Saturday, September 03, 2005

Is Helmick Trying to Lose Next Year's Reelection Bid?

WV Senate Finance Committee Chairman Walt HelmickSometimes, you really have to wonder whether there is any limit to the apparent stupidity of some politicians. Today's case in point is Senate Finance Committee Chairman Walt Helmick. The following story appeared on the AP state wire this morning: Helmick says rising gas prices may nix tax cut.

Helmick's latest comments show that when it comes to fiscal policy, his views would better fit in Boston or San Francisco rather than West Virginia--much less the very conservative 15th Senatorial District in which he is expected to seek reelection next year. The 15th District's other state senator is Clark Barnes, Elkins Republican, who defeated Mike Ross last year despite Ross's very conservative positions on most issues, including both social and fiscal issues.

A recent poll conducted by the State Journal and RMS Strategies showed that 59% of West Virginians think state taxes are too high and should be reduced. Other polling shows that 84% of West Virginians support completely eliminating the sales tax on groceries.

While I do not support any reduction in the state's gas tax, including suspending the likely increase resulting from the variable average wholesale price rate, I strongly believe other state taxes should be cut to both relieve the tax burden faced by individuals as well as to promote private sector economic growth in West Virginia. The tax cuts we most need are, in the following order:

  1. Immediately repeal the food tax.
  2. Reduce the business franchise tax from 0.7% to 0.5% and establish a phased-in repeal of that tax.
  3. Increase the personal exemption from the state income tax from $2,000 to $5,000 and index it for inflation.
  4. Index the marginal rates of the state income tax for inflation and provide that the first adjustment adjust the rates from 1987, the year when the rates were last revised. The CPI has increased by approximately 72% between 1987 and 2005.
  5. Eliminate the marriage penalty in the state income tax rates. Currently, married couples pay according to the same rate schedule as single people. The rates should be revised by doubling the size of the brackets for married filing jointly and equalizing the brackets for singles and married filing separately.
  6. Reduce the corporate income tax from 9% to 7% or maybe 6.5%. However, it should not be lower than the top marginal rate for personal income taxes, which is currently 6.5%.

In lieu of these tax cuts, we might also implement the comprehensive tax reform plan proposed in 1999 by Governor Underwood's Commission on Fair Taxation and then cut the tax rates once that plan is implemented. The Commission was chaired by current state GOP Chairman Rob Capehart and included among its members House Finance Committee Chairman Harold Michael and former Senate Finance Committee Chairman Oshel Craigo. Even if we would cut taxes, our state's tax system still needs a fundamental structural overhaul. For the last several years, legislation to implement this plan has been introduced by several Republican delegates and senators but has not seen the light of day in either house's Finance Committee. This year's versions of that bill were SB 188 (Weeks & Yoder) and HB 2445 (Sumner, Sobonya, Wakim, Frich, Schoen & Ellem).

Also check out William Stewart's take on Helmick's position.