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Statehouse Beat: Experience shows, there's no secret tax cut plan that will work

Throughout my tenure here in the subterranean realm of the Capitol press room, there has been one constant theme among Legislatures, both Democratic- and Republican-controlled: The belief that if they could just find the perfect combination of business tax cuts, like clicking the right tumblers on a padlock, they would be able to unlock the moribund state economy and unleash economic prosperity.

Of course, the idea the state can cut its way to prosperity is a pipe dream foisted by lobbyists for corporate barons who want to pay even less in taxes than they do now.

States like Kansas should be a cautionary tale. Instead of growing the economy, hyper tax cuts plunged that state into a fiscal crisis.

In West Virginia, we gave out Super Tax Credits in hopes of bringing automobile plants to the state, and instead saw coal companies use the tax breaks to further mechanize mines and lay off scores of miners.

We slashed the corporate net and business franchise taxes, with the hope that grateful corporations would be lining up to open locations in a new, “business-friendly” West Virginia. Didn’t happen, at least not on any significant scale.

More recently, legislators cut the severance tax on steam coal and gave a $12.5 million a year tax break to the operators of an antiquated coal-fired power plant.

The West Virginia Coal Association’s Chris Hamilton told legislators in March he had a study showing that the severance tax cut would create 400 mining jobs and $435 million of new economic activity.

Last week, asked about the impact of the severance tax cut, Deputy Revenue Secretary Mark Muchow told legislators state coal production is down about 10 percent this year, while WorkForce West Virginia reported that some 800 mining/logging jobs were lost in November.

And yet, the notion persists that, if we can just come up with the right combination of business tax cuts, we’ll be on the proverbial economic rocket ship ride.

•••

Going into the 2020 legislative session, momentum is back for an old perennial: reducing the personal property tax on business inventory, machinery and equipment.

This one is tricky, since property taxes fund county school boards and county governments.

The tax is also in the West Virginia Constitution, meaning voters would have to approve a reduction or repeal of the inventory tax in a statewide referendum. I want to see that campaign, encouraging voters to repeal a tax on businesses, knowing that counties likely will have to make up the difference by raising their property taxes.

(The inventory tax brings in about $380 million overall, and as I understand it, the proposal would be to cut about $90 million paid by the larger manufacturers, coal and natural gas companies.)

Rebecca McPhail, with the state Manufacturers Association, told legislators that loss could be made up through natural growth in the economy, but that seems wishful at a time when state tax collections are running about 2 percent short of estimates.

For those larger manufacturers, the state Development Office has a perfectly functional workaround. The state sells bonds to buy equipment, then the Development Office leases that equipment to the manufacturer.

Some of the more recent bond issues, as reflected in the state Treasurer’s Debt Position Report, are $23.74 million for the Gestamp stamping plant in South Charleston, $8 million for Entsorga West Virginia in Martinsburg, and $911 million for the giant Procter & Gamble factory in Inwood.

Of course, that gets back to the issue of the state picking economic winners and losers, but that’s a topic for another time.

•••

Have to say my opinion of Senate President Mitch Carmichael, R-Jackson, fell considerably Thursday, when he staged a panel discussion on proposed legislation to add the LGBTQ community to those classes of individuals protected from housing and employment discrimination under state law.

Notice of the meeting — which was sent using his personal email and not his official Senate account, although the meeting was held in the Senate Finance Committee room — advised: “Several local ministers from a variety of congregations will be joined by local small business executives for the purpose of discussing and answering questions regarding a proposal by Fairness West Virginia to apply non-discrimination language to statutes within the state of West Virginia.”

Being naïve, I presumed it was a continuation of the panel discussion hosted by Fairness West Virginia at the Capitol on Dec. 3, when Carmichael joined other legislators, faith leaders, and business officials expressing support for the legislation.

Of course, between the time that event was announced and took place, Carmichael’s likely primary opponent, Delegate Jim Butler, R-Mason, had blasted the legislation and accused Carmichael of playing into the hands of “liberal activists.” As a result, Carmichael spent most of his time equivocating and qualifying his support for the measure.

For Thursday’s session, when Carmichael said “a variety of congregations,” he apparently meant a variety of Baptist churches, since the panel consisted of nine Baptist pastors and two “business executives” — one, troublingly, in the real estate business. All 11, I believe, are from Carmichael’s 4th Senatorial District.

Instead of a continuation of the discussion on the Fairness Act, it was a counterpoint to that session, laying out their objections to extending anti-discrimination protections on the basis of sexual orientation or gender identity.

Pastor Jon Pinson prefaced his remarks by saying, “We are against all forms of discrimination” — then proceeded to lay out arguments as to why extending the Fairness Act to the LGBTQ community would deny their faith and hurt their businesses.

I walked out as the discussion degenerated into the absurd argument that the LGBTQ community shouldn’t be included in the Fairness Act since, unlike other protected classes, one’s sexual orientation can’t be discerned based on appearance. (Since one’s religion, national origin, or ancestry is obviously so clearly discernible at a glance.)

Giving a forum to bigots was a cowardly political retreat for Carmichael, who used the pretense of wanting to hear from both sides of the issue — which sounds a lot like saying “there were good people on both sides” at Charlottesville.

It was particularly troubling given that, a day earlier, the Legislative Rule-Making Review Committee voted to remove LGBTQ protections from a state foster care rule. (Firstly, that’s a no-no; you’re not supposed to use the rule-making process to change policy. Secondly, it still has to go through the legislative process in the 2020 regular session.)

Arguably, those Republicans who voted to bar same-sex couples from being foster parents, and who oppose expanding the Fairness Act are simply abiding by the state GOP platform, which states:

“We are opposed to same-sex marriage, civil unions or any other entity or institution that is intended to gain equal or similar status or recognition as the traditional marriage of a genetic man and a genetic woman. We also oppose any policies written by state agencies that further the homosexual agenda, including the creation of a protected class.”

And we wonder why our young people are leaving the state in droves.

•••

Last week, I wrote about how the removal of station agent Matt Crouch from the Amtrak station in Charleston had likely contributed to a nearly 3,000-passenger ridership decline in the past year, at a loss of more than $500,000 in ticket revenue — many times more than any savings from eliminating salary and benefits.

While the miners’ pension funding rightfully got the most attention among the riders that Sen. Joe Manchin, D-W.Va., got included in the omnibus spending bill, the legislation also includes language Manchin inserted to restore station agents at Amtrak stations that were destaffed in 2018.

Manchin had a similar rider in the transportation appropriations bill last year, but Amtrak attorneys came in behind him and changed the wording to “caretakers” — providing for near-minimum wage contract employees who open, close and clean stations, but otherwise perform no ticketing or baggage functions.

Meanwhile, while West Virginia politicians struggled to scrape together $3 million in order to continue MARC commuter rail service into the Eastern Panhandle — and disappointingly, failed to reach a hoped-for multi-year agreement with Maryland — Virginia officials Thursday announced a $3.7 billion investment in passenger rail that will greatly expand Amtrak and VRE commuter rail service in the commonwealth.

Ultimately, that will provide for hourly departures between Richmond and Washington, and east-west passenger service routes across the state. Meanwhile, legislation passed in 2017 directing West Virginia officials to come up with a plan for providing daily Amtrak Cardinal service has sat dormant for nearly three years.

•••

Finally, as I remarked on Twitter, congressional Republicans remind me of the androids on the HBO series “Westworld,” who are programmed to not be able to see certain things that would cause them to doubt the reality of their fantasy world.

For instance, they are unable to comprehend photographs from the outside world, design schematics of themselves or other androids, or even access doors used by their human handlers. If confronted with an offending item, they are programmed to respond, “That doesn’t look like anything to me.”

[Editor’s note: Spoiler alert] As the androids became sentient, they developed the ability to see those items that they had been programmed to disregard, and with that knowledge, ultimately rebelled against their human captors.

To date, presented with clear and compelling evidence in the impeachment of Donald Trump, congressional Republicans have effectively responded, “That doesn’t look like anything to me.”

One wonders if and when Republicans in Congress will become sentient.

Happy holidays to all.

Reach Phil Kabler at

philk@wvgazettemail.com,

304-348-1220 or follow

@PhilKabler on Twitter.

Funerals for Sunday, January 19, 2020

Atkins Sr., Dennis - 2 p.m., Hafer Funeral Home, Elkview.

Crislip, Edna - 2 p.m., Roach Funeral Home, Gassaway.

Driggs Sr., Phillip - 4 p.m., St. Timothy Lutheran Church, Charleston.

Sigmon, Steven - 4 p.m., Chapman Funeral Home, Hurricane.