"It is absolutely a monumental day," Gov. Jim Justice said last Tuesday, as he signed into law a 21.25% income tax reduction.
It is not perhaps the "tsunami" Justice initially pitched that would have seen the state's personal income tax cut in half, but the move fulfills lawmakers' pre-session goal of instituting meaningful, impactful tax reform in the state.
Members of the state Senate and House of Delegates are to be commended for developing a compromise that puts money back in taxpayers' pockets without going so far that we expose ourselves to the risks of energy market volatility and a sometimes-sluggish economy. About $750 million is being returned to taxpayers.
Other reforms include a credit on personal property taxes on vehicles, a small business tax break, and more property tax credits for disabled veterans.
Most importantly, lawmakers had the foresight to include a formula for future income tax cuts that would be triggered if there are higher-than-anticipated revenue collections.
Even the Wall Street Journal's editorial board weighed in on the tax cut, noting West Virginia has joined a growing number of states that are finding ways to grow their economy while keeping spending under control -all while giving tax dollars back to residents.
"Add West Virginia to the list of states that have cut income-tax rates, which now totals 22 since 2021, according to the Tax Foundation. The Charleston compromise falls short of Gov. Jim Justice's original proposal, but it's still a step forward with the promise of more tax-cutting to come," the Journal wrote.
"West Virginia's economy is benefiting from strong demand for coal and natural gas, but it needs to diversify and that means it has to attract more investment and people. The ... compromise will help it compete in a region of mostly lower-tax states, but its goal should be Tennessee's income-tax rate: 0%."
That's exactly right -- the goal must be an elimination of the state's personal income tax. As it stands now, the 21.25% cut still keeps West Virginia's top rate (5.1%)higher than Pennsylvania (3.07%), Ohio (3.99%) and Kentucky (5%). Eliminating the personal income tax would be one significant reason for folks to locate here.
It's going to take work by our elected leaders, but now that this new era of tax cuts has begun, our elected leaders must work toward that end.
West Virginians work hard, and they deserve to keep as much of their paychecks as possible. State agencies, departments and divisions must do their part by being as efficient as possible in serving our residents.
This income tax cut may be monumental, but it must be just the beginning.