Published: October 30, 2006 11:24 pm      

First part of tax plan unveiled

Manchin proposes cuts for ‘all walks of life’

Flanked by labor, business and spiritual leaders, Gov. Joe Manchin Monday unveiled the first installment of his plan to modernize West Virginia’s tax structure, saying it brooks “all walks of life” for instant relief.

Manchin wants lawmakers back in their seats Nov. 9, two days after the general election, explaining he wants those with at least two years’ experience working with him, rather than a Legislature filled with new faces, unfamiliar with his strategy.

“There is a time, and I believe the time is now to start giving back to the citizens of West Virginia,” he declared at Nell Jean Square in Beckley, a stop in his state flyover to explain the game plan.

For individuals, Manchin wants to lop another two pennies off the remaining 5 percent tax on groceries, one for 2007 and the following year, create a family tax credit for low-income wage earners, and allow seniors twice as much in the homestead deduction to $20,000.

In the business community, the governor seeks to lower the net income tax rate from 9 percent to 8.75 percent, one that would pump another $25 million into the pockets of owners.

“We know that’s going to help because it will put it right back into the economy,” Manchin said.

On top of that, he is proposing a cut in the business franchise tax from .70 percent to .55 percent, likewise a $25 million issue.

“That sends a strong message, not only to Wall Street, but to corporate headquarters, the people making investments, that this is a state headed in a positive direction,” Manchin said.

Manchin also would provide an exemption for contractors hired by manufacturing plants.

Other business changes would raise the non-resident withholding tax rate from 4 percent to 6.5 percent, extend non-resident withholding tax to capital gains on real estate, eliminate the pre-1967 corporate capital gain exclusion, and repeal the West Virginia Capital Company Tax Credit Program.

No new taxes are proposed, and Manchin was adamant that includes tobacco, even though the 262-page book prepared by the Department of Revenue suggested the state could corral $60 million by jacking up the tax on each pack of cigarettes from 55 cents to $1.

“We’re not talking about increases,” Manchin emphasized after his briefing. “There’s no raises of any kind.”

As for the massive book on tax modernization, Manchin cautioned that all recommendations likely won’t materialize for up to three years.

Privately, some lawmakers — Democrats and Republicans — have grumbled about the timing of the session, but Manchin told The Register-Herald there is a real sense of urgency to start providing relief across the board.

“The urgency is you have the most experienced legislature right now,” he said.

“There’s not a better group prepared to handle what we put before them than the group we have right now. We’ve put everything before them. We laid it out and laid it out in a manner that takes it from A to Z.”

To his critics, Manchin suggested they ask seniors, struggling families, businesses and others to simply wait longer for relief.

“If you don’t get it done, you have to answer to the people,” the governor said.

Manchin had ample support at his side.

The Rev. Dennis Sparks, head of the West Virginia Council of Churches, applauded the tax relief provided for individuals, including those earning below the federal poverty level.

Existing policy imposes 3 percent income tax on $10,000, and 4.5 percent on anything above that, but Manchin would exempt anyone under that amount from paying the income tax, and provide a buffer for anyone going beyond it.

“This plan has equitable rendering (to Caesar),” Sparks said, using a Biblical teaching to make his point. “This plan has a reasonable approach to change in the modernization of taxation. It’s about integrity.”

Steve Roberts, president of the West Virginia Chamber of Commerce, pointed out his membership provides more than half of the jobs in West Virginia.

“The cuts on the table are very significant,” he said. “They’re significant for employers, they’re significant for working people, they’re significant for our more experienced citizens. We’re seeing the culmination of great leadership. We’re seeing progress in West Virginia.”

AFL-CIO President Kenny Perdue said he was impressed by the tax relief in mind for working class people, the middle class, and the elderly, and the plan to close loopholes that some firms use to avoid paying a fair share of taxes.

Mary Abbott, representing the AARP, with 300,000 members in the state, saluted the homestead exemption increase.

“West Virginia has a high level of home ownership,” she said. “It is vital that older West Virginians can maintain their independence in the comfort of their own homes.”

— E-mail:

mannix@register-herald.com