Shepherdstown, W.Va- One of Governor Jim Justice’s campaign promises was that he wanted to cut West Virginia’s personal income tax. Now, he’s pressuring the legislature to follow through and it not only endangers your promise scholarship but the entirety of the state as well.
Firstly, why is this an issue?
Well, West Virginia earns nearly half of its total income through the personal income tax. To compensate, other tax areas are being raised and major budget cuts need to be done.
While a decrease in one area and an increase in another may seem like a neutral effect, it’s actually a negative effect on the average working-class citizen. The personal income tax is known as a ‘progressive tax’ meaning it puts more of the ‘burden’ on the wealthy. The more money you make, the more you pay into the pool.
West Virginia was already seeing areas where there could be reform as the highest bracket was set at $65,000, but a total elimination is bad news because its replacement will largely be the sales tax. The sales tax is known as a ‘regressive tax’ because it primarily taxes the poorer communities, as more of a lower-income family’s money will go to day-to-day groceries than that of a higher-income family.
While some may disagree with the extent to which the wealthy should be taxed, very few argue that the wealthy should pay less than the poor.
As concerning as this is, it’s not the only danger to the state. The state should be fighting to preserve and bolster the funding to public and higher education facilities as West Virginia is experiencing a problem known as ‘brain drain’.
Brain drain is when your educated population is leaving because there is little financial opportunity in a given area. Paired with the overall decline in population, especially in rural communities, West Virginia is in dire straits.
Governor Jim Justice’s hope is that wealthy people will immigrate to West Virginia as a pseudo-tax haven, but at the cost of the poor and businesses, as well.
There are nine other states: Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, that don’t have a personal income tax, and while The American Legislative Exchange Council reports that they outperform the states with the highest income taxes, many are skeptical about their findings.
Michael Mazerov, a senior fellow at the Center on Budget and Policy Priorities stated, “There is no compelling evidence that states without income taxes are outperforming states that have them or even have relatively high rates.”
While there is a general population growth, the employment growth trails behind by 41 percent. Whereas the nine states with the highest income tax only experience a 19 percent trail.
With the increase of property and sales taxes to compensate for the lack of an income tax, Washington, New Hampshire, Nevada, Florida, and South Dakota were among the 24 states with the highest cost of living in 2018, according to data compiled by the Council for Community & Economic Research.
It seems clear this abstract tax code does not lead to exceedingly positive results. It’s a round-about way to favor higher-income individuals with no real positive impact on anybody else. As Kelly Allen, executive director of the West Virginia Center on Budget & Policy economic think tank stated, “The way to grow West Virginia is by investing in our people, not by eliminating nearly half of our state’s general revenue.”
Investing in infrastructure and education are the two best ways to boost the population and overall economy. Investments that cannot and won’t happen under the elimination of the state’s personal income tax.
While Governor Jim Justice has said, “I am not a fan of just taking a meat ax to the things we already have within West Virginia, like saying we’re just going to cut out funding to our universities or whatever, which is ridiculous. We can’t even think about doing something like that.”
Many don’t see any other options. It would appear that this political ploy is to pacify the crowd while they move forward on the very things, he said they would avoid.
If this plan moves forward, income inequality will only rise, West Virginia schools will be cut, and everybody’s standard of living will only worsen.