Bill Maloney is right in stressing that “we need to fix our regressive tax structure …”

Tax Reform Is Vital in W.Va.

June 3, 2012
The Intelligencer / Wheeling News-Register

Just a few weeks ago West Virginians were reminded that when we are putting our best foot forward in an attempt to lure a big employer to our state, there had better not be any scuff marks on our shoes. That happened when the Shell chemical company decided to build an ethane cracker plant in Pennsylvania rather than here in the Northern Panhandle.

Clearly, despite an offer of massive tax breaks from Charleston, our state was not as attractive as our neighbor.

One of the big scuff marks on our economic development shoe involves tax policy. Clearly, Republican gubernatorial candidate Bill Maloney is right in stressing that “we need to fix our regressive tax structure …”

A reminder of the absurdity of current tax policy came last week when the state Supreme Court ruled in a case involving the Century Aluminum Co., which has been attempting to find ways to reopen its idled smelter plant at Ravenswood.

Justices, by a 3-2 vote, ruled against an appeal by Century of a property tax bill of more than $1 million. It was based on a state appraisal pegging the alleged value of plant and equipment at Ravenswood at $73.1 million.

In terms of attractiveness to business, the state’s property tax system already starts with two strikes against it. It has been pointed out Pennsylvania and Ohio don’t levy property taxes on plant equipment and inventory at all, while West Virginia does.

A third strike comes when the state’s method of valuing such property is considered. It is based on replacement value – even for an idled plant such as Century’s where no one would even consider tearing out old equipment and putting in new.

As Justices Brent Benjamin and Menis Ketchum noted in their dissent to the court’s majority opinion, that is absurd. The practice can cost a struggling company enormous amounts it cannot afford to pay – and the tax system can block efforts to restart a closed plant.

Here in the Ohio Valley, that very tax could become a factor in efforts to revitalize facilities closed while RG Steel goes through bankruptcy proceedings.

Such taxes are no way to encourage business investment – and job creation – in West Virginia. Maloney is absolutely right in calling for tax reform to be a priority in our state.

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