West Virginia Record

Friday, January 17, 2020

Carmichael's 'Voluntary tax scenario' is nothing more than a misleading slogan

Their View

By Christopher J. Regan | Feb 27, 2017


WHEELING – No one distorts language better than a politician. Politicians just have the uncanny ability to take the worst ideas possible, and dress them up in words that make them seem wise and wonderful. The latest example in West Virginia is the “voluntary tax scenario.”

How appealing. It’s a “voluntary” tax, you see. If you don’t volunteer, you don’t have to pay it. Senate President Mitch Carmichael (R-Frontier) has proposed making taxes in West Virginia optional. What a fine fellow he is and we must be lucky to have him.

Well, when it sounds too good to be true, it is. So what’s really going on? Carmichael’s actual proposal is to eliminate the income tax and replace it with a “consumption tax.” Income taxes depend on the ability to pay, but consumption taxes depend only on what you spend.

What do middle-class West Virginians, and West Virginians who are just hoping to become middle class, spend? Everything they have, of course. It’s all most people can do to keep a roof over their head, food on the table, and the car running. Extra money goes for school supplies, doctor bills, and a phone. Under Carmichael’s plan, those are the things that will be taxed more – the basic necessities of life.

So, in Carmichael’s words, when regular West Virginians go to the store, to spend their slim paychecks on the basics, they will be “volunteering” to pay tax. I wonder if he will stand there and collect their money himself? “Thank you for volunteering” he can say with a smile, as 12.5% or more is added to the bill for a child’s winter coat, or her school supplies, or her doctor bill – money her parents may not have at all, and certainly have other needs for.

Of course there are other people Carmichael won’t have to thank – call them the “non-volunteers.” Who are the folks who will be dodging duty in Carmichael’s all-volunteer taxpaying force? You guessed it: rich people. Wealthy people spend some of their money, but quite a bit of that is spent out of state. Their stock portfolios, their real-estate plays, and their hedge-fund income will all be untaxed under Carmichael’s “voluntary tax scenario.” If a wealthy CEO pays himself a multi-million dollar salary while draining the health and retirement funds of his workers, that money will go into his fat bank account tax free, courtesy of the politicians. It pays not to “volunteer.”

Like the Vietnam-era draft, Carmichael’s plan works by “volunteering” the ordinary people for the front lines while making sure the wealthy stay safe stateside. The facts show his plan amounts to a huge tax hike on working families in West Virginia and a massive tax break for the wealthiest people who live in our state. But it’s all voluntary.

Carmichael claims that Governor Justice likes this idea too. Well let me be clear: any politician, Democrat or Republican, who supports this plan is picking the pockets of working people to reward the rich, so shame on the governor if he does. Advising regular folks to spend less to avoid taxes is like telling starving people to eat less. We need to provide relief to ordinary West Virginians, not a shift of the tax burden onto them to hand the rich even more money.

So what should we do about our budget deficit? We start with first things first. The tax cuts on those who were already doing well, including the cuts to corporate net income taxes and business franchising should be rescinded. They obviously didn’t work. Those rates should be re-set to recover the money powerful special interests plundered from the state treasury the last time politicians were “reforming” taxes to steer more money into well-lined pockets.

Next we need to look at the state income tax with modern eyes. The highest possible income tax bracket in West Virginia kicks in at taxable income of $60,001 and above. That doesn’t make sense in 2017. We need additional brackets for people making $200,000 or more, $500,000 or more, and $1,000,000 or more. The money gained from these high-income folks can be used to tide us over so we can continue to pay for schools, police, and get to work on our roads, while giving the middle class a tax break. The well-to-do certainly have more ability to pay than those scraping by on less than $30,000.

Investing in education and infrastructure via a fair tax structure has proven to be a recipe for prosperity. Huge tax cuts on the rich with promises that they will then create jobs have failed over and over. West Virginians cannot afford to be drafted into Carmichael’s army to pay the taxes that rich people would rather avoid.

West Virginia needs real tax reform, not a misleading slogan. Let’s oppose Carmichael’s plan and demand real reform.

Regan is the former vice chairman of the West Virginia Democratic Party and an attorney at Bordas & Bordas in Wheeling. His blog can be found at www.homeyesterday.com.

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