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.