By Nadia Ramlagan
A new report singles out West Virginia for the state’s costly tax cuts enacted this year, and the drastic lost in revenue expected to exacerbate existing budget shortfalls in higher education and other state services.
The report from the Center on Budget and Policy Priorities found that beginning in 2025, the Mountain State will collect more than $800 million a year less in personal income tax revenue than it was previously.
The Center’s Senior Advisor for State Tax Policy, Wesley Tharpe, said the gains from that personal income tax cut are going to flow overwhelmingly to people at the top of the income-tax scale.
“West Virginia is one of many states that already has a history of underinvestment in public services,” said Tharpe. “The state of saying things like a very strained funding for colleges and universities, a state foster care system that is really struggling to keep up with need.”
According to the report, the cuts will result in the bottom 20% of West Virginia filers – those making under $19,000 a year – receiving $21 per year on average, while the top one percent will take an extra $10,000 a year.
Tharpe added that income taxes help buffer states against hard times.
“States really want to be raising enough revenue so that they have that cushion for things that may be entirely unexpected,” said Tharpe, “like, say, the COVID-19 pandemic, or things like an economic downturn.”
According to the report, twenty-six states cut their personal income tax rates and/or corporate income tax rates in 2023, thirteen of them multiple times.
Supporters of slashing personal income taxes argue such measures put more money in the pockets of residents and boost local economies.