Entries by Neal Barkus

Replacing West Virginia’s Income Tax with a Consumption Tax Promises Huge New Deficits for the Future

/in , , , , , /by

West Virginia Senate Bill 335, now pending before the Senate Select Committee on Tax Reform, would phase out West Virginia’s income tax and impose an 8% consumption tax on a broad range of transactions. The legislative “findings” that precede SB 335 assert that a major change like this to our tax structure would be both fair and fiscally sound. As to fairness, this assertion is demonstrably false. SB 355 would increase the tax burden on low income and working class taxpayers and give wealthier taxpayers a substantial overall tax break.

In the face of at least a $500 million budget deficit this fiscal year and perhaps a larger one next fiscal year, West Virginia is in dire need of a tax plan that will grow long-term, stable revenues. Unfortunately, SB 335 would at best provide only temporary revenue relief and portends mounting future budget deficits. This revolutionary change to our tax structure would be bad law and worse policy.

Eliminating the Income Tax and Creating a New Consumption Tax: Bad Law and Worse Policy

/in , , , , , , /by

Mischief is well on its way to becoming law in West Virginia. The Republican-controlled Senate Select Committee on Tax Reform is about to propose to the full Senate the passage of SB 335, which would phase out the state income tax and transform the current 6% sales tax into a broader 8% consumption tax. The conceptual basis for the proposed law is that the state provides the marketplace in which sales can take place so that vendors and purchasers who engage in transactions should be required to pay for the privilege of using that marketplace. If that silliness weren’t enough, the Bill’s legislative findings provide the following gem of a non sequitur. “The Legislature further finds that, in the free market system, the best judge of a purchaser’s ability to pay, for the purchase of the goods and services, is the purchaser, and, thus a broad-based consumption tax is firmly based on that principle of sound and fair taxation.” There is nothing sound or fair about this revolutionary change in West Virginia’s tax structure and it should be stopped in its tracks.

Republican Senators Propose Replacing West Virginia’s Income Tax with A Higher New Sales Tax

/in , , , , /by

Only nine states in the nation have no state income tax. However, there is considerable support in the West Virginia Senate to phase out our income tax completely by 2021 and replace lost revenue by raising the state’s sales tax to 8% from 6% and eliminating many sales tax exemptions. The effort in the Senate is being led by Sen. Robert Karnes (R-Upshur, 11) sponsor of SB 335. If the Bill in its present form is enacted, West Virginians would soon begin paying sales taxes on new items such as groceries, internet streaming services, haircuts, professional services, and more. The Bill is co-sponsored by eighteen other Republican Senators, including Panhandle Senators Craig Blair (R-Berkeley, 15) and Charles Trump (R-Morgan, 15).

Rep. Alex Mooney Deals a Blow to West Virginia’s Mountain Streams

/in , , , , /by

Rep. Alex Mooney (WV 2nd) is celebrating the demise of the Interior Department’s Stream Protection Rule. This Rule, made effective in the waning days of President Obama’s tenure, would have created a buffer zone between mountain streams and mine sites and would have protected drinking water in accordance with modern technology. The Rule would have mainly affected mining done by mountaintop removal where mining refuse is pushed into stream valleys. But Rep. Mooney and his Big Coal backers claim that the Rule would have killed over 70,000 jobs in the coal industry. Unfortunately, Rep. Mooney’s grasp of coal economics and employment numbers is feeble, perhaps influenced by his ideological impulse to dance on the grave of the Obama Administration.

Those Who Work, Those Who Don’t

/in , , /by

After the 2016 election results we are struggling to understand what hit us. One common view is that Democrats have become tone deaf to the working class, advancing policies that cater to other key constituencies of the party but failing to do much about bettering the economic lives of those in the middle and lower middle. Why, we ask, did Wisconsin, Michigan and Pennsylvania forsake Hillary Clinton in favor of a bombastic outsider who made huge promises, but apparently hasn’t a clue how to govern to deliver on them?

Several thoughtful books can help us find the answer. The best of these is Those Who Work, Those Who Don’t, a sociological study written by Jennifer Sherman in 2009. Sherman sought out a small town in rural America where industry and jobs had been decimated and widespread poverty made the normal social pecking order collapse. This should sound familiar in West Virginia. She wanted to learn what factors provided status and capital in a community where economic distinctions were no longer possible. What she learned is an eye-opener.

Originalism and the Supreme Court

/in /by

President Trump’s nominee for the Supreme Court is Judge Neil Goresuch, who is said to be an Originalist like Justice Scalia, whom he will replace if confirmed.

Originalism is a theory of judicial interpretation that requires the judge to determine what the Constitution meant at the time of its enactment. An Originalist does not believe that an interpretive gloss may be added to this meaning to make the outcome better fit the times. In the case of current statutory interpretation, an Originalist focuses solely on the plain meaning of the words used in a statute without resorting to what judges or others may think Congress intended the statute to mean.

Corporate Tax Cuts to Stimulate Job Creation: They Never Work

/in , , /by

We should be open to any legislation or tax policy that stimulates job creation. But we should also be on guard against legislation or policy that merely sounds good, without subjecting it to a rigorous evaluation of its costs and benefits. Among the West Virginia Legislature’s new Republican majority, it is fashionable to call for corporate tax cuts as a way to unleash job creation. Unfortunately, this thinking is more the product of ideology than of solid analysis. The idea of corporate tax cuts to stimulate job growth has one main problem – it never works.

The West Virginia Workplace Freedom Act

/in , , , /by

In early February 2016, West Virginia became the 26th state to adopt a “right to work” law, called the Workplace Freedom Act. The new law does not simply prohibit an employer and a labor union from requiring membership in the union as a condition of employment. It goes further and also forbids requiring an employee to pay any dues or fees to a labor union as a condition of employment. The law was vetoed by Governor Tomblin on February 12, 2016 but that veto was overridden by the Legislature on the same day. The new law was to take effect July 1, 2016.

Outlawing any required fee payment to a union is a significant step for West Virginia to take. It reveals that our Legislature was not so much interested in protecting employees from compulsory membership in an organization they might not support, as it was in financially crippling labor unions. In so doing the Legislature advanced a conservative political agenda of long standing.

More Corporate Welfare In the Midst of a West Virginia Budget Crisis

/in , , , /by

Several committees met December 5, 2016, as part of the Interim Session of the West Virginia Legislature. The pall of a significant revenue shortfall hung over everything. Incoming Senate President Mitch Carmichael (R – Jackson, 04) has announced a goal for the upcoming session to make West Virginia’s tax structure “competitive” with surrounding states. In a statement reported in the State Journal on December 4, Carmichael said that cutting taxes on manufacturer’s equipment and inventory will be considered. This and other measures would serve the laudable goal of “creating an environment that the private sector can hire people and put them back to work.” But shouldn’t that first require some hard evidence that the property tax is actually causing coal companies to decline mining opportunities in West Virginia? Really, in a time of starkly reduced revenue for all the important things the West Virginia government does, why does our Legislature spend any time considering tax relief for coal companies?

Trump Voters Now Have Second Thoughts on Repealing Obamacare

/in , /by

The Kaiser Family Foundation has issued the results of a new poll concerning repeal of Obamacare. Anyone with a pulse knows that repeal has been made a rallying cry for Republicans in Congress, in fact their centerpiece in the ideological attack on the Obama administration. But it appears that Republican ideology has gotten out ahead of the desires of voters. These voters are not as much interested in ideology as they are in understandable, affordable and stable healthcare. Overall, 49 percent of the public think the next Congress should vote to repeal the law and 47 percent say they should not vote to repeal it. Of those who want to see Congress vote to repeal the law, a larger share say they want lawmakers to wait to vote on repeal until the details of a replacement plan have been announced (28 percent) than say Congress should vote to repeal the law immediately and work out the details of a replacement plan later (20 percent).