In confusion there is profit

In the movie Operation Petticoat there is a great line that holds true in today’s troubled economy. When Lt. Com. Sherman (played by Cary Grant) asks where his supply officer, Lt. JG Holden (played by Tony Curtis), is during an air raid the commander is told, “When the air raid started they took off. All he said was, ‘in confusion there is profit.’” It is play on Rudyard Kipling who once reasoned that it was a good thing to keep one's head while all around were losing theirs. Right now across the country the Federal Government and State Governments are loosing their heads over the economy but if West Virginia’s government keeps its head, then we as a state can profit from it.

The way for West Virginia to take initiative is simple. The same bad economic policies out of Charleston that hurt us in good times hurt us in bad times as well and we must change those.

Two periods of strong economic growth stand out in recent American history the one started by John F. Kennedy in the 1960’s and the one started by Ronald Reagan in the 1980’s. Both have a common thread, both Presidents cut the tax rates which put more money in the hands of the people and businesses. This allowed people to spend more money on good and services spurring economic growth and the businesses used the additional money to expand operations providing those goods and services. In other words growth breeds additional growth.

The additional growth comes because people naturally want to be rewarded for their work and when they work harder they receive additional reward. It is the American Way, it is Capitalism. The problem in West Virginia is when compared to other states our businesses and people receive less of a reward for their hard work because of our tax rates and structure. When the state takes a bigger chunk than other states it simply reduces the incentive to work hard in West Virginia or encourages people to move to another state. The state has created a ‘tax wedge’ against prosperity. The removal of this wedge will lead to people willing to take the risk of starting a business and creating new jobs in the state and in bad economy that is more important than in times of prosperity.

Besides the high income tax rates there are two other primary ‘tax wedges’ hurting West Virginia businesses, the Business Franchise tax and the Inventory tax. The Business Franchise tax is based on companies net worth, it’s not a tax on Franchises as many believe and is paid by all businesses in the state. The tax remains whether or not the company is making a profit. This is a tax that companies in most other states do not have to deal with. So in bad economic times this tax has a greater impact on with West Virginia companies that are struggling to make a profit. If a corporation is looking at closing one of two plants, then it will make more economic sense for them to close the West Virginia plant because of the Business Franchise tax.

The same holds true for the inventory tax. Sales drop as the economy slides downward, inventories of unsold goods naturally raise. In West Virginia our inventory tax punishes companies more and more as their sales slide downward. In many cases, especially with small businesses, this can be the straw the breaks the camels back. In order to pay the additional taxes imposed by the state with falling revenues these companies must find the funding. For most this will result in employee layoffs and some bankruptcy.

West Virginia must now make the hard choices to profit in this confused economy. The worse the economy gets the more our business are punished by the state tax structure. The opposite of the way it should be. Consider that eliminating the Business Franchise and Inventory taxes will reduce revenue to the states tax coffers in the short term, but if we don’t eliminate them and those businesses leave or declare bankruptcy they will pay no taxes at all in West Virginia. The cutting of the tax rates will put more money in the pockets of West Virginians and West Virginia businesses rewarding them for their hard work by making it easier for them to weather the economic storm. Making these changes will allow more West Virginia companies to survive and attract those that want to expand with an atmosphere that rewards hard work.

Removing the tax wedges put in place by bad Charleston policies will allow West Virginia to keep its head while other states loose theirs.

2007 Year in Review

It’s hard to believe that we are nearing the end of another year. 2007, to say the least, has been an eventful year all around.

Riding their wave of 2006, Democrats brought new leadership on the national level in 2007. The faces were new, but the Democrats turned out to be the same tax and spend party that still can not stand up to our nation's enemies.

Nancy Pelosi was selected to be the first female Speaker of the House and together with Senate Majority Leader Harry Reid; they have managed to make history – by achieving all-time low approval ratings. Never had there been approval ratings lower than what we see in Congress today.

The Democrats believed that they had a mandate to end the Iraqi front of the Global War on Terror. Fortunately for our nation, they have failed to deliver on that campaign promise, along with many others.

Thanks to our nation's resolve, President Bush has changed course in Iraq, by sending a surge of military personnel to the area. The result was lower violence, safer neighborhoods and refugee Iraqis returning home again.

Back home at the national level, we have been enjoying continuous economic growth.
According to the National Bureau for Labor and Statistics, more than 8.1 million mobs have been created since August 2003.

This past September alone, our economy created 110,000 jobs. September 2007 is the 49th consecutive month of job growth, setting a new record for the longest uninterrupted expansion of the U.S. labor market.

With an $8.3 billion reduction in the trade deficit, our exports and Gross Domestic Product have grown 14.8 percent and 3.8 percent respectively. Thanks to the President's tax cuts; we have seen this record job growth, while we continue bringing in record revenues to our nation's treasury. Tax cuts do work.

What we have not seen is the growth coming into West Virginia.

Forbes Magazine recently released their 2007 rankings of states' business climate.
West Virginia dropped to 50th, last in the nation. In 2006, in wake of Hurricane Katrina, Louisiana was able to keep us at 49th. But that state's recovery efforts brought them up out of the basement in 2007, leaving West Virginia in last place once again.

According to the US Chamber of Commerce, West Virginia ranked once again 50th in Legal Climate, landing us #1 once again as a judicial hell-hole for the 2nd year in a row.
You would think with ratings such at these, that our new legislature would go to the statehouse and work to make our state business friendly, bring real civil justice reform, and improve our business climate. They did not.

Because Bob Kiss did not run for re-election in 2006 the House Democrats selected a new Speaker: trial lawyer Rick Thompson of Wayne County. Under Thompson's leadership, we continue to see broken promises by the Democrats during the 2007 Legislative session.
On the campaign trail in 2006, many Democrat legislators claimed that they were pro-life and pledged to support parental notification legislation. But with abortion on demand activist Carrie Webster handed the gavel to the powerful House Judiciary Committee, parental notification never saw the light of day.

In 2006, West Virginia House Democrats argued that they supported the parental notification bill, but were protecting the committee process by failing to discharge it from then House Judiciary Committee Chairman Jon Amores' desk.

Twelve current House Democrats failed on their promise to fight for parental notifications by voting with former Speaker Kiss and Chairman Amores to prevent consideration of parental notification on the House floor last year. "Protect the Committee Process" was their mantra.

The committee process didn't seem as important with 2006 Mine Safety Bill demanded by Governor Manchin in the wake of the Sago tragedy. It passed in 6 hours and completely bypassed the committee process altogether - the same process they were so adamant about protecting when pro-life members were trying to protect the unborn. In 2007, the parental notification bill and all other pro-life bills were pronounced dead on arrival. The "pro-life" Speaker will not stand up to his Judiciary Committee Chairwoman.

In 2006, Democrat Doug Reynolds of Cabell County had promised that he would vote against renewing a temporary gas tax. In 2007, Freshman Delegate Doug Reynolds broke his campaign promise and voted to keep the gasoline tax increase permanent.

Another item on the Democrat agenda was the expansion of gambling in West Virginia to include Las Vegas-style table games at the racetracks.

This arguably unconstitutional vote allowed only four counties to have a voice in what affects the entire state. There are people who live within sight of the Tri-State Greyhound Park in Cross Lanes who were denied the right to decide if they wanted table games in their backyard, because they lived on the wrong side of the Putnam-Kanawha county line. However, people over forty miles away on the Kanawha side Montgomery had a vote.

The residents of the Putnam side of Nitro were let down by their legislators: Delegates Dale Martin and Brady Paxton. Both Democrats both voted for passage of the table games bill and in the process allowed their constituents to be disenfranchised.

The legislature also deemed necessary that our cities and municipalities in West Virginia would be allowed to pass home rule ordinances. A five-year pilot program will soon be in place for five cities. Home Rule will give these cities power to create their own taxes to be imposed on citizens and businesses, the same citizens and businesses that are over taxed as it is..

Nowhere in this legislation was the requirement that citizens within these city limits would have a vote to permit these changes. Officials will soon have the power to impose yet more taxes on working families that already face one of the highest total tax burdens in the nation.
Instead of shifting some of the power to tax to the local level, the Democrats simply are planning on allowing another government hand in your pocket, without reducing your tax burden at the state level.

In a futile attempt to appear to be "pro-business", the Democrats enacted a reduction in the Business Franchise Tax - by a whopping quarter of one percent (.25%). Small businesses nibble on the crumbs handed down by the ruling party, and real tax reform is once again forgotten. With the Democrats running the legislature, we can forget about eliminating regressive business taxes that are in place such those levied on inventory, machinery and equipment.

Other bills that the legislature spent their limited sixty-day session on were: allowing the transportation of roadkill across state lines, building prison nurseries for inmate mothers, and clarifying that fish feces were not sludge.

As another year end draws near, we hold our glasses high and hope that 2008 and the election that it carries will bring the changes we desperately need.