Commentary: Steve Roberts

West Virginia Needs Business Tax Relief

Bluefield Daily Telegraph, July 13, 2006

Representatives from business, labor, education, state and local governments and citizen groups gathered in Charleston last week to discuss West Virginia’s tax structure and to deliberate on what changes are needed to modernize our system of taxation.

The driving force behind this is Gov. Joe Manchin, who is continuing to lead West Virginia into the future by tackling important issues. Gov. Manchin and his top leaders have been undertaking an analysis of our tax structure to see where changes are needed. They are expected to release a report sometime this fall.

I want to congratulate the state Tax Department for working to educate diverse groups and to stimulate discussions about the state’s major revenue sources and the way the state spends its money. This is desperately needed because, as the Tax Department has indicated, West Virginia is reaching its breaking point when it comes to taxation.

One area in particular where West Virginia needs to “modernize” its taxing situation is on large and small businesses. West Virginia's overall tax burden on businesses is one of the highest in the nation. West Virginia has one of the highest business tax rates for its Corporate Net Income Tax, and is one of a handful of states that also imposes a Business Franchise Tax. As such, West Virginia continually ranks near the bottom in national studies regarding tax friendliness for business.

This situation is validated in a recent tax study completed by The Council On State Taxation (COST). Periodically, COST analyzes state and local tax rates on business. The new study shows that in FY2005 West Virginia ranked among one of the highest states in terms of state and local business taxes as a percent of private-sector economic activity.

West Virginia ranked third highest at a rate of 6.6 percent, equal with North Dakota. Only Wyoming (at 9.6 percent) and Alaska (at 9.3 percent) ranked higher. In addition, West Virginia businesses pay the highest percentage of local taxes – 80.3 percent – than in any other state.

For our state businesses to grow and invest, West Virginia’s leaders must address the state’s high business tax burden. West Virginia ’s leaders have taken bold steps over the past several years to enact reforms in other key areas such as workers’ compensation, medical malpractice, civil justice and general insurance. Now, it is time to fix the state’s business tax structure.

A special tax subcommittee of the West Virginia Chamber is completing work on a plan that will focus not only on needed reforms to the state’s business tax structure, but also on how to make the state’s business community more competitive and healthier.

The committee is zeroing in on business taxes and rates that have made West Virginia uncompetitive with other states and will be recommending specific tax code changes that will improve our standing.

The goal of the West Virginia Chamber of Commerce is to strengthen our state’s competitive situation so all West Virginians will enjoy greater opportunities and a better quality of life in the future.

Stephen G. Roberts, President
West Virginia Chamber