CHARLESTON — Gov. Jim Justice is moving forward with plans to call a special session of the West Virginia Legislature next week on a proposed 10% personal income tax, though he has yet to see if there is enough support in both the House of Delegates and Senate.
The justice issued a proclamation on Wednesday calling the Legislature into special session along with the wording of the bill for a 10% comprehensive reduction in the state’s personal income tax rates retroactive to Jan. 1. The measure, as presented, would bring in $254 million in unused taxpayer dollars. to citizens.
The extraordinary session will begin at noon on Monday, July 25. It coincides with the July interim legislative meetings which start from Sunday July 24 to Tuesday July 26.
“I have been the biggest supporter of completely eliminating our personal income tax. It will drive job growth, population growth and prosperity in West Virginia. But the most important thing to do is to start right away,” Justice said in a statement. “Over the past year, gas prices have spiraled out of control and inflation has skyrocketed. West Virginia needs help right now.
West Virginia has five personal income brackets ranging from 6.5% for those earning $60,000 or more per year, to 3% for those earning $10,000 or less. According to Revenue Department Cabinet Secretary Dave Hardy, the proposed new rates are intended to provide much-needed tax relief across all tax brackets.
“The first goal is to try to share with West Virginia the benefits of this record-breaking fiscal year that we just completed,” Hardy said by phone Wednesday afternoon. “The bill that will be introduced in the special session on Monday, not only does it provide immediate relief, but it provides tax relief until January 1 of this year 2022. It gives you a larger refund at the next spring and a bigger salary in the second half of 2022 as well.
In Justice’s proposed plan, those earning $60,000 or more in personal income will see their rate drop from 6.5% to 5.98%, those earning between $40,000 and $60,000 will see their rate drop by 6 % to 5.5%, both representing a decrease of almost half a percent. . Those earning $10,000 or less would see rates drop from 3% to 2%, a full 1% drop.
Those earning between $25,000 and $40,000 would see their rates rise from 4.5% to 4.2%. Those earning between $10,000 and $25,000 would see their rates rise from 4% to 3.7%. If lawmakers approve it, it will be the first change to personal income tax rates since 1987.
“The Governor cares about all the people of West Virginia, from the lowest income earners, often low income taxpayers are retirees on fixed incomes, right up to the top who are often business owners. that provide jobs and create jobs”, said Hardy.
“The governor understands and really wanted us to be sure to give relief to people who are really feeling it,” Hardy continued. “We all know people feel it through the gas pump, through the grocery store, through every store, through everything they pay for with their utilities. So it gives a lot more relief to the lower income brackets.
The Justice Department believes its cut will be the first step toward phasing out the personal income tax, which accounts for nearly half of the state’s general revenue budget.
“Once we get the ball rolling, we can continue to reduce our personal income tax until it is completely eliminated,” Justice said. “When you look at states like Florida, Texas, and Tennessee, they don’t have personal income taxes and their state economies are growing like crazy. There is a direct correlation.
“People are moving to states without income taxes because they can keep more of their hard-earned wages, which drives ever greater economic activity,” Justice continued. “It’s a cycle of kindness producing kindness. This is what I want in West Virginia, and I hope the legislature will agree with me and pass this bill.
The justice plan is nearly identical to Bill 4007, introduced in the 2022 legislative session by House Finance Committee Chairman Eric Householder, R-Berkeley. The bill passed the House 76-20 along party lines, but was never taken up by the Senate. This plan also reduced personal income tax rates by 10%, although the percentage rate reductions are different from the rate reductions proposed by Justice.
In HB 4007, those earning more than $60,000 would have seen their tax rate drop to 5.85%; those earning between $40,000 and $60,000 would have seen their rate drop to 5.4%; those earning between $25,000 and $40,000 would have seen their rate drop to 4.05%; those earning between $10,000 and $25,000 would have seen their rate drop to 3.6%; and those earning less than $10,000 would have had their rate reduced to 2.7%.
While it’s likely Republicans in the House will support Justice’s proposed bill because it closely resembles HB 4007, it’s less clear whether Republicans in the Senate will go ahead. HB 4007 was never taken up by the Senate, and Senate Speaker Craig Blair, R-Berkeley, has said in recent interviews that he would rather focus on Amendment 2, a constitutional ballot amendment. of November that would allow legislators to modify or eliminate certain personal elements. property tax rate.
Sources said Republican lawmakers plan to meet Wednesday night to discuss the personal income tax justice proposal. A request for comment for Blair and House Speaker Roger Hanshaw, R-Clay, was not returned.
Democratic state lawmakers have called for some form of tax relief since the start of the 2022 legislative session in January, when they proposed to cut the consumer sales and use tax. After the session ended in March, Democratic members of the House and Senate proposed a 30-day gas tax freeze of 35.7 cents in West Virginia.
In a joint statement released Wednesday afternoon, Senate Minority Leader Stephen Baldwin, D-Greenbrier, and House Minority Leader Doug Skaff, D-Kanawha, said they were pleased that justice eventually convened a special session for tax reform, although they expressed disappointment that he limited the special session to discussing only a personal income tax cut.
“West Virginians Need Help Now” said Baldwin. “As inflation has risen this year, Democrats have come up with ideas to give people gas tax relief, sales tax relief, tax credits for families, investments in labor and even a tax refund”, he said. “These suggestions have been largely rejected or ignored by the governor and the majority party.”
“The limited special session call also prevents us from discussing other opportunities for meaningful tax relief for West Virginians,” Skaff said. “His lack of communication aside, we look forward to reviewing this plan to see how we can provide much-needed relief to the citizens of our state.”
Steven Allen Adams can be contacted at [email protected]