Editorial: Another tax shift?
New legislative leaders are studying a major realignment of state taxes, through the Joint Senate Select Committee on Tax Reform. A recent meeting offered a glimpse of what lawmakers have in mind, such as further tax cuts and even eliminating the personal income tax.
In coming months, GOP leaders presumably will clarify whether they want their 2015 reform to be “revenue-neutral” — producing the same level of support for state government, but shifting taxes from one group to another — or whether they want to reduce overall revenue.
If total revenue is lowered, the tax-cutters must spell out exactly what state services will be reduced: Will West Virginia have fewer state troopers, or mine inspectors, or highway workers, or schoolteachers, or college professors, or food inspectors, etc.?
Any high school student can understand this simple arithmetic: If state funds are crimped, again, the state payroll must be trimmed by laying off certain public employees. Tax-cutters must have enough integrity to list agencies that would be cut.
Gov. Tomblin commented: “The bottom line is, it’s going to demand so much money to run this government, and you’ve got to do it in a responsible manner.”
In a recent Gazette commentary, analyst Ted Boettner, of the West Virginia Center on Budget and Policy, pointed out that West Virginia erased $225 million in business taxes over the past few years in hope it would lure firms and create jobs — but it didn’t work.
“Over this period, the total number of West Virginians employed has dropped by nearly 40,000, from 778,000 to 739,000,” he wrote. “West Virginia also has a smaller share of the nation’s private sector and manufacturing jobs. This all happened while the state’s business tax ranking from the conservative Tax Foundation moved from 37th to 21st-lowest in the nation.”
To create jobs, Boettner said, West Virginia should pump more funds into higher education, broadband Internet service, workforce training, small business support and health care.
As for tax changes, he suggested: A state-level Earned Income Tax Credit for low-income families, higher tabs on harmful cigarettes and alcohol, closing loopholes for wealthy people and corporations who hide money overseas, and the like.
In the past, various state tax reform studies have been undertaken, then ignored. Nationwide, Republicans generally favor shifting more taxes onto lower-income families. That is the kind of reform West Virginians do not need.