This week, Governor Jim Justice (R-W. Va.) proposed the Just Cut Taxes and Win (JCTAW) Act, a bill that would reduce the business tangible property tax imposed on many businesses in the state of West Virginia. Over six years, the bill would reduce taxes by about $420 million, specifically on manufacturing businesses. Bill proponents argue that the JCTAW is designed to bring manufacturing jobs back to West Virginia and make the state more competitive for manufacturing.
The JCTAW Act would start by phasing out the $140 million business tangible personal property (TPP) tax on industrial machinery, equipment and inventory over a period of six years, with the tax permanently eliminated in Fiscal Year 2026. The current tax rate is between 2% - 3% (depending on the county the business is in) on 60% of the market value of the business property.
West Virginia is one of only fourteen states that taxes industrial business inventory and has the fifth highest TPP tax among those states. The tax is especially harmful to attracting businesses that offer high paying, middle class manufacturing jobs because it makes equipment ownership unnecessarily expensive. In fact, a Tax Foundation policy report found that the TPP tax causes business investment to “flow out of jurisdictions with high tax rates into jurisdictions with lower tax rates.” This puts West Virginia at a major disadvantage compared to non-TPP tax states like Ohio, Wisconsin, and Pennsylvania when it comes to attracting manufacturing jobs from states with less than friendly business climates across the United States.
The JCTAW Act is especially timely given the long-term trend of states such as Ohio, Florida, and Arizona moving to reduce or eliminate their TPP taxes. As this trend continues, and unless West Virginia acts, the state will fall further behind other states in attracting business investment if it fails to eliminate the TPP tax sooner rather than later.
ATR strongly supports Governor Justice’s and the legislature’s effort to deliver a win to West Virginia businesses and workers through the Just Cut Taxes and Win Act.