Latest News, Opinion

Editorial: Tax exemptions should stay right where they are

From The Register-Herald of Beckeley:

My goodness, this legislature and our governor can’t seem to keep their sticky little fingers out of the pockets of working class West Virginians. To say the least, it’s getting a little uncomfortable — and unseemly – with so many busy hands grabbing whatever nickels and dimes they can find.

The latest? Our elected state representatives in the House, the Senate and the governor’s office are seriously considering the elimination of tax exemptions for a whole tapestry of small businesses.

So much for creating a “business friendly” environment here in the Mountain State.

Yes, we know. A budget gap approaching $500 million next year and $700 million the year after will lead a politician down dark back alleys looking for any stray coin.

But to offer up the tax exemption on professional services and advertising? Well, that would be a blow to the economy and take us to where no state has been – except one, which quickly reversed itself once the disaster revealed itself out in the real world.

In short, that new tax will result in higher business expenses. And what happens when business expenses go up? Those costs are passed along.

The tax is projected to raise $87.6 million to help fill a leaky state bucket. And that estimate is, at best, wishful thinking. What we don’t know is how many jobs it will eliminate, how many businesses it will close and how many more people will be running for the exits.

Everyone would be paying more in myriad ways – including trips to the barbershop, hair and nail salon, tax accountant and lawyer’s office. Also targeted are professional engineering fees, contractors’ fees and memberships at health clubs and fitness organizations.

If you run a small business, add in janitorial services and the cost of an advertisement on radio, television or newspaper.

Yes, we at The Register-Herald have a vested interest in this. But so do you. The more an advertisement costs, the less a business advertises; the less a business advertises, the fewer boxes of soap get sold; less soap means fewer jobs and an additional drain on tax collections for the state.

This tax stinks. This is a tax that would hasten the downward economic spiral in our state. And no state in the continental United States has a tax on advertising.

You know what else would happen? Large, multi-national corporations like Johnson & Johnson, Proctor & Gamble and General Foods would look askance at our state, shake their heads and wonder why we like to inflict so much economic damage on ourselves.

We expect our legislators to do a different kind of digging, taking their hands out of consumer pockets and, instead, examine what happened in Florida in the late 1980s when that state passed a similar measure. Here is what happened: Businesses and consumers got hot under the collar and the public turned against the tax. The tax was counterproductive because it discouraged advertising, which in turn depressed retail sales. That, in turn, reduced revenue from the general sales tax. Inside of six months, the law was repealed.

Yes, it was a disaster.

Given the dire state of our budget and with the clock ticking, we don’t have much time or patience for a fool’s errand

Comments are closed.

Subscribe to Our Newsletter