WV Legislative Committee on Tax Reform

After day-long testimony, reform ultimately may not mean big cuts or massive shifts in tax obligations, said Senate Finance Chairman Mike Hall, R-Putnam, said after the second major session of the legislative interim committee on taxation. He said it’s also clear that tax reform alone probably will not be enough to attract new business investment to the state.

Following a presentation by business and economics professors and Marshall and West Virginia universities, Hall asked why the recent elimination of the state’s business franchise tax and rollback of the corporate net income tax has not produced significant growth in the state economy. Jose Sartarelli, dean of the College of Business and Economics at WVU, said it could take years for those tax cuts to show any effect on economic development, particularly with states like New York and South Carolina offering more generous tax breaks to new businesses. "Do not expect taxation to be a silver bullet," he said.

Jack Henchman, vice president of state projects for the Tax Foundation, said that while West Virginia ranks 21st in overall business tax climate, it ranks 42nd or lower in attracting corporate headquarters, research-and-development facilities, and capital-intensive manufacturing investments. "You need to look at things at a national or even a global context," he said. "I would be very critical about trying just to beat Ohio, Pennsylvania and Kentucky."

He said West Virginia’s business taxes have gone from terrible to middle of the pack. He noted that the state is one of only two with a throwout rule, allowing the state to collect higher taxes on corporations also operating in states where similar taxes are not imposed, and is one of only a few states to have both an inventory tax and a personal property tax on equipment.

The select committee meets next on June 9, when it will hear from representatives of county and municipal governments; "Unleashing Capitalism" author Russ Sobel; and from Commerce Secretary Keith Burdette, who will discuss tax implications on efforts to recruit new businesses.

More to come...