West Virginia, unlike many other states, has done a good job in weathering the recession.
General tax revenue has increased, allowing the state's emergency reserves to become among the most healthy compared to other states in terms of spending.
West Virginia has taken small steps in reducing taxes to residents and businesses, making the cuts permanent.
Grocery shoppers in the state saw the sales tax on food drop another percent come the first of the year. The tax is now at 2 cents for every dollar spent. It will drop another penny in July and then be phased out by the middle of 2013. Taxing food has always been one of the most backward ways of raising state revenue.
Business owners also saw slight cuts to the tax on corporate net incomes and the business franchise tax. All states actively compete for new jobs and business relocation or expansion. West Virginia was ranked as having the 11th highest corporate net income tax in 2010. The state drops to 19th with the tax reductions this year and then to the middle of the pack in 2014 when the tax is again lowered.
Washington should take notice of what the Mountain State has accomplished. Taxes have been cut while revenue has increased. State jobs or services have not been cut, unlike other struggling states.
Allowing businesses to invest and expand, with the knowledge the corporate taxes will be decreasing, is a sound way to invest in the future. The state will see about $56 million in less revenue because of the tax cuts but the dollars will be made up from other sources.
Residents will have more cash in hand after leaving the grocery store. Businesses will have more cash on the books at the end of the year. The state's general revenue remains healthy. It is a good combination during tough economic times.