Wednesday, April 12, 2006

West Virginia to Have Nation's Lowest State Income Tax Exemption

In their zeal for every dollar they can extract from our pockets, West Virginia's Ruling Party knows no bounds. We have one of the nation's highest corporate income tax rates and highly regressive taxes on food and income below the federal poverty level

Today, West Virginia has become the state with the lowest dollar threshold for paying state income taxes, at $8,000 (via personal exemptions) to $10,000 (if the income qualifies as earned income) for a family of four. Alabama, which has long taxed families of four beginning with an annual income of just $4,600, today raised its minimum threshold for paying state income taxes to $12,500 beginning next year.

I will let you know in this space whether the Ruling Party schedules any festivals to celebrate West Virginia's attainment of this distinction.

Reports the AP:

MONTGOMERY, Ala. (AP) -- Alabama's dubious distinction as the only state to levy income taxes on a family of four making less than $10,000 came to an end under a bill signed Wednesday by the governor.

Under tax-cutting legislation that will take effect in January, the threshold at which such families will start paying income taxes will rise from $4,600 a year to $12,500.

"For decades, Alabamians have labored under the nation's most unfair tax system,'' Gov. Bob Riley said. "Well, in Alabama today, that unfair system ends.''

The GOP governor worked with the Democrat-dominated legislature and Alabama Arise, a church-funded lobbying group for the poor, to get the tax break passed after years of seeing similar bills fail.

The nonprofit Center on Budget and Policy Priorities reported in February that Alabama had the lowest threshold for levying income taxes on a family of four.

The legislation will move Alabama to the fourth-lowest threshold, behind West Virginia at $10,000, Montana at $10,800 and Hawaii at $11,500, according to 2005 tax figures.

For years, Republican legislators have tried to reduce the tax burden West Virginians face in a variety of areas, including our now lowest-in-the-nation state income tax exemption. Bills to this end never see the light of day.

During this year's regular legislative session, 18 of the 21 Senate Democrats and Senator Karen Facemeyer, R-Jackson, introduced SB 674, a bill that would have given all personal income taxpayers a single exemption of $12,500 for single individuals and $25,000 for a married couple, up from the current exemption of $2,000 times the number of exemptions on the person's federal income tax return with a special $10,000 low earned income exclusion for certain low-income taxpayers.

Unfortunately, none of SB 674's sponsors were really serious about passing it. On Monday, February 27, a week after SB 674 was introduced and the last day on which the bill could have been brought to the floor in its house of origin without suspending rules, the Senate rejected discharging SB 674 from the Finance Committee by a nonrecorded vote of 22-10. SB 674's chief sponsor, Senator Billy Wayne Bailey, D-Wyoming even said that he was not serious about passing the bill and introduced it just to start a conversation about the subject.