Killing the Golden Goose

As global demand for energy rises, West Virginia is poised to take advantage through use of our abundant energy resources. West Virginia has produced oil and natural gas continually since the 1800’s. Our mountains allow us to efficiently produce electricity from both hydroelectric and wind energy, but coal is still the energy Golden Goose to the states economy.

Unfortunately instead of feeding and caring for the Golden Goose most of the time the state stalks the Golden Goose like a predator using taxes as its favorite weapon. Some 200 years ago US Supreme Court Chief Justice and namesake of Marshall University, John Marshall warned, “The power to tax involves the power to destroy.” The evidence that Marshall was correct is all around us in West Virginia as we rank 50^th in business opportunity due to our punitive business tax structure destroying our economy.

The latest hunter taking aim at the Golden Goose is DEP Secretary Stephanie Timmermyer, who went before the Senate Finance Committee February 7^th requesting a state tax on coal be doubled. West Virginia is already at a huge economic disadvantage and this will only add more. We have the 7^th highest tax rate in the nation and at the same time we rank 49^th in per capita income. The destruction of the states economy through a punitive tax structure has dropped the states population from 1.3% of the US population in 1950 to 0.6% today, a drop of more than half.

Simple economics explains how the global coal market will respond if the coal tax increase is enacted. West Virginia coal will become more expensive in the market place. Just as we shop for the lowest price on food or gasoline, those in the coal market will also shop for the lowest price of coal. That will put West Virginia coal producers at a disadvantage. It will be harder for them to be price competitive. New coal orders will drop as a result. The drop in orders will mean less need for manpower, transportation, and supplies further increasing the adverse effects on the West Virginia economy.

Secretary Timmermyer’s request for an increase in coal taxes personifies the problem with Charleston’s understanding of the economy. Ronald Reagan clearly identified the problem when he stated, "The problem is not that people are taxed too little, the problem is that government spends too much." West Virginian’s have been taxed so heavily for so long that a large unused surplus exists in various state accounts. In 2005 State Senator Russ Weeks estimated that at $1 billion, Senator Herb Snyder at $3 billion, and West Virginians Want to Know at $5 billion. When the state has somewhere between $1 and $5 billion dollars sitting unused in various accounts; we should not be talking about raising taxes.

With world demand for energy high and West Virginia sitting on coal, oil, gas, hydroelectric and wind to supply the world, tax cuts are in order to help our economy grow. The money not spent on taxes will be plowed back into the businesses of the state thus feeding the Golden Goose. If the power to tax is the power to destroy, then the power to reduce taxes is the power to create.