All of us share a frustration over the dismal condition of the West Virginia economy. Many national publications and rating agencies have placed WV near the bottom in per capita income. The lack of prosperity effects virtually facet of our society. From compensation of public employees to careers for our citizens; the consistently poor business climate robs West Virginians of progress. Our young adults are leaving to seek opportunity in other states. Who among us has not been affected by the unfortunate circumstance of children or grandchildren that are forced to leave our state in pursuit of jobs? Absent real opportunity; all the feel-good, happy-talk about WV will not make a bit of difference. The first step to solving any problem is acknowledging that one exists.
The tragedy is that it doesn't have to be this way. Real prosperity can and should occur within the borders of West Virginia. With the right set of economic policies and legal reforms, West Virginia can flourish and generate a multitude of opportunities for our citizens. Each of us wants prosperity for our constituents. Unfortunately, much of the entrenched political leadership within our state simply will not allow the needed reforms to be enacted. Typically, they pacify the electorate by using words and catch phrases such as: "gradual reduction" or "more study". This approach should no longer be acceptable. Our citizens deserve meaningful change and hope for a brighter future.
Whether the people of WV will be prosperous or poverty stricken depends in large part on how well we, in this room, allocate their resources through the power granted us to tax and spend. If taxes are too high -- people, jobs, opportunities, and hope are exported to other states. If government expenditures are not properly prioritized upon the greatest need rather than on the most politically connected, our vulnerable will suffer and prosperity will be diminished.
My fellow Delegates, the WV economy has been studied and analyzed by renowned economists and bipartisan commissions for years. The results overwhelmingly convict us of imposing excessively high tax burdens upon WV businesses which in turn limit their ability to provide jobs and opportunities to our citizens. It is our responsibility to change this state and make it better.
The experts view three glaring problems with our tax code. First; imposing a Business Franchise Tax. The minority leader spoke eloquently about the pressing need to abolish this anti-job tax. The Senate originally supported a bill that "gradually" "phased out" this tax over a FIVE year period. But, as if this snails pace wasn't slow enough, the governor has recommended an even slower approach of seven years. Are you kidding me? In the 21st century, business moves at the speed of light. Seven years is an eternity and during that time, WV will fall even further behind.
Secondly, unlike most of our neighboring states, counties in WV levy taxes upon the inventory, machinery, and equipment of a business. Therefore, WV is, once again, placed at a competitive disadvantage. The gentleman from the 52nd articulately conveyed a method of reducing this tax while holding the counties harmless. Such a policy will invigorate business and stimulate job creation.
Thirdly and perhaps most prominently, is the excessively high CNIT. It is shocking to note that WV levies a CNIT that is 40% higher than VA and 25% higher than KY and MD. These are staggering differences that virtually compel business to give special consideration to locating in these other states. Border counties are particularly vulnerable to this competitive disadvantage. Specifically, it is big business that most acutely feels the pain of this excessive tax. Virtually, without exception, big manufacturing concerns, high-tech industry, and fortune 1000 companies are organized as "C" corporations. As such, they pay the CNIT. Entities that are chartered as an "S" or LLC effectively avoid this discriminatory tax. Our tax policy discourages the very jobs that we seek to attract; jobs with health-care benefits, retirement packages, and career progression.
Ladies and Gentlemen, in the next few days, we will have an opportunity to correct our job-killing tax code and to efficiently prioritize the expenditures of the WV taxpayer. May I suggest that among our greatest priorities be a significant reduction in the CNIT such that job producing corporations will be encouraged to locate and expand in WV. Doing so will provide incredible opportunities for our citizens. Let us forgo the politically pacifying tactic of gradualism. Rather, let us chart a course that will provide growth, and opportunity for this and future generations of West Virginians. I look forward to working with each of you to fulfill our goal of a prosperous WV.