CHARLESTON – Governor Jim Justice believes lawmakers in the West Virginia legislature made a big mistake earlier this year.
When members of the Republican-controlled legislature failed to pass a tax reform program that would have paved the way for the elimination of the state’s personal income tax, it was a misstep that lawmakers and state residents “will absolutely regret forever,” the justice said. during an interview with WV News.
Justice argues that eliminating the state’s personal income tax would stimulate the state’s economy and attract new residents to the state.
“What an opportunity we had – an opportunity beyond belief,” he said. “There was a way to do it. There was a way to introduce it gradually. And you absolutely could have done it and put more money in all your pockets every year from the start.
Members of the public never fully understood the implications of the tax plan, which influenced the actions of lawmakers in the 2021 regular session, Justice said.
“Just to put it as it is… people never really got all the details and were never really able to figure it out,” he said.
“Therefore, lawmakers, they just migrated into the ditch because people never really got it. “
“I’ll go straight to their quarters and go wherever I can.” And I will tell the people, and I will educate the people and tell the people who have everything in me that this is what we have lost, this is what you have lost, ”he said.
Justice called the House’s 0-100 vote to kill the tax reform bill “greatness” and said it “was not going to back down from the issue.”
“There’s no way I’m doing it, because it’s just too important,” he said.
The Justice Department’s tax reform plan, which underwent numerous permutations throughout the legislative session, included an immediate personal income tax reduction of 60% while imposing a number of increases. tax. These included increasing the consumption sales tax, increasing taxes on soft drinks, cigarettes and alcohol, and imposing taxes on certain professional services.
The governor’s plan also called for $ 52 million in personal income tax refund checks, with every West Virginia earning less than $ 35,000 receiving an annual refund check.
Now, because of the provisions included in the last adopted federal economic stimulus package, the window to eliminate the state’s personal property tax is essentially closed, Justice said.
Guidance documents from the US Treasury Department indicate that states cannot use American Rescue Plan Act funds “directly or indirectly” to offset lost revenue caused by changes in tax structures.
Justice accuses Senator Joe Manchin, DW.Va., of including this language in the recovery plan.
“Joe really put some language into the situation that states wouldn’t be able to take any kind of COVID money and everything if you cut your taxes anywhere,” he said. “So, to be perfectly honest, it blew his legs out from under him.”
If the state were to continue to eliminate its income tax, it would likely lose billions of federal dollars, Justice said.
“It’s as dead as it gets right now, until we can at least have an opinion, an absolutely rock solid opinion that we’ll be on a solid footing because we can’t walk away from these dollars. stimulus, ”he said. . “That would be really stupid to do.”
House Speaker Roger Hanshaw R-Clay agreed with Justice, saying Congress action “effectively mutes” state plan to end personal income tax .
“West Virginia, like every other state in the Union, has benefited from federal stimulus funding during the COVID recovery process,” Hanshaw said. “The fact that Congress tied the hands of states on the kind of tax changes that could be made by states that took that federal money – the fact that this actually happened means that we are now in a waiting situation. . “
The rules and regulations surrounding the US bailout will be in place for the next two years, after which the state may reconsider the matter, Hanshaw said.
“I think that will always interest us; that will certainly interest me, ”he said. “There’s no question that states that don’t have income taxes are actually growing – they have growing economies and growing population bases. We would love to join those states, but I see no way to take this revenue reduction step while these congressional restrictions are in place. “
As of 2021, seven states – Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming – have no state income tax. Two other states – New Hampshire and Tennessee – do not tax earned wages.
Senior Editor Charles Young can be reached at 304-626-1447 or [email protected]