Lawmakers passed the largest tax cut in state history in 2023, putting West Virginia on a trajectory to eventually phase out its personal income tax. This was a huge accomplishment as the legislation included a provision that will gradually reduce the income tax over time so long as certain economic conditions are met. This affords the state a fiscally responsible pathway to eliminating the income tax, returning hundreds of millions of dollars to Mountaineers’ pockets.
This marked a sea change when it comes to fiscal policy in West Virginia. As is often the case with landmark policy shifts, it didn’t happen by some happy coincidence.
A 2023 poll of likely Republican primary voters indicated when it comes to government spending, 77% of respondents believed policymakers should reduce spending in order to lower taxes, even if it means some programs and services are scaled back. It showed conservative voters strongly prefer lower taxes and fewer government services over more services and more taxes. Even moderate voters prefer lower taxes by a 63% to 23% margin.
Huffman
| Courtesy photo
Policymakers in deeply red West Virginia have heard this mandate from voters loud and clear, as evidenced by their continued prioritization to lower tax rates and make government spending live within its means. This is great news for the future of our state, especially at a time when out-of-control spending at the federal level has led to historic inflation causing prices to jump almost 20% since January 2021.
These reckless federal policies have had dire consequences for the average American household who now must spend over $11,000 more every year to keep the same quality of life as before.
Common sense and data tell us that allowing taxpayers to keep more of their hard-earned paychecks will put the state on the path to economic growth. According to research published by the Cato Institute, taxation does impact where businesses locate and where individuals move. In 2016, 24 of the 25 highest taxed states saw net out-migration. Likewise, the lowest taxed states, particularly those without income taxes, saw the largest net in-migration.
This trend also occurred in 2018 and is increasing today. Not only are high tax states repelling businesses, they are also driving away high-income earners. According to 2023 data from the nonpartisan Tax Foundation, West Virginia is the among the states whose in-migration is benefiting from its status as a lower tax state. And we’re not done lowering rates yet.
The specter of tax cuts causing massive state revenue loss is a long-time schtick that tax-and-spend special interests have levied against the policy of returning money to taxpayers. Their world view is that the government can spend your money better than you can and that prosperity comes from government, not people contributing to a free market.
However, despite a 21.25% cut to personal income tax rates, West Virginia came in above revenue estimates because our economy is growing, in part, due to pro-growth policies like tax reform. For the pro-big government nay-sayers, this is troubling news indeed. Policymakers have enacted historic tax cuts, predicated on thoughtful fiscal restraint, and instead of calamity we have what the statist fears most—economic growth from private sector actors that paints a bleak picture for their false narrative.
To steal a line from Margaret Thatcher, the problem with socialist policy ideas is that, eventually, you run out of other people’s money. Those would-be tax hikers who posit ever-expanding government as the end-all, be-all solution to societal problems have merely to look at the data which suggests individuals are fleeing high tax states for states that will allow them to keep more of their money, and jobs are following them.
We all agree that there are certain functions state government should provide, but one cannot tax-and-spend their way to prosperity. The only way to afford a more robust social safety net for the truly vulnerable over the long-term is to grow the economy. And tax cuts are one of many of the proven measures that principled policymakers have pursued to drive the kind of economic growth we need for every West Virginian to thrive. Policymakers would do well to stay on the path of meaningful tax reform. It is working.
Huffman is the West Virginia State Director of Americans for Prosperity