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Howard's Commentary - The Con is On

GOP leadership in WV is trying to pull a fast one.

They say they want to lower your taxes and give you greater freedom to control your own taxation.

But that is just the first shoe, my friend.

Republicans have introduced a bill to get rid of the personal income tax and to replace the lost revenue with higher sales tax. They say it lessens taxes on the "job creators" (the wealthy) and lets everyone decide how much they want to be taxed because they can decide what to buy.

Of course, buying the things of life eats a bigger piece of the middle class income than it does the upper class, so the regressive tax is bad for those who aren't wealthiest.

The proposal to eliminate the income tax and replace it with increased consumption tax is a bit murky. It would involve getting rid of the sales tax and related use taxes, adding an 8% broad based consumption tax (similar to but more encompassing than the sales tax), a "temporary" flat income tax to eventually be eliminated completely.

The Senate Tax Reform Committee last Friday decided not to have a report prepared on the actual financial impact of these proposals, so it's unclear if the bill will be revenue neutral or would sink the state deeper into budget red.

Based on best information available now, the WV Center on Budget and Policy says 80% of West Virginians would pay MORE in total taxes than they do now. While not paying up at income tax time sounds like a good idea, most Mountain State residents would pay more every time they go to the store.

Eliminating West Virginia's income taxes and its sales and use tax and replacing it with a general consumption tax – which operates the same as a sales tax – would make the state's upside down state and local tax system even more regressive and it would give large tax cuts to those that don't need them and huge tax increases to those who are struggling to get by. It would also mean that West Virginia would have the highest statewide tax on groceries.

As the chart below highlights, somebody making on average $26,000 a year (second 20 percent) would pay an additional $946 in taxes under SB 335, while someone in the top one percent would get a tax break of nearly $28,000. This is a "Robin Hood in Reverse" tax plan. If enacted it might be one of the biggest transfers of wealth from the poor and middle class to the rich in the state's history.

This is more of the ALEC-driven corporate agenda that pulls the strings of WV's GOP leaders. It's more of the trickle down (or as I call it "pee on us from above") philosophy.

The average West Virginian will pay MORE taxes, not less.

States that have eliminated the income tax have seen their budget problems grow and their economies tighten--not expand.

And we still have nearly a half billion dollar budget hole.

Categories: Commentary