After a historic 21.5% income tax cut last year, the West Virginia legislature ended 2024 with another win for taxpayers. Thanks to the commitment of Governor Justice, Speaker Roger Hanshaw, and Senate President Craig Blair, the 2% tax cut passed in a special session on Wednesday will give back millions to people who need it and, more importantly, represents another step on the path towards elimination of the state income tax.
The 2023 cut did two things. It shrunk the tax rate by 21.5%, providing immediate relief for West Virginians, but it did something more substantial in the long run – it set triggers that will eventually destroy income tax in the state for good. Every time West Virginia collects excess revenue, the statute now requires that revenue be returned to taxpayers in the form of a permanent rate cut. With revenue coming in well above expectations this year, Governor Justice has already announced an additional 4% reduction by 2025.
This additional 2% cut during the special session signals a clear demonstration to the people of West Virginia that legislators aren’t complacent in their pro-taxpayer goals.
Rather than settle for a 21% decrease and wait for the triggers to come into effect, Justice will leave office having set an example for the Republicans who remain: fight for lower taxes every chance they can get. If revenue continues to blow past expectations, Republicans should do as Justice has done and proactively return that money to the pockets of hardworking families.
Democrats claim that the state can’t afford to continue lowering taxes, but they can’t deny that West Virginia exceeded its revenue collections enough to trigger the 4% cut next year. This correlation between tax cuts and growth is reflected nationally as well. States who cut taxes between 2021 and 2023 actually saw higher revenue growth, even after factoring in inflation.
But there are a number of other reasons why Democrat arguments fall flat.
To begin with, West Virginia is losing population, and a great way to promote domestic migration is to lower taxes. The theory, of course, is that the subsequent population growth will increase tax revenue as more people will be generating income in the state. While income tax reduction is far from the only policy reform that could attract population growth, the trends are undeniable.
Tennessee, one of West Virginia’s neighbors, became one of the top states in the nation for in-bound migration after fully eliminating their income tax in 2021. For years now, Americans have been moving from high-tax states like California to no-income-tax states like Tennessee, Texas, and Florida.
Income tax cuts are also proven to spark economic growth. From 2022 to 2023, when West Virginia first implemented the 21% tax cut, real GDP in the state grew substantially. Income tax cuts increase consumer demand, encourage businesses to expand, and generate jobs, all of which further grows the state’s population. They also increase saving, including among the wealthy, who invest that extra cash in businesses, leading to even more economic growth.
Governor Jim Justice’s leadership, along with the efforts of Senate President Craig Blair and Speaker Roger Hanshaw, has led to a nearly 30% decrease in West Virginia’s income tax burden and put in place permanent triggers that will ultimately end the income tax for good. Over the coming years, taxpayers can expect the continuation of that tax reduction policy to keep increasing growth, population, and hopefully catalyze a trend of economic freedom that will bring West Virginia to a new level of prosperity.