Latest News, WVPA Sharing

Richest West Virginians would benefit the most from proposed federal tax plan

By RUSTY MARKS

The State Journal

CHARLESTON, W.Va. — The richest 1 percent of West Virginians would see huge tax cuts under the tax reform plan being considered by the U.S. Senate, according to the West Virginia Center on Budget and Policy.

At the same time, the poorest 20 percent of state residents could get less than $100 in tax relief, said Sean O’Leary, chief policy analyst for the organization.

According to information compiled by the national Institute on Taxation and Economic Policy and broken down by state, the wealthiest 1 percent of West Virginians could see a tax cut of almost $19,000 under the proposed Republican tax plan. That tax cut could grow to more than $21,000 by 2027, ITEP calculated.

But the poorest 20 percent of West Virginians might see only a $60 cut in their federal taxes, with the tax cut rising to $90 by 2027, according to calculations.

And O’Leary said about 6 percent of West Virginia taxpayers would actually see their taxes go up under the plan.

With most of the benefits of the cuts going to the wealthy, “Why are we doing these tax cuts?” O’Leary said. “There are losers in every scenario, except the very wealthy.”

But by the same token, there are winners in every scenario. According to research, most West Virginians can expect to see tax cuts between $60 and $2,960 in 2018 under the proposed tax plan, or $90 to $2,480 in 2027.

“All of the analyses that I’ve seen on the Senate’s tax reform bill suggest that every income level should see a reduction in respective tax burdens,” said Garrett Ballengee, director of the conservative Cardinal Institute for West Virginia Policy.

But O’Leary said the tax cuts, especially at the highest levels, aren’t worth the loss in revenue to the federal government. Analysts have estimate the Republican tax reform proposal will increase the national deficit by $1.5 trillion over the next 10 years.

O’Leary said the federal government likely will have to cut Medicaid or other social service programs to help pay for the tax cut plan.

Ballengee is inclined to agree.

“I am skeptical that the tax cuts will ‘pay for themselves’ through greater economic growth, so I think it is important for Congress to tackle spending reform in the near future, too,” he said.

O’Leary said arguments that almost everybody gets tax relief through the plan are missing the point.

“Everybody gets a tax cut, so it’s fair?” O’Leary said. “It’s not fair.” He said the people who get the greatest benefit from the tax cuts are the people who will be least affected by cuts in services required to pay for the reform plan.

Ballengee doesn’t see it that way.

“It is likely true that higher income levels will see a relatively larger reduction in their tax burden, but higher income levels also pay a disproportionate amount of the income taxes in this country,” he said. “It shouldn’t be a class warfare issue, it’s simply an economic and tax-paying reality — people that pay a disproportionate amount of income tax will see a disproportionate benefit from an income tax cut.

“The idea is that this will keep more money in the productive private sector and will lead to higher growth, more jobs, and higher wages,” Ballengee said. “According to the Tax Foundation’s modeling, West Virginia could expect to see nearly 5,000 jobs created and an after-tax income increase of nearly $2,000 for a middle-income family from the Senate’s plan.”

Staff Writer Rusty Marks can be reached at 304-415-1480 or email at [email protected]

See more from The State Journal

Comments are closed.

Subscribe to Our Newsletter