In 2006, our governor and legislators began passing legislation that eventually lowered the business franchise tax from 0.7 percent to zero and cut the corporate net income tax from 9 to 6.5 percent. This was done to attract businesses to our state and grow the economy.
It didn’t work.
The state now has fewer jobs than it did before the tax cuts went into place, and now collects more than $180 million less per year than in 2005. Ask any West Virginian if he or she thinks our economy is better off than it was in 2005, and I think most will say it’s not.
According to the most recent budget projections, the state now faces a deficit of about $125 million for the next fiscal year.
Instead of wasting time attempting to cut income taxes (a terrible idea when we already have a deficit), or trying to raise the sales tax (something that would really hurt low-income West Virginians), why don’t we simply restore the two taxes back to their 2005 levels? This would provide all the revenue we need plus some, and would not harm regular West Virginian’s pocketbooks.
The new jobs never materialized and our budget is in much worse shape than it was in 2005. The tax cut experiment didn’t work. It’s time to stop doing it.