Mountain State Times

Governor Jim Justice has proposed a significant reduction in West Virginia's personal income tax, with the intention of benefiting small businesses. These businesses, having endured numerous hardships in recent years such as the pandemic, supply chain disruptions, and inflation, could find relief through this tax cut.

The plan, which focuses on halving the personal income tax, indirectly targets small businesses organized as pass-through entities. Such businesses report earnings on personal tax returns rather than corporate ones. Gil White highlighted that a successful passing of this proposal would enable businesses to upgrade equipment, increase wages, and potentially ensure their continued operation.

Skepticism exists among some state legislators regarding the feasibility of a 50 percent income tax cut. However, West Virginia's recent budget surplus of $1.4 billion suggests otherwise. In his State of the State Address, Justice noted, “We’ve got surpluses that are off the chart.” He asserted that this surplus allows the tax cut without compromising other financial requirements.

While the exact savings for taxpayers remain unclear, Justice estimates potential savings around $1 billion. This financial relief could then circulate back into the economy, boosting spending and sales tax revenue. During his address, Justice told lawmakers that passing the tax plan would enable them to “become your own stimulus package.”

The importance of small businesses to the state's economy is underscored by the U.S. Small Business Administration's statistic that 98.8 percent of West Virginia's businesses are classified as small businesses. These businesses faced significant challenges over the past few years, adjusting their operations in response to supply chain issues and workforce shortages.

Lowering the tax burden could assist these small enterprises in overcoming recent economic difficulties, allowing them to expand, create additional employment opportunities, and maintain vibrant communities. According to White, aiding small businesses is beneficial for everyone.