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One study isn't enough

April 14, 1997

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.

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Census figures show that between 1980 and 1990, the state lost 156,000 people, or about 8 percent of its population. Berkeley, Jefferson and Morgan counties notched big increases, but many others in the state's interior lost from 10 to 25 percent of their populations.

The Eastern Panhandle counties will probably see another jump in the 2000 census, but whether it will be enough to balance or exceed the out-migration from the other areas of the state remains to be seen.

The study also fails to address West Virginia's strong anti-tax sentiment. Cutting the income tax would be easy; replacing it with something else would require a knock-down, drag-out fight. As this study proves once again, it's easy to point out problems, but crafting solutions is a great deal harder.

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