By May 17, 2017 Read More →

Senate passes amended tax reform bill

By ANDREA LANNOM

The Register-Herald

CHARLESTON, W.Va.  — After the governor addressed the full Senate, encouraging passage of the revenue bill, and a debate on whether income tax should only be eliminated on Social Security, the body passed the Tax Reform Act.

Senate Bill 1007, which passed in a 19-11 vote, marked a change from Monday’s proposal. The new bill sets the consumer sales tax at 6.95 percent, instead of 6.85 percent.

Digital products, including digital books, games, movies, videos, news and ringtones would be subject to the consumer tax under the revenue bill.

As with the proposal on Monday, the amended bill also reduces personal income tax by 15 percent starting Jan. 1 and works to phase it out if certain conditions are met. However, legislators changed the last tax bracket to annual incomes of $200,000 instead of $250,000.

The revenue bill still includes severance tax tiering.

The bill also includes a 0.5 percent increase to the corporate net income tax, which had previously been taken out to reflect negotiations with the House.

Gov. Jim Justice addressed the body, as well as several members of the House of Delegates who stood in the back of the chamber, before the Senate’s evening floor session. He said lawmakers had before them “a hell of a plan.”

“The situation now, we all know is pretty doggone tough. … It doesn’t matter if it’s my fault, your fault, the predecessor’s fault or people in government 20 years ago fault,” Justice said. “It’s not good and we all know that. Keep that thought in mind. Here’s what you’re going to have. If you vote yes, you vote for a plan that we all think could be better and in many ways, it could be better. It’s in no way perfect, but it is the best of what we have today.”

Justice asked lawmakers to give him a chance. He said he thinks they are “on the cusp of something remarkable.” He said the bill balances the budget and controls spending.

“Let me tell you in our darkest hour in the most bleakest time we have ever been in West Virginia today, we have opportunity,” he said.

Before ultimately passing the bill, the Senate took up an amendment offered by Senate Democrats that would have eliminated personal income tax only on Social Security.

Proponents said it would help people who need it the most, saying the bill shifts the tax burden to lower and middle income families.

“The objective of no income tax is an influx of rich folks coming back to West Virginia,” Sen. Roman Prezioso, D-Marion, said. “By doing that in this method, you don’t see an immediate result. Let’s try to perfect the bill to make it better for the citizens of the state and to stabilize the budget.”

Lawmakers who opposed this amendment said it would do away with the benefits from implementing a full phase-out plan.

“The reason I oppose the amendment to the amendment is you know who gets tax relief in West Virginia? Everyone, every single person. Every senior who receives a Social Security check. Every West Virginian including those seniors,” Sen. Charles Trump, R-Morgan, said.

The Senate rejected Prezioso’s amendment in a 12-18 vote.

After the floor session, Carmichael said he was happy with the bill’s passage, calling it a “cause for celebration.” He said he hopes the House also will pass it.

“It really is an amazing outcome. I hope the House embraces this outcome,” Carmichael said. “It’s really good for the economy and for working West Virginians. And if they don’t like it, I’m anxious to see their alternative.”

Members of the House have previously expressed concern with aspects of the bill, including the phase-out of personal income tax and what it would do to the budget in the next few years, along with concerns of increasing the corporate net income tax.

Before the Senate went into its evening floor session, Delegate Eric Nelson, R-Kanawha. and chair of the finance committee, said one of the concerns mentioned in his committee is about phasing out personal income tax and how it would affect the state’s bond ratings. He said personal income tax is one of the primary and steady streams of income.

Nelson said he is not opposed to tax reform, but said it should not be in the revenue measure.

“A large concern is the out year holes without explanation would have a negative effect on this state,” he said. “The holes in the last few years have been explained.”

When asked how it would affect the state’s bond rating, especially when it comes to road bonds, Carmichael said “if we continue to do what we did in the past, our bond ratings will continue to be in decline.”

“The governor believes and the Senate agrees that this is a pro-growth strategy that will make our financial prospectives much better than they currently are,” Carmichael said.

He said he anticipates West Virginia’s growth rate to have to be about 2 percent to make up for the cut in personal income tax.

Nelson also previously said he was happy that under the proposal Monday that corporate net income tax was taken out. Carmichael had previously said this measure was taken out to reflect negotiations with the House.

Tuesday, Carmichael said the idea was to pull corporate net income and replace it with direct use on business, which he said was objectionable.

“The House has frequently said what they’re opposed to but they’ve rarely said what they’re for,” Carmichael said.

The Senate also advanced SB 1006, which would increase the funding fro the state road fund, to second reading.

The body referred SB 1005, the furlough bill, to the Committee on the Judiciary. The House Committee on Government Organization passed its version of the furlough bill and referred it to the Committee on the Judiciary.

• • •

The House, meanwhile introduced its Tax Reform Act of 2017 and a bill to increase money in the state road fund. Delegate Mike Pushkin, D-Kanawha, also introduced HB 109 to make medical cannabis subject to consumer sales and service tax.

All of these bills were referred to the House Committee on Finance.

The Senate also approved 28 nominations including new State Forester Barry L. Cook and Joseph Wallace and Debra K. Sullivan, who both will serve as a members of the West Virginia Board of Education.

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