CHARLESTON, West Virginia (WSAZ) – The West Virginia House of Delegates has passed a proposal to reduce state income tax by 10%.
The bill passed 76-20 at third reading. It now moves to the state senate for further consideration. If passed, it would come into effect with revenues received in 2023.
It would become the first change to the state income tax rate since 1987.
It covers almost the entire career of Bob Nistendirk, a member of Woomer, Nistendirk & Associates in Charleston. He has prepared thousands upon thousands of West Virginia tax returns. He reviewed the House proposal and offered a perspective for the average household.
“They will see savings of $200 to $300 per year. For some people, you can do a lot with $200 or $300. For others it might just be $4.5 a week, which may not seem like much of an impact for most.
Of the. Eric Householder, R-Berkeley, sponsored the proposal and called it a modest, common-sense approach that paves the way for more tax cuts in years to come.
“Right now we’re flush with the money,” he said. “It’s time to reward the hard-working West Virginians who helped us get to where we are today.”
The proposal would raise West Virginia’s top marginal tax rate to 5.85% — still higher than each of its neighboring states, but a fraction of Maryland and Virginia.
It would ultimately cost West Virginia $265 million in lost annual revenue.
Of the. Jim Barach, D-Kanawha, was among 20 lawmakers who did not vote on Friday. They called it a tax cut for the wealthy and questioned plans to pay for it with surplus funds. Instead, many of them were in favor of a reduction in the sales tax.
“Giving tax relief, which takes a lot of revenue away from the state, we’re going to have to make up for that somewhere else,” he said. “It also tends to help people at the top of the economic ladder who don’t need as much help.”
The legislation, House Bill 4007, is different from last year’s failed attempt to eliminate income tax altogether. He raised taxes in other areas to cover lost revenue.
This year, lawmakers will make up the difference with excess funds — unspent dollars all at once — not just for next year, but for those to come.
When asked, Householder, who is also chairman of the finance committee, said he had no concerns about this approach.
“Next year we should have almost a billion dollars in surplus,” he said. “So the West Virginia comeback story is happening. It’s true. And now is the most perfect opportunity. We’ve done tort reform. We’ve is doing labor reform. I think the missing trifecta is tax reform.
The bill also creates something called the SAFER Fund, where lawmakers would put half of any future surplus as a savings account for additional tax cuts.
Currently, that portion of the surplus would go to the state’s Rainy Day Fund, but Householder said lawmakers believe his balance is sufficient to allow for the change.
For now, Nistendirk will wait and see and hope that these surpluses and future expenses remain in balance for the good of its customers and others who will benefit from them.
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