We have yet to see all the details of Gov. Jim Justice’s proposal to reduce, and eventually eliminate, the state’s income tax. Justice did lay out parts of his plan in his State of the State address earlier this month and in an impromptu online “town hall” on Monday.
The sales tax would rise from 6% to 7.5%. Sales tax exemptions on professional services would be eliminated. Energy production would be subject to potentially higher severance taxes based on market conditions.
Taxes on tobacco and soda pop would rise. Also, the highest earners would be subject to a wealth tax. Additionally, Justice wants state spending to remain flat for the next three years.
Expect a furious debate in the West Virginia Legislature when the bill is eventually drafted and taken up. Republicans generally like tax cuts, but this proposal also will include tax increases to offset lost revenue.
A new poll suggests West Virginia Republican voters are open to the idea. The poll was conducted by Triton Polling and Research for MetroNews affiliate WMOV Radio in Ravenswood. The survey included only Republican voters, since Republicans have supermajorities in the House and Senate and they will control the fate of the tax bill.
The poll of 508 likely Republican voters asked if they would support or oppose the elimination of the state income tax to attract more investment to the state. The question pointed out that the lost revenue would be made up with a higher sales tax or “implementing a new food tax.”
The survey found that 53% strongly or somewhat support the idea while 37% oppose.
However, when Republican voters were asked specifically about a tax on food, their opinions shifted. In the poll, 63% said they somewhat or strongly oppose the implementation of a new sales tax on food to pay for the elimination of the personal income tax. Another 34% said they backed a sales tax on food, if it meant getting rid of the income tax. Gov. Justice stated Monday that he would not bring back the state’s food tax, phased out a few years ago.
This poll just scratches the surface of the debate ahead. Legislators are going to get an earful from their constituents and interest groups, once the specifics are detailed in legislation.
That will produce plenty of whack-a-mole arguments.
Let’s say there is not enough support for increasing the sales tax by 1.5%, as Justice has proposed. Then lawmakers will have to increase a different tax or find more cuts to make up for the lost revenue.
Justice and tax-cutting Republicans should be encouraged by the poll. It shows their core constituents like the idea of eliminating the income tax, and Justice has supermajorities in the Legislature to make it easier to advance his tax plan.
However, when legislating, philosophy often runs headlong into practicalities. The state income tax raises more than $2 billion a year. Not paying that tax will be a gain for middle- and higher-income residents, but at issue will be the amount of pain West Virginians will be willing to accept to make up for the lost revenue.