Thursday, November 16, 2017

A Brief History of Tax Reform in American Government

As president of West Liberty University in Wheeling, West Virginia, from 2007 until 2015, Robin Capehart presided over one of the oldest and most prestigious schools in the region. Today, he serves as a senior fellow with the Public Policy Foundation of West Virginia. In this position, Robin Capehart also uses his extensive experience as a government advisor on tax reform to conduct research and author papers on issues of importance to the economic and social well-being of the state and the nation.

Tax reform in the United States has a lengthy and complex history. For almost a century after its founding, the country funded its operations largely through tariffs, only establishing a limited income tax during the Lincoln administration. Just seven years after the Civil War concluded, Congress rescinded that tax.

Thinking on the issue changed in 1913, when legislation permitted the imposition of a new federal income tax. Tax rates burgeoned during World War I, with the very top rate hovering in the 90 percent range until John F. Kennedy pushed through a significant tax cut. Since then, presidents have initiated major tax cuts about once in a generation.

Major successes in tax reform include a report by William Simon, treasury secretary under President Gerald Ford. The Department of the Treasury’s 1977 Blueprints for Basic Tax Reform had long-lasting policy effects.

The Reagan administration achieved a high point in tax reform in the 1980s, when it not only slashed taxes, but also anchored reform in a thoroughgoing simplification and consolidation of the tax code.

Friday, November 3, 2017

School Choice Champions See Opportunities in West Virginia

As the president of West Liberty University in West Virginia for close to a decade, Robin Capehart directed the administration of one of the state’s oldest institutions of higher education. Today, he serves as a senior resident scholar at the Public Policy Foundation of West Virginia. An accomplished scholar and attorney in the field of taxation and tax reform, Robin Capehart has also served as a consultant to state government on that subject.

In addition to his work as the head of West Liberty University, Mr. Capehart maintains a strong interest in education policy in general. He has authored several papers on that topic, published in recent years in Public Policy Quarterly. In particular, he favors broadening of school choice, which was among the pioneering standards put forth by President George H. W. Bush’s administration at the 1989 Education Summit.

Proponents of school choice emphasize the importance of respecting the rights of individual families to determine the best type of school for their own children. Charter schools, magnet schools, voucher funding, and homeschooling are among the possible means of increasing school choice available to communities.

Charter schools are not currently approved in West Virginia, yet proponents believe that their cause is gaining ground. Two members of the statewide school board recently resigned, offering the governor the opportunity to reorganize educational infrastructure. In addition, elected officials and the public alike have expressed a lack of confidence in current educational bureaucracy.

Saturday, October 28, 2017

West Virginia Tax Reform - Excess Acreage Tax

The past president of West Liberty University, Robin Capehart served as chairman of the West Virginia Governor’s Commission on Fair Taxation from 1997 to 2000. As the commission’s chairman, Robin Capehart coauthored a 1999 study of West Virginia’s tax structure. The nearly 1,000-page report determined that the state’s tax system was burdened by an overly complicated and regressive structure that was still geared to an early-20th-century economy.

The Excess Acreage Tax is one of many specific examples outlined in the report of outdated tax measures that do not fit the economy and society of West Virginia today. Established in 1905, the Excess Acreage Tax imposes a one-time tax of $0.05 per acre on any corporation purchasing 10,000 acres or more of property in West Virginia. However, this does little to address the state’s historic economic problem of high rates of absentee land and mineral ownership. In 2012, West Virginia’s top 25 landowners owned about 18 percent of private land in the state, but none of the 10 largest owners had their headquarters in West Virginia.

The commission’s report recommended several changes to modernize the Excess Acreage Tax to reflect today's economic and fiscal situation . These recommendations included increasing the tax from $0.05 per acre to $0.50 per acre, lowering the property size threshold to 1,000 acres, making the tax annual rather than a one-time measure, and allowing taxed corporations to claim a credit against West Virginia’s severance tax. Based on data from the West Virginia Property Tax Department, adopting these changes could generate an estimated $1.7 million in annual tax revenue.

Thursday, October 12, 2017

West Virginia May Repeal Personal Property Taxes for Businesses

Robin Capehart served as the president of West Liberty University in West Virginia for eight years. Before Robin Capehart became the head of West Liberty, he led comprehensive tax reform efforts as the Secretary of the West Virginia Department of Tax and Revenue. Tax reform remains a major issue in West Virginia, with the newest proposal involving the repealing of personal property taxes for businesses in the state.

Recently, State Commerce Secretary Woody Thrasher and other government officials spoke out in support of a proposal to eliminate the personal property taxes that businesses are required to pay on various types of equipment and machinery. While the measure would require an amendment to the state’s constitution, a growing number of supporters are pushing for the change.

The proposed amendment would make West Virginia more appealing to business owners. Currently, Pennsylvania and Ohio have no such tax, and Virginia has put an exemption on machinery and equipment to benefit business owners. Individuals thinking about where to open a business may prefer these states because of lower taxation rates.

The downside of the repeal is that it could affect area schools. In 2016, the personal property taxes earned $589 million in revenue, a large portion of which when to county school boards.

In a recent appearance on Statewide Talkline, Capehart noted that such a proposal was a major part of the recommendations of Governor Underwood's Commission on Fair Taxation. However, Capehart told Talkline host, Hoppy Kercheval, that undertaking such a move should be done in the context of a revenue neutral, comprehensive tax reform package.