On tax plan, Justice blasts the business groups that have long supported him
Gov. Jim Justice is not wild about lobbyists right now.
During his latest town hall event, Justice publicly complained that lobbyists representing West Virginia business sectors aren’t sold on his income tax proposal.
“You’re going to see an orchestrated effort by those out there that are probably thinking penny-wise and pound poor,” Justice said near the beginning of Thursday night’s event. “They’re good people. But they’re thinking selfishly to tell you the truth.”
What set the governor off was a memo to legislators by the West Virginia Business and Industry Council. The broad-based organization credited Justice for the goal of eliminating the personal income tax, but said businesses wouldn’t benefit.
That’s because the governor’s proposal specifically exempts “Schedule C” businesses — essentially those classified as sole proprietors — from the income tax cut. But many of those same businesses would be subject to new sales taxes under the plan.
“The proposal reduces the personal income tax obligation of an individual wage earner based on their income level but does nothing to benefit a business,” the organization wrote in a memo signed by chairman Mike Clowser.
The Business and Industry Council represents retailers, manufacturers, gas and mining companies, contractors, auto dealers, professional services, hospitals, realtors, foresters, beverage and beer wholesalers, telecommunication providers and more. That broad base makes it influential with West Virginia legislators.
BIC was an ally of Justice in his “Roads to Prosperity” effort that culminated with a vote of West Virginia citizens to allow West Virginia to generate highway improvement money through bonds. BIC also endorsed Justice in his 2020 re-election campaign: “Jim Justice is the leader we need in these tough times.”
When Justice has had common cause with West Virginia’s various industries he has commonly invited their leaders and lobbyists to meet or appear with him. As he pushed a similar tax plan tied into the state budget’s passage in 2017, he surrounded himself with lobbyists.
His tune was different at the town hall.
“You have lobbyists circling around because no one wants to give just a little bit,” he said.
“We do not want to be run by the lobbyists,” he said a little while later.
Also, “It is a swamp overtaking us all.”
And, “You’ve got lobbyists who are chasing our legislators everywhere.”
Then, “I want you to absolutely not listen to a soul who is out trying to sell you a bill of goods.”
Justice first said the day after he won re-election that he’d like to phase out the personal income tax. The idea was his big splash during the governor’s annual State of the State address last month. And this was one of a series of town hall events to promote the idea, which the governor said he will continue.
The governor is proposing a 60 percent cut in the state personal income tax, suggesting it will be a splash that will encourage population growth. He would like to eliminate the tax entirely within three years or so, banking on that growth.
The income tax accounts for about $2.1 billion of the state’s tax base, about 43 percent of the General Fund to pay for government services like education and healthcare.
An outline of the governor’s plan estimates initial personal income tax reductions totaling $1,035,650,000 and rebates totaling $52 million for lower-income residents — but also tax increases of $902,600,000 to make up for most of those breaks.
The proposal would also raise a variety of other taxes, including on soft drinks, tobacco, beer and wine. And Justice proposes taxing some professional services for the first time, including law offices, accountants, gyms and more. He also advocates a “luxury tax” on some items costing more than $5,000. And he proposes sliding scales for severance taxes for coal, oil and natural gas, paying more when markets are better.
“All I can do is lead you to water,” he told West Virginia residents on Thursday night. “I cannot make you drink.”
The Business and Industry Council sees several problems.
“We all agree the elimination of the personal income tax is a laudable goal, but BIC members believe there needs to be study, debate, and public input in order to develop a comprehensive tax restructuring plan,” the organization wrote in the memo signed by Clowser.
Justice on Thursday night went down through the business group’s bullet points, taking issue with each.
“I want you to absolutely not listen to a soul who is out trying to sell you a bill of goods.”