly or indirectly offset any reduction in the net tax revenue” of a state caused by a change in law.

According to an earlier version of the American Rescue Plan that passed the U.S. House of Representatives, no such provision existed that would have prevented those funds from being used in such a way.

During Justice’s virtual briefing Monday, the governor was asked about this aspect of the bill and went as far as accusing Manchin of inserting that provision himself.

“This is absolutely terrible, but what was written in the law was written in there primarily by Joe Manchin,” Justice said. “Joe Manchin is supposed to be your representative, West Virginia. And you know what Joe Manchin is doing? He’s still trying to hit at me.”

Justice then accused Manchin of inserting that provision in the bill simply to keep the governor’s income tax reduction plan from moving forward.

“When it really boils right down to it — what Joe Manchin is parading around doing is — he’s basically telling West Virginians ‘You don’t want to do this and the reason you don’t want to do this is because Jim Justice came up with this,” Justice said.

On Monday, Manchin accused Justice of attacking him and said he welcomes a conversation with the governor on how to best improve the lives of residents using the more than $2 billion in funding secured for the state through the bill.

“Policy differences do not justify personal attacks; I want to work with Gov. Justice in the best interest of our state,” Manchin said in a statement.

A spokesperson for Manchin did not respond when directly asked whether the senator was responsible for the provision in the American Rescue Plan that would keep states from using the relief funds to backfill losses from tax cuts.

In recent weeks, Justice has floated the possibility of the federal government forgiving relief money that the state has allocated toward unemployment and other pandemic-related expenses not already covered by earlier relief packages.

If that were to happen, Justice has proposed setting aside any surpluses from that hypothetical forgiveness program into a “bucket” that he has said he hopes could be used to backfill any revenue shortfalls.

But on Monday, Justice clarified his position on the matter.

“My additional rainy day bucket has nothing — and still has nothing in the world — to do with taking CARES money and putting it over here in a rainy day bucket that is for tax relief. Nothing at all. Nothing whatsoever,” Justice said.

And so far, that remains true, according to an outline of Justice’s plan that was unveiled Thursday.

But Justice also questioned why states — including West Virginia — should not be allowed to use the money in any way they see fit.

“It is our right, as other states, to draw down stimulus money that’s been given to us to pay us back for expenditures that we have expended toward COVID,” Justice said. “If we have just happened to run our states better than other states — that are run by Democrats and out of control. If, in fact, we have done that, should we not have the options to do with those monies whatever we want to do with those monies that will only help West Virginians and help us become better and bring more opportunities to us?”

The governor’s office released a draft of his income tax reduction bill Thursday afternoon. As of Monday, the measure had not been formally introduced in either the House or Senate.

Gov. Justice Releases Plan To Reduce Personal Income Tax, Outlines Hikes To Make Up For Lost Revenue

More than three weeks after he championed the reduction of the personal income tax in his state of the state address, Gov. Jim Justice has unveiled details of the plan.

Justice announced Thursday he has submitted a bill to the Legislature to consider.

While the bill was not immediately available, the governor’s office has released a framework of the plan that offers insight into how the state would account for a loss in revenue from the reduction of personal income tax.

The plan aims to bring the rates for all tax filers down 60 percent on income earned from wages and salaries, as well as social security, unemployment and retirement benefits.

“We have all the building blocks in our state,” Gov. Justice said in a news release announcing the plan. “We have an economy that’s truly on the launchpad, some of the greatest people you’ll find anywhere, who are smart, kind, faith-based, and hardworking people, along with four of the best seasons on Earth with more natural beauty than you could possibly imagine. “

Justice said the time is now to “make a big move to put us over the top.”

“The last piece of this puzzle is the elimination of our personal income tax. That’s why I am proposing a plan to make this dream a reality starting with a 60 percent reduction in state income tax for year one,” Justice said.

An abstract of Justice’s plan estimates personal income tax reductions totaling $1,035,650,000 and rebates totaling $52 million. But some tax increases — totaling $902,600,000 — are being pitched to make up for a big chunk of the loss of revenue.

Among those hikes, Justice is proposing an increase to the consumer sales tax (from 6 percent to 7.9 percent). Taxes on natural gas and coal would be restructured under a tiered system, according to charts on the abstract. Additionally, taxes on soda, tobacco, beer, wine and cigarettes would also see a bump. Justice also says he would create a luxury items tax.

In all, more than $185 million in lost revenue is not yet accounted for under the abstract released by Justice’s office. However, the abstract offers some “options to consider,” including $25 million in state budget cuts, a $10 million reduction in payroll through attrition and $60 million in projected annual revenue growth.

The revenue shortfall left by the governor’s plan drew criticism and a request for more specifics from the West Virginia Center on Budget and Policy, a non-profit policy research organization.

WVCBP Executive Director Kelly Allen called the plan “regressive” and said it gives tax cuts to the state’s most wealthy, thus shifting the burden to low- and middle-income West Virginians.

“The plan also fails to fully offset the revenue losses of reducing the personal income tax, which means inevitable cuts to public services in the midst of an ongoing pandemic,” Allen said. “We urge the Governor to highlight exactly what he intends to cut in order to balance the budget.”

Finance committees in the House of Delegates and Senate would get a chance to mull the bill over before sending it to their respective floors. As of midday Thursday, the bill had not been formally introduced and was not slated on an agenda for either chamber’s finance committee.

W.Va. House Kills Another Revenue Increase

The West Virginia House of Delegates has killed another revenue increasing bill – one that would’ve generated an estimated $215 million in three years.

House Bill 2933 has taken several forms as it worked its way through the House of Delegates. In its latest form that was set for a vote Wednesday, the bill would’ve reinstated a 3 percent food tax in October of this year and eliminated a number of exemptions to the current sales tax – things like daycare services, cell phones, or personal and professional services.

It would’ve lowered the sales tax from 6 to 5 percent in July 2018, and it would’ve put a flat 5.1 percent rate on the personal income tax.

Several delegates swore on the campaign trail they would not support any revenue increases, and some members even tried killing the bill on its first reading in the chamber Saturday. By the time the bill reached second reading Monday, it had over a dozen pending amendments.

Consideration of any of those amendments and the bill itself were delayed multiple times before it was ultimately laid over Wednesday night. Wednesday, however, was crossover day, or the final day members can vote on bills originating in their chamber. That procedural move kills the bill and prevents lawmakers from putting it to a vote.

A similar tax reform measure, however, passed out of the State Senate Wednesday. That bill increases the sales tax, creates a new structure for the personal income tax, and lowers the severance tax on coal.

House Kills Bill to Increase Beer Barrel Tax & More

The West Virginia House of Delegates has killed a bill that leadership says was one of the keys to balancing the 2018 budget. The bill was presented on behalf of Governor Jim Justice and originally would have raised $450 million in new taxes but drastically changed as it worked through the committee process.

House Bill 2816 would have put about $20 million dollars back into the general revenue fund during the 2018 fiscal year. The governor’s office says the budget hole for 2018 could be as high as $497 million dollars. But House officials say that’s because the governor attempted to increase state spending in his budget plan. The House’s budget calls on closing about a $340 million dollar gap, and without House Bill 2816, the chamber’s Finance Chair says that will be more difficult to do.

The bill looked at three major things to help balance the 2018 budget. First, it would’ve eliminated the film tax credit, putting $5 million back into general revenue. Second, it would’ve ended a transfer of monies from sales taxes on automobile products to the state road fund, putting about $12 million back into general revenue. And third, it would’ve increased the beer barrel tax, which estimated to bring in almost $3 million additional dollars.

This bill was up for passage in the chamber Tuesday, but was immediately met with opposition from members on both sides of the aisle. Several Democrats and Republicans opposed the bill because of its elimination of the film tax credit. But it was the beer barrel tax increase that had delegates like Republican Pat McGeehan from Hancock County fuming.

“So I’d just like to know, are we conservatives here? I thought the Republicans controlled this chamber. Maybe not, I don’t know,” McGeehan said, “Some members in my party seem like they’d like to take us back to the 1920s and early 1930s as prohibitionists. It’s not our job to pick and choose which legal products to tax. That’s called the ‘nanny state.’ It’s called free enterprise; that’s what we’re supposed to embrace.”

The bill failed 39 to 60. House Finance Chair Delegate Eric Nelson of Kanawha County says he was extremely surprised by the vote.

“You know what, we’re just going to continue – our idea of having a budget out by [Wednesday], which we were on a path of last Saturday; it’s going to be very difficult now,” Nelson noted, “So, you either have to look at cuts, or I hate to say it, revenue measures, and I don’t think the body, if they don’t look at a potential beer consumption change, where do you think they’ll be? Difficult times right now.”

Originally, delegates were also going to vote on House Bill 2933 Tuesday. It’s another bill to increase revenues for the state.

The bill in its current form reinstates a 3 percent food tax in October 2017, and it would also get rid of a number of exemptions to the current sales tax — like cell phones and professional services.

It would lower the sales tax from 6 to 5 percent in July 2018, and it would put a flat 5.1 percent rate on the personal income tax. All in all, the bill is estimated to bring in an additional $215 million between 2018 and 2020.

Delegates pushed consideration of that bill off until Wednesday.

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