A West Virginia Senate Committee is crafting a proposal to do away with business personal property taxes in hopes of attracting more corporations to the state.
Personal property generally includes furniture, fixtures, office equipment, industrial machinery, tools, supplies, inventory, and any other property not classified as real property. West Virginia is one of only 10 states that tax inventory; other states are increasingly moving toward eliminating those taxes.
"Inventory tax is one of more distorted taxes you can have," Senator Jared Walczak said. He suggests eliminating property taxes for businesses, perhaps as much as the first $100,000 in value.
Senators say they realize that if they eliminate personal property taxes, some other tax will have to increase. "Our counties are struggling to pay their bills too," said Senator Robert Karnes "So you can't say well, you're going to lose that revenue source. You replace it with an alternative revenue source, perhaps a sales tax."
Some economists don't believe increasing sales tax is a viable option. "Every time you go to check out at the store that purchase is more expensive," said Kelly Hughes, Assistant Professor of Business and Economics at West Virginia Wesleyan College. "It's going to affect lower income households more than higher income households."
Eliminating business personal property taxes would require a change in the state's constitution. Tangible personal property accounts for almost 33% of the state's property revenue and 19% of all local government revenue.