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Analysis: Business Property-Tax Cut Wouldn’t Bring Jobs

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Monday, January 14, 2019   

CHARLESTON, W.Va. – The governor and legislative leaders again are considering repealing the personal property tax for businesses.

But according to the West Virginia Center on Budget and Policy, it's unlikely to bring job growth.

Last year, lawmakers looked at ending that tax on inventory, machinery and equipment.

Sean O'Leary, a senior policy analyst the center, says most states tax either inventory, or machinery and equipment, or both.

He says comparisons have found no real connection to growth no matter what states do.

"Since the end of the recession, there's no real clear link between states that have this tax, states that don't have this tax, and growth rates,” he points out. “And states that have neither of the taxes have actually grown less than the states that have both."

Leaders at the Legislature say repealing the tax would get more businesses to locate in the state.

But O'Leary says the tax is just a "fraction of a fraction" of a company's costs – not nearly enough to change anyone's mind.

He says West Virginia is "fairly middle of the road" in the way it structures these taxes.

The state has a very low property tax rate overall.

O'Leary says part of that is because it applies the tax to a broad range of things.

He says states that do not tax inventory, machinery or equipment have to make up the income by raising other kinds of property taxes.

"So their land and buildings are getting taxed at a much higher rate than they are in West Virginia,” he explains. “So the savings that they would have doesn't really add up to anything."

Supporters say eliminating the tax would cost the state about $140 million a year, once it's fully in place.

O'Leary says the real total price tag would be more than $300 million a year, with much of the cost landing first on county school systems.

He notes the state would have to reimburse the schools for the lost revenue, and that strong public education is much more likely to boost employment.


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