Don’t let anyone tell you that the window of opportunity is closing on the West Virginia Legislature to pass on a major effort to eliminate the state’s personal income tax and blow a $2.1 billion hole in annual revenue collections.
While House Speaker Roger Hanshaw said Tuesday he doubted all parties could come together before session’s end to write legislation that would satiate all tastes, he also told MetroNews “Talkline” that “it makes sense that we keep talking.”
Let me interpret: We’ll get this done in special session.
This particular vision of a tax cut is like nirvana for the fiscal conservatives, an all-consuming dreamland destination where more of the tax burden is shifted to middle- and low-income workers. Now that the Republicans are drawing near their ultimate goal, they are not about to step away. Just the opposite, they are about to break down the dang door.
Before the summer is over, I’d wager, we’ll see some odd compilation of what all three – the governor, the Senate and the House – are bringing to the party.
But by any reasonable analysis and real-life evidence that these lawmakers are ignoring, the results could be devastating to the working class, the working poor and to responsible governance.
As analyzed by Sean O’Leary, senior policy analyst at the West Virginia Center on Budget & Policy, here are some of the highlights of his take on the Senate plan to cut personal income tax to zero:
● In its first year, the Senate plan would be a net tax increase for the average taxpayer in the bottom 60 percent of households.
● Even with the income tax fully eliminated, the Senate plan would be a net tax increase for the average taxpayer in the bottom 40 percent of households.
● The typical household in West Virginia would see a net tax cut of only $27 when the bill is fully enacted.
● A household in the top one percent in West Virginia would receive a tax cut that is 1,252 times as large as that of a household in the middle 20 percent.
● The Senate plan would create a $1.4 billion hole in the budget within five years, requiring either further regressive tax increases or substantial budget cuts.
● The Senate plan would give West Virginia the highest state sales tax in the country.
● The Senate plan would make West Virginia one of only 14 states to tax groceries.
● The Senate plan would give West Virginia the fourth highest combined state sales and hotel tax.
If those highlights are not concern enough that this batch of bad bean counters is seriously jeopardizing the state’s economic future, just take a look at Kansas – the Petri dish of tax cut experimentation.
When Kansas Governor Sam Brownback implemented similar and sharp income tax cuts in 2012, the plan aimed to boost the Kansas economy. Instead, the cuts led to sluggish growth, lower than expected revenues and brutal cuts to government programs.
The Brownback tax cuts have served as one of the cleanest case studies for measuring the effects of tax cuts on economic growth in the U.S. They were eventually reversed by a Republican-controlled legislature as a failure.
If only our elected representatives had not slept through that class.