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Tax plan needs full review in legislature's next session

July 14, 1999

Legislative leaders say they don't have enough information on West Virginia Gov. Cecil Underwood's plan for a major overhaul of the state tax system. Underwood staffers say the more information lawmakers get, the more they seek, leading the administration to suspect that they're trying to talk the plan to death. In our view, Underwood needs to realize that unless he retreats on his timetable, he may end up with no changes at all.

After more than two years of study, Underwood had hoped that lawmakers would OK the tax package in a special session to be held this fall. As proposed, the system wouldn't yield any less revenue, but would be simpler and more attractive to prospective new industries.

But as House Finance Chairman Harold Michael noted, expecting the plan to move through the Legislature untouched is unrealistic, even though Underwood's allies say tax reductions and increases have been balanced to make it revenue-neutral.

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Underwood needs to concede that there isn't going to be a special session this fall, then start putting together a bill and some presentations on how the changes would work for the upcoming regular session. Some key question that need to be answered include:

- How shifting from the present system of business taxes to a straight 2 percent tax would affect existing industries.

- How increasing the state's share of education funding will affect local spending decisions. As we said in a previous editorial, it's unclear whether this would remove any local incentives to economize, or whether the legislature would begin more in-depth reviews of local school budgets.

- How taxpayers might counter a decision to shift from a reliance on personal property taxes to a greater dependence on income taxes. We'd like to know if the new system would make it more attractive to hold previously acquired property, like real estate, instead of converting it to income by developing it.

Those are the sorts of questions lawmakers need to answer, and which can be explored at length during the upcoming session. The alternative is seeing the whole process - and two years' work - tossed on the shelf.

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