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Underwood's tax proposals require further explanation

July 06, 1999

The long-awaited report from West Virginia Gov. Cecil Underwood's Commission on Fair Taxation isn't due out for another few weeks, but early reports suggests that it contains good news for the state's Eastern Panhandle. The bad news is that under the present plan, most of the state's counties will lose revenue. It's up to the governor to persuade the unconvinced (including us) that the changes this plan proposes are affordable and will benefit the entire state.

The key provision of the Underwood commission's plan would be the elimination of personal property taxes, which he feels are a strong deterrent to economic development in the state. But the West Virginia Association of Counties estimates that while 29 other counties would lose revenue, Berkeley, Jefferson and Morgan counties would gain millions in new funds.

That bonanza would come as the result of another Underwood commission proposal that would have the state take over full funding of county schools. Currently counties must kick in 25 percent of all school costs.

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Those counties that would lose revenues would be protected by yet another provision that calls for the state to cover any losses they suffer.

Perhaps the final report will make this clearer, but here's a few of the things that we don't understand. Where will the state get the revenue to cover the counties' losses? And if the state is going to do that, why would local government try to raise revenues through the proposal's other items, like piggyback sales and income taxes?

For this plan to work, there has to be a sharing of responsibilities. Local governments may not like the idea, but the requirement that they fund a portion of their school system costs is an incentive to better manage those systems. And if more economic development is the payoff for eliminating personal-property taxes, should the local governments which stand to gain, in terms of jobs and construction, be shielded from any risk?

Perhaps these and other questions will be answered when the full report arrives, but for a change this sweeping, the answers will have to be convincing indeed.

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