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Can we improve the system?
Frivolous lawsuits and Tax reform
Earlier this year Governor Underwood advocated a reasonable and common sense approach to civil justice reform. The legislation he recommended was geared at stopping frivolous and excessive lawsuits.
Currently many feel we all pay in higher insurance costs, higher medical bills and health care costs and higher taxes. Some of the issues focused on by the Governor are included in my Citizens' Poll. They cover provisions on how our legal system works or doesn't work, whether we have too many lawsuits, whether the system serves the public and is fair to those involved and whether we have too many costly and frivolous lawsuits.
Gov. Underwood's Commission on Tax Fairness
A second important issue that will come up during future legislative sessions deals with the recommendation of the Governor's Commission on Fair Taxation. It became apparent to Governor Underwood that tax fairness concerned most citizens. He established the Governor's Commission on Tax Fairness consisting of 14 people and headed by Secretary of Tax and Revenue Robin Capehart.
The commission's mission statement directed them to review the present system of taxation and determine whether it adequately embodied the values and principles of the people of West Virginia. The Commission spent a year listening to citizens across the state to propose a tax system that is equitable, fair and free of favoritism. It focused on the values of simplicity, accountability, economic growth and competitiveness.
Current system chaotic and unfair
In July, the commission provided a document of over 100 pages which provides an opportunity to bring order to the chaotic and often unfair tax system that we have today. It is a work in progress and must await the results of an economic model that will provide the specific rates that will support the plan.
It became apparent that the personal property tax was not consistent with the values of West Virginians. It violates tax neutrality and consistency and is also regressive in that it is not based on the ability to pay. To make up for the loss in the personal property tax, the commission recommends:
--- Because of the problem with excess levies, eliminate the use of property taxes to fund education, but retain property taxes on real property for use by cities and counties;
--- Authorize cities and counties to expand their use of the real property tax to make up for lost personal property revenues. Since education levies will be eliminated, this should be accomplished without raising overall real property tax rates;
--- Authorize local governments to "piggyback" on the proposed state taxes.
New broader based system
It is the commission's feeling that a "fairer", broader based tax will generate the same amount of revenues and do away with many taxes paid only by certain groups. The "fairer," broader based tax would be a General Excise Tax imposed on the purchase, sale or use of tangible personal property and services. It would replace and have a broader base than the current consumer sales and use tax with their often arbitrary exemptions and exceptions. The proposal will also raise the minimum tax rate to the federal poverty level (for a family of four it would rise to $16,450 yearly).
There was no discussion on replacing the food tax as revenues from it would have to be recouped somewhere else. This would prove regressive to poorer families, as those who purchase food with food stamps do not pay taxes on food purchased with the food stamps.
The commission's recommendations are an outline of proposals that reflect a philosophical shift from a tax system that depends on a shrinking property tax base to a system which local governments obtain increased flexibility in generating revenues. It will be fairer to the individual and business, create a more competitive environment for international trade and could result in more jobs for West Virginians.
This is part of the August 1998 Citizen's Poll
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