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The Excess Acreage Tax is one of many specific examples outlined in the report of outdated tax measures that do not fit the economy and society of West Virginia today.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.

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.

A Need for Comprehensive West Virginia Tax Reform

Formerly the president of West Liberty University, Robin Capehart oversaw a wide range of activities that significantly boosted enrollment and got the community more involved in campus life. Robin Capehart’s experience beyond leading West Liberty University includes a past role as West Virginia’s Secretary of Tax and Revenue, and he has focused on enacting comprehensive tax reform.

In a 2015 interview, Mr. Capehart spoke of the present tax system having its roots in the 19th century and the Great Depression and not reflecting the dynamics of the current economy. As he saw it, the need to broaden the state’s tax base and take a comprehensive look at the entire tax structure rather than simply tinker around the edges is particularly acute.

Unfortunately, taking aim at a single issue such as the corporate net income tax can have unforeseen consequences on other aspects of the tax system. There have already been limited efforts to modernize the tax system, with Senator Joe Manchin taking on recommendations and addressing the regressive aspects of taxes, such as a need for greater personal income tax exemptions in a way that reflects federal poverty levels. The present reforms centered on ensuring that local control was greater, particularly with regard to activities of the Municipal Home Rule Board, and in addressing the business tax structure.