By Stephen Smoot
Much like they say about the month of March, the State Legislative season came in like a lion as storms raged among the State Senate, the House of Delegates, and the Governor over the most responsible way to cut taxes. It went out like a lamb as, after years of trying, state leaders found a way to significantly cut taxes.
“It’s not often that you have the largest tax cut in the history of West Virginia,” Governor Jim Justice said in a release. He added, “I thank Speaker Hanshaw, President Blair, our leadership teams, finance folks, and all the people who pulled the rope. It’s taken two years to get here, but it’s a monumental day for us all.”
According to the West Virginia Tax Division’s website, the tax reform package includes an immediate reduction of income taxes by an average of 21.25%. Changes do not affect returns for 2022 filed in 2023. Rates were, however, “changed retroactively to January 1, 2023” to include all of this year. Detailed information on how income level affects the tax cut for each taxpayer is available on tax.wv.gov.
Additionally, the state tax division reports that “taxpayers will be able to claim a credit on their 2024 state income tax return, filed in 2025, for all timely paid property taxes on vehicles in the 2024 calendar year. Tax credits are also available for “residential property of disabled veterans and on all personal property taxes paid by small businesses.” Hoppy Kercheval from West Virginia Metro News shared that the package included a “50% rebate for small businesses on their machinery and inventory tax.”
Overall, tax reform should save taxpayers approximately $700 million in the first full year, according to Metro News.
Much of the disagreement centered not about whether to cut taxes, but how to do it in a way as to produce the most benefit to both taxpayers and the state economy. Governor Justice and the House of Delegates favored lowering income taxes while the Senate leaned toward personal property and other related taxes.
The best “bang for the buck, in terms of making the great state of West Virginia a powerhouse,” said Stephen Moore of the Heritage Foundation in a public discussion with Governor Justice last month, “is to cut the income tax as much as you can.” Moore has previously worked for Club For Growth and served as an economic advisor to former President Donald Trump.
The State Senate originally wished to simply do away with various forms of property taxes. County governments, however, rely on these taxes for revenues and feared possible replacement by a state disbursement that could potentially be cut off or reduced. In this format, the county governments still control the money and taxpayers get the same benefit.
In the end, both sides compromised. Elements of the House and Senate plans made it into state code while each side recognized the concerns of the other.
While some opposed cutting taxes before tackling problems such as emergency services, jail staffing, or infrastructure, Craig Blair, State Senate president, explained “we’ll be able to do deferred maintenance, as we’ve got all that built in. That’s why we refused on the Senate side to go the 50% or 30, 40, 50, those numbers didn’t work . . . you got to be able to have money to invest in yourselves.”
Tax reform also produced political results beyond benefits to taxpayers. After a dramatic drop of gold and blue balloons, Governor Justice said “it’s so much better when we do it as a team. We don’t get across the finish line without a team.” Tax reform helped to restore at least some level of teamwork between the two chambers and the Governor.
