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Betty L. Wiley: Cutting WV income tax likely to backfire (Gazette)

By By Betty L. Wiley
SAM OWENS | Gazette-Mail

West Virginia’s lawmakers are apparently about to make another big mistake, changing the tax structure to benefit the biggest wage earners and hurt the poor.

An income tax is a classic tool for redistributing wealth. Robin Hood-like, it taxes higher earners at a greater rate than lower earners. If income tax is removed, other taxes have to increase to make up for the loss of revenue, such as sales tax, and they are charged to everyone regardless of income.

No matter how poor you are, you pay the same amount of sales tax as the rich guy, and higher sales taxes (by whatever name) are supposed to be making up the revenue lost from income taxes.

This is referred to as a regressive tax system, in opposition to progressive taxation, which spreads the most tax burden to those who make the most money.

It isn’t logical to eliminate a major source of income while facing a budget shortfall, and simultaneously slash spending on services that enhance the quality of life. Most states do have income tax, and they have it for a reason: so the citizens in those states can pay for the services they need. I figured out for myself that eliminating income tax gradually is not going to bring new business and jobs to West Virginia. But then I googled it to see what the experts say.

There are nine states with no income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, New Hampshire and Tennessee. Only Texas has seen job growth -- as a result of being the center of the oil industry. The others have not; job growth has trailed population growth in the other eight. This is based on a 2013 report from the Institute on Taxation and Economic Policy. But Texas lost a lot of jobs when oil prices were low; now prices are rebounding, but it is significant that new technology is eliminating many job positions.

The Center on Budget and Policy Priorities (CBPP), in a 2014 report, says that states shouldn’t eliminate income tax with the idea of keeping people from leaving the state (or bringing more people in). The loss of revenue may actually have the opposite effect, loss of population, because without adequate revenue, public services may deteriorate and make the state much less desirable as a place to live and to do business.

Experts say there is one clear result for states that do levy an income tax. Guess what that is. It helps the poor.

We need to pay more, not less, income tax, so we can improve infrastructure, pay for education, develop an excellent, trained workforce to attract new business. We need to protect and capitalize on our resources that make West Virginia a desirable place to live.

Voters should reject any candidate who promises to cut taxes, because cutting taxes simply lowers the standard of living for everyone. It’s the most devious way to get votes. In the end, those who need help the most will not profit from tax cuts; they will suffer. The state and federal governments belong to us and exist to serve us. But it takes money to pay for the services we want and need. The government doesn’t need to be smaller; by diminishing it, we cheat ourselves.

Soon this year’s legislative session will end, and we’ll know the extent of the damage. Make it a point to remember the names of those who vote to slash West Virginia’s budget to the bone. Next time you have a chance, get rid of them.

Betty L. Wiley, of Morgantown, is a former Monongalia County Commissioner.

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