CHARLESTON, W.Va. — Gov. Jim Justice doesn’t sound like he likes the state Legislature’s tax reform ideas.
“If we go to an 8 percent consumption tax and we go to a higher motel tax and an 8 percent consumption on food or an 8 percent consumption on utilities and we diminish our state income tax, who’s winning and who’s losing?” Justice said today at a gathering of state tourism leaders.
“You know who’s winning? Me. The rich guy is winning. The guy who is losing is the guy who can’t afford to do anything today.”
Justice made his remarks before members of the state Tourism Commission and board members from the West Virginia Association of Convention & Visitors Bureaus and the West Virginia Hospitality and Travel Association during Tourism Day at the Legislature.
The context was tax reform proposals being considered in the Senate and the House of Delegates. Both would broaden consumer sales taxes and adopt a flat income tax, although there are differences between the bills.
The Senate’s version, which seemed to be the one in Justice’s reference, would establish a broad-based, 8-percent consumer sales tax and a flat 2.5 percent personal income tax. This version includes a tax on groceries, eliminated in West Virginia four years ago. A Senate Finance subcommittee started looking at the bill today.
The House version, which is actually two bills, would establish a flat income tax rate of 5.1 percent and drop the sales tax to 5.5 percent while also broadening what is taxed. Groceries are not a part of the House proposal. The House bills have not yet been taken up by committee.
Justice criticized the math for not adding up, for the tax plans being regressive, for the proposals being too aggressive given the state’s economic struggles and for being regressive.
“The flipside of the whole thing is that proposal has got so many holes in the bucket it’s unbelievable. It’s all over the place. The numbers don’t make any sense,” he said.
“If we go off on one of these tangents like we’re trying to go off on this tax reform stuff, guys all we’re doing is we’re taking a patient who is lying in intensive care and we’re throwing him into the Olympics and we’re hoping it’s going to work.”
Some of those observing the tax plans have also worried about their effects on sales in West Virginia, particularly for those who live in counties bordering surrounding states.
As he spoke to the tourism leaders, the governor concluded, “The net-net of the whole thing is, you’re going to put all the burden on the people who need us the most. You’ll drive more people away from a tourism standpoint.”
Asked about the tax reform proposals today, Senate President Mitch Carmichael praised the effort and criticized the governor’s tax proposals for not going far enough.
“What I will say is the governor’s reform tax proposal is simply a tax increase without any overhaul of the economy or changing the system in West Virginia to provide jobs and opportunity. It does not do that. It’s simply a tax increase,” Carmichael, R-Jackson, said today during an interview in his office.
“The Senate proposal is a fundamental overhaul. If people want bold, aggressive new direction-type things in West Virginia, this is the plan to get behind. The House certainly has some great ideas of their own. So we’ll work together on those.”
Carmichael said the Senate and House tax reform proposals are distinct and likely won’t be reconciled until later in the legislative session. The end of the 60-day regular session will be April 8.
“It would be nirvana, utopia if both sides knew exactly what they wanted in the bills and they looked exactly the same as they came through both chambers,” Carmichael said. “That’s probably not going to happen. There’s going to be differences, as there should be.
“The Constitution sort of has the Senate take a longer term view of the economy and the House is much more into the here and now. I believe there will be differences.”
Carmichael added, “The Senate proposal is a monumental, bold overhaul of the tax system in West Virginia. I think that’s one of the things that’s held our state back for so many years, is the way we tax our citizens. It just doesn’t reflect a 21st Century economy.”
Justice, concluding his talk with the tourism leaders, indicated he does not believe the proposals are nirvana.
The governor has said he would like to eliminate the state income tax, but he does not believe it can be done until the state is on better economic footing.
“I would loveto get rid of the state income tax. I’d love to. But that’s two or three steps down the road,” Justice said. “No one in their right mind can think you’re going to do that while the patient is so unstable. We’re in Armageddon mode and we’re going to just leap to that and hope that everything is works? No way, just plain no way.”
The governor wrapped up his remarks by saying, “They do have a grizz on their ass that’s for daggone sure. And he isn’t going to back off, that’s all there is to it.”