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In response to the current large state tax surplus, Gov. Justice has proposed a 50 percent reduction in the state personal income tax. When fully implemented this would return roughly 800 million dollars to West Virginia taxpayers.
The people that will benefit most from this are those who have larger incomes and therefore significant state income tax liability, that is, the wealthier segment of our population. However, nearly 15 percent of West Virginians live in poverty and over 20 percent are elderly and many of these have incomes too small to owe any income tax at all, so the Governor's tax cuts will not provide much benefit for our older and poorer citizens.
Older and poorer citizens still pay a significant proportion of what little income they may have in the form of state and local sales taxes which total up to 7 percent of money spent on non-exempt goods and services. Poor people pay a much higher fraction of their income in sales taxes while wealthier people pay a significantly lower percentage of their income in such taxes. It is the poorer segment of our population that needs tax relief the most.
A 50 percent reduction in the personal income tax is presumably the first step in a three-year plan to eliminate the tax entirely. This was proposed by Gov. Justice back in 2021, and at that time several committees of the West Virginia state legislature approved bills that would accomplish that end while also raising the state sales tax to 8.5 percent which would make it one of the highest rates in the nation.
At the same time, several currently exempt categories of the sales tax code would be made newly taxable. Included among these would be food purchased at grocery stores. The overall effect of these changes would be a massive shifting of the tax burden from those who can most afford to pay to those who can least afford to pay. Surely, we West Virginians are better than that.
A more equitable path to reduce the surplus would be to leave the personal income tax in place and reduce or eliminate the state sales tax. This would benefit all West Virginians and provide help to those who are most in need of tax relief.
This could be done by lowering the effective sales tax rate but could also be partially accomplished by changing what is taxed. For example, the poor and the elderly are more likely to spend their food money on take-out food or at fast food restaurants. This is also true for young people who do not have their own homes and kitchens.
Our current sales tax code exempts food purchased at grocery stores, but taxes food purchased at restaurants. This disproportionately penalizes the poor, the elderly, and young adults. If it is good policy to exempt food purchased in a grocery store, it is also good policy to exempt food purchased in restaurants.
We all need is food, and we should not penalize some segments of our population because of where they buy it.
James Van Gundy
Elkins