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Editorial: Tax reform is necessary; timing is everything

From The Charleston Gazette-Mail, Daily-Mail editorial page:

To his credit, Senate President Mitch Carmichael has focused like a laser beam on the idea of reducing the state income tax. Good for him. It will be even better for West Virginia if he can make it happen.

The love Carmichael, R-Jackson, and many of his fellow Republicans have for this idea came naturally. Coming of age in the Reagan era, they saw that a significant income tax cut could yield economic growth and business expansion, job creation, and even increased revenue to the federal government.

Though nearly half of West Virginia’s annual revenue comes through the state income tax, many freedom-loving citizens have long dreamed of going even further than President Ronald Reagan did in the 1980s.

Rather than just across the board tax relief, why not reduce the size of West Virginia’s unwieldy government and eliminate the state income tax altogether?

The Senate’s current plan, pushed by Carmichael, is a good first step. No one can accuse him of not painting in bold strokes. It’s not a plan to benefit the rich, as tax-loving critics contend, but a plan to let people keep more of their own money and encourage the economy to grow — which will provide more people with more money to grow the economy more, and so on.

Once word gets out that West Virginia has no income tax, a loud and clear signal would be sent across the nation that the state has indeed changed, and investment and newcomers are welcomed.

The problem this year, however, seems mainly to be a matter of timing. Facing a severe financial shortfall, even Republican members of the House of Delegates are skeptical for now.

In such a volatile budget year as this, proponents of the Senate plan are having a difficult time convincing not just Democrats but some Republicans that the hoped-for economic energy from cuts will compensate for the loss of revenue.

Beside being wary of the increase in consumer sales tax to make up the lost revenue, House Republicans appear wary of the anticipated shortfall in revenue that the income-tax reduction shows in the plan’s second year.

Carmichael and his fellow senators are concerned of that, too, but point out that there will be another legislative session before then to make adjustments if the economy doesn’t pick up and bring in more revenue.

With the House passing its own revenue plan Friday — sans income tax reduction — and with 40 days remaining before the start of the next fiscal year, perhaps now is the time for legislators and the governor to agree on a more simple, yet still conservative, 2018 budget.

But not first without a commitment from all to seriously focus on long-term proposals that Senate leadership, House leadership and the governor can agree on to truly and thoughtfully reform West Virginia’s tax structure and the size of its government for a long time coming.

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