CHARLESTON — As the special session called by Governor Jim Justice for lawmakers to consider his personal income tax proposal drags into the third day, divisions continue between the governor and Republicans in the House of Delegates on one side and the Senate Republicans on the other.
The House read House Bill 301, the Governor’s 10% reduction in personal income tax rates, for the first time on Tuesday after the House Finance Committee recommended passage of the bill. law Project. The bill is at second reading today, when amendments can be considered.
“The opportunity we’re trying to create here is for all of us and for a lot of people in West Virginia, especially small business owners and family businesses like me… (is) the opportunity to take advantage of a discount comprehensive tax bill that we’ve neglected for nearly 35 years,” said House Finance Committee Vice Chairman Vernon Criss, R-Wood. “We haven’t changed our tax brackets. We are late to be able to help normal taxpayers and their families.
HB 301 would reduce personal income tax rates in all six income brackets retroactive to Jan. 1, resulting in more money on paychecks and bigger tax refunds at the end of the year. tax year in December. Rate reductions range from a 1% reduction for those earning $10,000 or less per year, reducing the tax rate from 3% to 2%; a half percent reduction for those earning between $40,000 and $60,000 per year and those earning more than $60,000 per year.
If passed, HB 301 would bring $255 million in tax revenue to taxpayers beginning in fiscal year 2023 and $102 million due to retroactive tax reduction for a total of $357.2 million, according to a tax memo from the State Department of Revenue. The bill would net taxpayers $270 million in fiscal year 2024, with tax revenue increases expected going forward due to estimated tax base growth. The Ministry of Revenue has estimated an administrative cost of $35,000 for implementing the tax reduction.
According to the State Budget Office, personal income tax brought in more than $2.5 billion in tax revenue in the fiscal year that ended June 30 and accounted for more than 42% of the $5.9 billion in total tax revenue for the general revenue fund, resulting in a surplus of $1.3 billion at the start of the new fiscal year.
“If we look to the future in West Virginia, if we can start reducing our personal income tax when the day comes when we eliminate our personal income tax, no doubt…that’s the thing. even that is going to bring real growth to West Virginia,” Justice said Tuesday during his virtual briefing with reporters at the State Capitol Building.
Of the. Larry Rowe, D-Kanawha, proposed an amendment in committee that would have kept the 6.5% tax rate for those earning more than $60,000 a year, and instead would have given each taxpayer back between $200 and $290. $ according to tax brackets. This amendment failed.
“One-third of West Virginians would get two-thirds of the tax benefit,” Rowe said, repeating a statistic offered by the Department of Revenue estimating that the top third of taxpayers would benefit the most from HB 301. “This what my plan does is to treat taxpayers equally, and that’s something we have to do for, people.
HB 301 is similar to House Bill 4007 which passed the House in the 2022 legislative session earlier this year. This bill was never taken up by the Senate, and skepticism remains among Senate Republicans about the plan. Speaking after Tuesday morning’s floor session, Senate Speaker Craig Blair, R-Berkeley, said there was no support among Senate Republicans for HB 301.
“I can tell you now but on a higher degree, the Governor’s plan won’t work,” Blair said. “It will definitely not pass the Senate.”
Instead, the Senate Republican Caucus released a pamphlet on Monday afternoon detailing its plans if voters approve Amendment 2 in November, giving the legislature the power to reduce or eliminate six tax rate categories. taxation of tangible personal property. Senate Republicans want to fund all 55 counties based on their counties’ actual dollar assessments and provide counties with a minimum of an additional $1 million above their assessments, funding counties directly through the general revenue fund. .
Under the Senate plan, tangible personal property taxes for machinery and equipment, furniture and fixtures, leasehold investments, computer equipment, inventory and vehicles would be eliminated.
Senate Republicans estimate that by maintaining a fixed budget combined with natural growth in tax revenue, they can provide $558 million in funding to county governments and school systems each year going forward. It would also help erase the burden counties face with regional jail fees that are bankrupting smaller counties.
Blair said his caucus wanted to modify its plan in HB 301 or introduce the plan as separate bills. At a minimum, Blair said the Senate Republican caucus could introduce a nonbinding resolution expressing support for the tangible personal property plan. The West Virginia Chamber of Commerce and the West Virginia Manufacturers Association prefer to focus on tangible property taxes rather than a personal income tax cut.
“Momentum is building not only across the state of West Virginia, but inside this building and outside this building with counties as well as people realizing what we want to do to the people of West Virginia,” Blair said. “The momentum is really building.”
Other bills the Senate Republican caucus is considering include a bill that would allow personal income tax reduction based on increased consumer sales and use of tax revenue. . Sales tax revenues would need to increase by 5% to trigger a reduction in the tax rate distributed among each tax bracket.
Another bill would provide West Virginia taxpayers with a refund on their 2020 tax year personal property taxes on motor vehicles. Senate Republicans also want a bill that would grant increased benefits to some retired teachers and public servants at a cost of $26.5 million. The one-time $1,500 payment would only go to retirees over age 70 on July 1 with 20 or more years of employment in the state and who receive less than $1,000 a month.
“If (justice) wants to veto it, it’s on him,” Blair said. “If he wants to veto a (cost of living increase) for pensions, it’s a one-time payment, or if he wants to veto where we sent him a bill passed where we give tax relief to every taxpayer and every person in West Virginia who owns an automobile, so it’s on the governor. It’s not on us.
During his virtual briefing, the judge criticized the Senate Republicans’ tangible personal property tax plan, accusing the majority caucus of wanting to remove local control from counties and put big business above ordinary taxpayers.
“We can layer things that benefit big business that literally don’t benefit us in hopes that more business will come. You can take control away from counties with the ability to have guaranteed revenue streams where you put control in Charleston…If you do that and transfer it to Charleston, you’re taking a hell of a risk,” Justice said. .
Although he’s against the Senate Republican’s tax proposals, Blair said he’s grateful the justice convened the special session because it sparked discussions about tax reform in the state.
“I actually applaud the governor for putting this on the call, because what he’s done is bring awareness to the people of West Virginia and West Virginia counties,” Blair said. “We don’t sleep behind the wheel. We are still working on things… We have done a lot of work to prepare this.