I give Gov. Jim Justice credit for pointing out that some promised remedies for West Virginia’s ills didn’t pan out. In a televised town hall meeting, he told the audience:
“Really and truly, let’s just be brutally honest. We passed the right-to-work law in West Virginia. And we ran to the windows looking to see all the people that were going to come — and they didn’t come. We got rid of prevailing wage. We changed our corporate taxes and we’ve done a lot of different things. And we’ve run to the windows and they haven’t come.
“We’ve absolutely built the field in a lot of different places thinking build the field and they’ll come, and they didn’t come.”
It’s hard to argue with that. The promised benefits of West Virginia’s 2007 tax cuts under the leadership of one party never happened. And the state has lost about 60,000 people, more than the population of its capital city, since the push for anti-worker legislation began in 2015 under the leadership of another party.
The governor promises that things will be different this time around, with his plan to drastically cut or phase out the state income tax. I’m sure he has the best of intentions, but, for some reason, I keep thinking about Lucy holding the football for Charlie Brown to kick, in the old Peanuts comic.
(In case that cultural reference is dated, it didn’t work out well for Charlie Brown.)
The state income tax provides more than 40% of revenue for the core state budget, to the tune of over $2 billion per year. Eliminating or drastically reducing it would involve shifting taxes to the least wealthy or eliminating state investments in people, infrastructure and health at all levels. Or, more likely, it will mean a bit of both.
West Virginia’s income tax is the only progressive tax in the state, meaning that those with more resources pay a somewhat higher rate. According to an analysis of the proposed legislation, 63% of the tax cuts will go to the top 15% of earners. Proposed rebates notwithstanding, overall taxes likely would go up on people in the lower 60%, who, by necessity, spend most of what they make on taxable goods and services.
Even if all the proposed new and/or increased taxes are enacted, it would still leave a budget gap of about $185 million. That means that more cuts to state programs and services would be required. And that’s assuming that the Legislature agrees to all aspects of the plan, which seems pretty iffy.
The plan includes an increase in the regressive consumer sales tax to 7.9%, increasing excise taxes on soft drinks, beer, wine, tobacco and such; taxes on “luxury goods;” and taxing some new services. All these are likely to arouse a great deal of opposition from retail and industry groups, which have a long history of getting pretty much whatever they want from compliant lawmakers.
We also can be sure of hearing a rousing round of protests from and about the economic impact on border counties, if West Virginians take their purchasing power elsewhere. About 30 counties are at or near the border of another state. More to the point, our colonial overlords extracting the state’s mineral wealth might not be happy about changes to severance taxes.
If these groups get their way, the revenue hole to be made up would be even deeper and the overall package probably would include even more budget cuts.
Proponents claim that any impact will be more than compensated for by the hordes of new people flooding into the state. However, as a saying variously attributed to Yogi Berra, Mark Twain and many others goes: “It’s tough to make predictions, especially about the future.”
I will venture to make one, however: If West Virginia’s leaders cut investments in the things that make a place worth living in — good schools, higher ed and job training, child care, parks and natural resources, public libraries, good roads, broadband, access to health care, support for the elderly — nothing will stop the bleeding of our youngest, best and brightest.
(This ran as an op-ed in the Charleston Gazette-Mail.)