CHARLESTON, W.Va. – After conducting multiple virtual town halls to field questions from concerned parties over the past weeks, Governor Jim Justice announced today that he has submitted a bill to the West Virginia Legislature to repeal personal income tax in the Mountain State.
Governor Justice described today’s bill as a once in a lifetime opportunity to transform West Virginia’s tax structure; raising wages, raising home values, bringing in more businesses, more people, and making life better for all West Virginians.
To support his actions, Gov. Justice shared data collected between 1950 and 2016, in which the total population of the United States doubled. Across the board 49 of 50 states saw their populations increase, all except for West Virginia.
Between 2010 and 2020, West Virginia’s populations decreased by 3.8%, cited as the steepest rate of decline in the country. During Justice’s first tenure as Governor from 2016 to 2020, West Virginia lost 2.6% of it’s population, despite measures to retain population such as Right-to-Work and Prevailing Wage laws, Roads to Prosperity, Tourism investment and more.
“We may never have an opportunity like this ever again,” Gov. Justice said. “Because of how we’ve handled the COVID-19 pandemic – how we’ve saved lives, had the best vaccine program in the nation, and kept our economy on the move – the spotlight of the world is on West Virginia right now. This is the time to seize our opportunity.’
“We have all the building blocks in our state,” Gov. Justice continued. “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. But now we need to make a big move to put us over the top, so when people look at another population map 70 years from now, West Virginia will be right up there with the very top states in the country.
“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% reduction in state income tax for year one.”
West Virginia will become the first and only state in the mid-Atlantic or Northeast region to eliminate state income taxes.
The plan seeks to encourage job growth and population growth in West Virginia by attracting people and businesses who wish to locate to low-tax states.
Every West Virginian will benefit from the plan, according to Justice. All lower income brackets less than $35,000 a year will receive a tax rebate check under the plan.
To offset the cutting of tax funding for State operations, Justice said it would take all of West Virginia “pulling the rope together.”
Pulling the rope together starts with changing the state consumer sales tax from 6.0% to 7.9%, while also adding a small, single-item luxury tax for certain high-value luxury items that only the very wealthy typically purchase, according to Justice.
Under the Governor’s proposal, professional services, such as legal and accounting services will pay the same tax rate as skilled trades like plumbers and electricians. The consumer sales tax base will be expanded to include computer hardware/software, legal services, accounting services, other professional services, selected advertising, electronic data processing, and health and fitness memberships.
The Governor feels that the new taxes will be offset as people migrate to the Mountain State. Taxes on soft drinks, tobacco products, beer, wine and liquor will also be changed.
Justice’s bill also calls for a tiering system to be put in place for natural gas, oil and coal severance taxes, “so that when times are good, these companies throw a little more in the collection plate, and when times are bad, the state steps up and lowers severance tax so that their critical jobs are protected.”
The Governor’s plan is also drawing criticism across the State.
As currently structured, it would raise West Virginia’s sales tax to 7.9 percent, making it the highest state sales tax in the country, and effectively making our combined state and local sales tax rate 8.4 percent, higher than that of any of our surrounding states. This tax shift would constitute a windfall for high-income West Virginians, while shifting regressive sales taxes onto low- and middle-income families, those same families who have been hit hardest by the pandemic, said the WV Center on Budget & Policy.
Worse, the proposed pay fors total $185 million less than the tax cuts, meaning that when combined with the Governor’s flat budget – which already doesn’t account for inflation – we are looking at budget cuts totaling 5 percent of our total base budget. This amid a pandemic, when public services are more important than ever.
“Governor Justice’s plan is as regressive as we feared it might be. While it gives huge tax cuts to the wealthiest West Virginians, the tax shifts would fall most heavily on the vast majority of West Virginians who are low- and middle-income,” said WVCBP executive director Kelly Allen. “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. We urge the Governor to highlight exactly what he intends to cut in order to balance the budget.”