CHARLESTON, W.Va. — A tax reform bill on track for a final vote in the West Virginia Senate by Wednesday is designed to shift West Virginia more toward consumption taxes as opposed to income taxes, according to Senate President Mitch Carmichael (R-Jackson, 04).
“Almost virtually without exception, the economists will tell you that is the pro-growth strategy,” Carmichael said.
“Tax that a little more (consumption tax), we’re talking one percent more, and then reducing the income tax so that people can keep more of their hard-earned money.”
The bill, SB 409, was scheduled to be read for a 2nd time on the Senate floor Tuesday, according to legislative records, even though members of the Senate Finance Committee had not yet approved it.
On Monday evening, committee action on the bill was postponed and it was not immediately clear when it would be taken up again.
In general, the proposal raises sales taxes to seven percent, implements a food tax at 3.5 percent, eliminates sales tax exemptions for a list of services, creates a seven percent use tax and adjusts severance tax rates based on coal type, with a phased in reduction of the tax on steam coal to 2.5 percent.
As written, the sales tax exemptions would be lifted in the following areas effective Oct. 1, 2017: regulated solid waste disposal, telecommunications services, licensed services of barbering, manicuring, cosmetology, embalming and funeral directing and non-medical personal care services with exceptions for services funded or reimbursed through Medicaid or Medicare.
The proposed legislation creates three tax brackets for income taxes.
For most people, the tax rates would be as follows based on taxable income:
Not over $20,000
Tax = 1.85% of the taxable income
Over $20,000 but not over $35,000
Tax = $350.00 plus 3.65% of excess
Tax = $875.00 plus 5.45% of excess
“It shifts all the brackets downward in our income tax, so that every individual paying income tax gets an income tax reduction,” Carmichael explained.
“The money that people are working to earn, they will be able to keep more of it.”
He said timing was a key part of the bill.
“We’re shifting it in a timing perspective that brings a little more money to the table this year.”
It’s all part of ongoing budget work.
“The Senate will do what we said we would do. We’ll bring forth a budget that lives within our means and spends no more than we have,” Carmichael said on Tuesday’s MetroNews “Talkline” which originated from the State Capitol.
The 2017 Regular Legislative Session ends on Apr. 8.