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WVa income tax cut plan advances to House of Delegates

April 8, 2021 GMT

CHARLESTON, W.Va. (AP) — West Virginia Republicans’ attempt to cut the state income tax took a key step forward after the state Senate narrowly approved a measure on Wednesday night.

But its fate remains uncertain in the House of Delegates, despite a Republican supermajority. More conservative lawmakers have previously signaled opposition to raising excise taxes on coal and energy companies to help offset cutting the income tax, which in total brings in about 40% of the state’s revenue.

The Senate passed its bill 18-16, with five Republicans joining all 11 Democrats in voting against it. Republican Gov. Jim Justice cheered the outcome.


“The days of accepting population loss and job loss in West Virginia are over,” Justice said in a statement. “We have put our heads together to come up with a plan that all West Virginians can be proud of.”

The bill comes after weeks of competing proposals. The current version would initially cut the income tax by 40% — down from a 60% cut originally envisioned in the governor’s plan last month. It raises the sales tax from 6% to 8%, which would be the nation’s highest.

There are a bevy of tax increases for energy companies and the service sector. A controversial tax on groceries was scrapped from the Senate bill, after Justice called it a “showstopper.”

It also includes the governor’s proposed tax rebate for earners of $35,000 or less.

But a luxury tax on any item costing at least $5,000 championed by the governor did not make it into the Senate version, even after Republican Senate President Craig Blair appeared to be open to the provision earlier this week.

A spokeswoman for the House of Delegates, Ann Ali, wrote in an email that the bill had not yet arrived to the lower chamber and it’s unknown when delegates will take action.

A Democratic senator predicted gridlock in the House.

“I’ve heard from my friends on your side of the aisle in the other House, that the bill is dead on arrival,” Sen. Mike Romano of Harrison County said on the floor on Thursday.

Legislators have until Saturday to pass the bill, before the end of the 60-day statehouse session. The governor on Wednesday issued a proclamation to allow lawmakers to stay one extra day into Sunday to work on finalizing a balanced budget.

The Senate bill was unveiled hours before it was quickly approved without a full fiscal impact analysis.

The left-leaning West Virginia Center on Budget and Policy said 70% of the tax cuts would go to the wealthiest 20% of residents. In total, the initial reduction to the income tax would be about $818 million.

The center said on average only households making above $55,000 would see a net reduction in taxes, while poorer residents are hit hardest by the sales tax hike.