West Virginia Governor Jim Justice wants the state legislature to cut personal income tax by 10%.
The governor issued a proclamation convening a special session with the sole objective of getting lawmakers to pass his proposal, which would return $254 million back to West Virginians.
The proposal calls for the 10% reduction of personal income tax to be retroactively applied to Jan. 1, 2022. Justice has argued that the revision in state tax policy will bring relief to residents currently struggling due to rising inflation.
"I've been the biggest proponent of completely eliminating our state personal income tax. It will drive job growth, population growth, and prosperity in West Virginia. But the most important thing to do is get started right away," Justice said in a statement, per WTRF Wheeling.
"Once we get the ball rolling, we can keep coming back and chipping away at our personal income tax until it's completely eliminated," Justice added.
Justice has pushed to repeal the state’s income tax on multiple occasions.
In February of 2021, he proposed phasing out the personal income tax during his State of the State address. Income tax had brought in $1.9 billion during the previous fiscal year.
Justice suggested that, in order to assist with the transition, legislators could launch several new tax initiatives including a tiered severance tax for coal, oil, and natural gas, a 1.5% higher consumer sales and use tax, and a wealth tax. Other suggestions included increasing the taxes on tobacco and soda or removing tax exemptions for professional services. The governor also urged the legislators to make $25 million in cuts in state government.
Justice argued that becoming an income-tax-free state over the course of four years would draw businesses to West Virginia and ultimately aid in future growth.
“I have a bill in front of you to propose the attraction of remote workers to West Virginia,” Justice said during his address. “It’s a fundamental change and a modernization in how we look at corporate tax and the corporate tax structure in how we move towards making West Virginia attractive for remote workers. We want to do it.”
Justice’s no-income-tax proposal was narrowly passed by the state Senate in an 18-16 vote in April. In May of 2021, the West Virginia House of Delegates unanimously blocked the bill in a 0-100 vote. Delegates cited concerns that raising the sales tax to 8% would drive residents out of state to shop and, in turn, hurt business in the states.
Despite previous the defeat, Justice is continuing to advocate for a reduction in personal income tax. His proposal to cut the tax by 10% does not include a proposal to raise any other state taxes or alter the personal tax bracket.
A 10% reduction is the largest cut the state can enact while remaining in compliance with the American Rescue Plan Act, per AP News.
"When you look at states like Florida, Texas, and Tennessee, they have no personal income tax and their state economies are growing like crazy. There is a direct correlation,” Justice said during his July 20 statement. “People are moving to no-income-tax states because they can keep more of their hard-earned paycheck, which spurs ever greater economic activity. It's a cycle of goodness producing goodness.”
“That's what I want in West Virginia, and I hope that the Legislature will agree with me and pass this bill,” the governor said.
The special session will adjourn at noon on July 25.
