A new study of America's state income tax rates released this week concludes that West Virginia taxes its working poor too heavily. Maybe so, but without knowing what effect eliminating such taxes would have on the state, it's tough to say whether cutting them would be possible.
Officials of the Center of Budget and Policy Priorities say that West Virginia is taxing a family of four when their income reaches $10,000 a year, a practice the federal government stopped 11 years ago. Though the official poverty level income for a family of three is $12,511 a year and they pay no federal taxes, West Virginia's state income tax takes $197 a year from that family.
Elizabeth McNichol, who led the study effort, called taxation at that rate a "tax on the working poor," and added that it goes against welfare-reform programs' effort to reward those who go to work.
But determining whether such a cut could be made isn't possible without information of the sort the study didn't provide. For example, although the study talks in general about improved state economies, it doesn't say what the effect on state revenues would be. Nor does it talk about alternative sources of funding, in a state that has been losing taxpayers in recent years.