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Attorney proposes income tax elimination


The Journal

MARTINSBURG, W.Va. — Backed by experience and credentials, a local tax attorney is trying to change the way West Virginia collects taxes. By proposing to eliminate income taxes and replace it with a broader consumption tax, Michael Caryl wants to revolutionize the state tax system.

His plan for reform specifically calls for the abolishment of income taxes and taxes on tangible property. To replace the loss of income, Caryl suggests creating a broader consumption tax on all sold goods.

According to Caryl, the plan would work for lower income residents because they could choose what they can afford to pay taxes on.

“West Virginia has a revenue and spending problem,” Caryl said. “The state is currently trying to get a structure that is effective and fair for everyone.”

Caryl, an attorney at the Bowles Rice firm in Martinsburg, has worked with West Virginia taxes for most of his career. Caryl said his specialty is tax law, and he served as the State Tax Commissioner from 1985 to 1988. In the ’90s, Caryl said Governor Cecil Underwood orchestrated the Fair Tax Commission, of which Caryl was vice chairman.

Caryl said his reform proposal stems from the West Virginia Fair Tax Plan of 1949. The original 1949 plan did tax models to show the potential effects of the new system. According to Caryl, the models showed that some citizens might pay a bigger share of the taxes under the revision than they currently paid. Caryl said those that would pay more under the revision were the same citizens who were benefiting most from the current system.

Caryl explained that his system would create a stimulus tide that would ultimately benefit everyone, however. Caryl believes his reform would give the state a greater capacity to generate revenue.

“I’ve been working on this proposal for years,” Caryl said. “I think (my proposal) would effect West Virginia in a positive way as a body.”

One of the major changes under Caryl’s proposed reform is the way local schools are funded. All but a small part of income taxes go to local school districts to provide funding, but regardless of what percentage of income taxes fund schools, three quarters of the total school budget is funded by the state, according to Caryl. Under Caryl’s plan, the Legislative would fund 100 percent of the school budget, and Caryl predicts the broader consumption tax would more than displace the loss of the income tax.

Another aspect of Caryl’s reform is reducing the amount of state tax exemptions. Although certain exemptions — such as medical expenses — would remain intact, others would be cut. Caryl specifically said the tax exemption for food tax would be cut.

According to Caryl, $170 million is currently exempt because of the blanket exemption for food. He said lower income residents receive food stamps, which would still be exempt under the potential reform, thus would not place a bigger burden on the lower income population in his opinion.

Currently, Caryl said his plan has been introduced to the Senate Committee on Tax Reform. SB 335, the bill introducing Caryl’s plan, was introduced to the Senate by Robert Karnes, R-Upshur, and sponsored by 19 other senators, including Craig Blair, R-Berkeley, Patricia Rucker, R-Jefferson, and Charles Trump, R-Morgan. Caryl thinks Senate leadership has been, overall, very supportive of the his plan.

“I don’t think it’ll get passed exactly as it is, but I think it will remain largely the same,” Caryl said. “There’s reason to believe the House will see the merit in the reform as well.”

Caryl is also hopeful Governor Jim Justice will be open minded about comprehensive tax reform, specifically in the form of Caryl’s plan.

“Some of the most prosperous states don’t have an income tax,” Caryl said. “There’s some reason to believe Governor Justice will support the comprehensive reform.”

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