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WV Senate considering shift from income tax to sales tax

By Eric Eyre

The Charleston Gazette Mail

Sen. Mitch Carmichael

CHARLESTON, W.Va. — State Senate President Mitch Carmichael said Friday that lawmakers are looking into a proposal that would eliminate West Virginia’s personal income tax and raise the consumer sales tax.

Carmichael, R-Jackson, said he has appointed a special committee that’s considering that proposal and other measures that would overhaul the state’s tax structure. A report is expected by the end of the month.

“You would eliminate the tax on the production of income and shift it to a consumption tax — more of a consumer sales tax,” Carmichael told reporters and editors at the 2017 Associated Press Legislative Lookahead event Friday.

Carmichael said states such as Tennessee, Texas and Florida don’t tax residents’ personal income, and those states’ economies are growing.

“Evidence shows it worked in those states,” he said. “It’s worthy of study. It’s worthy of review.”

Carmichael said he has met with Gov. Jim Justice, who also supports overhauling the state’s tax structure, according to the senator.

West Virginia has a six-percent consumer sales tax. A one-percent increase would generate about $200 million in extra revenue each year. Earlier Friday, legislative leaders said they were considering doing away with exemptions to the sales tax, including a reinstatement of the tax on food.

Carmichael said tax structure changes would help insulate the state against “boom and bust” periods that are signatures of the coal and natural gas industries.

“You need to get away from this reliance on the fossil fuel industry,” he said.

The personal income tax generates about $1.9 billion in revenue for the state each year. Groups like the West Virginia Center on Budget and Policy, a left-leaning think tank, strongly oppose eliminating the tax.

Carmichael also reiterated Friday that lawmakers stand ready to support government spending cuts proposed by Justice. The governor’s aides have said cuts could top $390 million. The state faces an approximate $500 million budget shortfall for next year’s budget, which begins July 1.

“This Republican-led Legislature will not leave the governor hanging out to dry with those cuts,” he said. “We will not leave his side.”

Carmichael hinted that K-12 education could take the biggest hit because school funding makes up about half of the state budget. Lawmakers already have targeted Regional Education Service Agencies. Some lawmakers want to eliminate the eight RESAs, which provide services to school systems.

“We can’t stay away from cutting the things that have been sacred cows in the past,” he said. “We want to do it in the most compassionate, responsible, efficient manner to reduce the size of the state budget.”

On other topics Friday:

Carmichael said he would work hard to discourage his Senate colleagues from taking up a “religious freedom” bill, which critics say discriminates against LGBT people and discourages companies from creating jobs in the state. During last year’s legislative session, Carmichael gave an impassioned speech and voted for an amendment that essentially killed the bill on the Senate floor.

Carmichael said West Virginia’s Promise Scholarship, which provides reduced tuition to college students, would likely survive budget cuts this year. But he said some lawmakers are talking about making it more of a loan-forgiveness program, in which the state would pay students’ tuition only if they stayed and worked in West Virginia for several years.

Reach Eric Eyre at [email protected], 304-348-4869 or follow @ericeyre on Twitter.

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