It doesn’t take a lot of sleuthing to figure out the motive behind Gov. Jim Justice, the Republican nominee for U.S. Senate, calling a special session beginning Sept. 30 — just 23 days before early voting for the general election begins — to propose an additional $110 million-a-year cut in personal income taxes.
If that’s not election interference, it surely comes close. Even Justice has revealed his true intent, specifically stating on at least three occasions his sense of urgency to rush through the tax cut for the “voters†— not for the taxpayers, or the people of West Virginia.
The big question is not about Justice’s motivation for the special session — unlike every other aspect of his administration, that is completely transparent — but why he believes it is necessary to so blatantly pander to voters so close to Election Day, and why he is pursuing it so aggressively. After all, if the polling is accurate, Justice has a commanding lead over Democrat Glenn Elliott.
At his virtual briefing Thursday, Justice said with a sense of arrogance and entitlement that he won’t debate Elliott because, in his mind, “the race is over.â€
So why is he is pushing for a big pre-election tax cut if the Senate race is locked up? I never thought I would write this, but it may be that Justice knows something the rest of us don’t. More on that in a moment.
Surely, there is no compelling need to pass the tax cut now. No Fortune 500 company, for instance, has said it will locate a major facility in the state, but only if the tax cut is enacted prior to the start of the 2025 tax year.
Not even Justice has claimed that the additional 5% cut, which would bring the total reduction in income tax rates to 30%, would mark the tipping point where businesses and individuals would begin pouring into the state, something he evidently believes total elimination of the tax would do.
Both major party candidates for governor have expressed their concerns about having a lame duck governor take up such significant legislation in the waning days of his term, potentially leaving whoever wins the election having to deal with the ramifications of the lost tax revenue.
Legislative leaders have also been unenthusiastic about the tax cut, considering that under the formula in the 2023 law to phase out the income tax over time, a 4% reduction already will kick in Jan. 1.
The perpetually unpleasant Senate Finance Chairman Eric Tarr, R-Putnam, has said he will consider Justice’s proposal only if the governor can show where he would cut the proportionate $110 million out of the state budget.
Which is more than a bit heartless considering that a series of “flat†state budgets have effectively cut state agencies’ spending power by nearly $500 million this year, compared to fiscal 2018-19, resulting in multiple budget crises that are reflected daily in headlines in this and other media outlets.
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As for the why of the urgency of doing a tax cut now, I don’t presume to understand what goes on in Big Jim’s cranium, but the most plausible explanation is that he wants the tax cut (or at least credit for attempting to provide the tax cut) to offset what he may see as a looming October surprise.
Given the tenuous state of his various private business interests, it’s conceivable the October surprise could come in the form of more bad news involving one or more of his businesses.
Just last week, the state Tax Division filed a new tax lien against Justice’s Greenbrier resort for $403,647 in December 2023 sales taxes that were collected but were never remitted to the state.
If you’re scoring at home, that amounts to a total of nine tax liens against the resort for a total of $4,442,699 of un-remitted taxes collected from June through December 2023, with the first seven liens filed in February.
Three liens totaling $1,286,155 have been withdrawn, presumably because they were paid off, but with the two new liens filed for un-remitted November and December taxes totaling $921,653. In other words, the Justices are just barely paying off old liens faster than new liens are being filed against them — and the pattern of not remitting taxes to the state appears to be ongoing.
This after Justice told the media in April that a payment plan had been worked out with the Tax Division and that the resort was current in its payments, claiming, “All’s good in the neighborhood there.†Either like Rick coming to Casablanca for the waters, Justice was misinformed, or he’s lying.
As noted, it’s one thing for The Greenbrier to not have enough cash to pay property taxes (which, as of the start of the special session, will total $1,348,385 in unpaid taxes and penalties for the hotel alone), and quite another to collect sales taxes on behalf of the state, and then intentionally divert that money for other purposes. In some circles, that would be called theft.
Under state law, businesses have to stay in good standing with the state Tax Division in order to maintain state licenses. How The Greenbrier has been able to retain its liquor and casino licenses under the circumstances is certainly open to scrutiny.
I’ve talked to several attendees of the state Chamber of Commerce’s annual Business Summit at The Greenbrier in August, and they spoke about the obvious signs of deferred maintenance, the under-stocked gift shops, and a notable decline in general quality, all indicators of a failing enterprise.
And, of course, under the agreement with Beltway Capital to avert the Aug. 27 foreclosure auction of The Greenbrier, the Justices have until Oct. 24 to pay the agreed-to settlement amount in full.
We still don’t know if and how Justice secured the funding to pay off the loan debt, which Beltway Capital says is $40.3 million, which Justice said has been paid down to $9.4 million, or why the due date for the final payment falls two months after the announced agreement to avert the foreclosure auction.
We still don’t know who is loaning the money to Justice, who has been known to do business with the Russians and the Saudis. Revealing the identity of the lender could be a bombshell in itself.
At any rate, it sure seems as if the hoopla over his proposed tax cut is intended as a distraction to divert attention from whatever October surprise Justice thinks may be coming.
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Over my many years covering the statehouse, this will be the closest special session to Election Day ever called by a lame duck governor.
In 1996, Gaston Caperton called a special session on Oct. 15, taking up six supplemental appropriation or fund transfer bills, as well as a bill to create a parent corporation for WVU Hospitals. None of those bills even registered with voters, let alone influenced them to vote for any particular candidate.
It is important to note that, of the four other lame duck governors I’ve covered, none were running for public office their lame duck year, unlike Justice.
Of the four governors I’ve covered who were running for reelection (Caperton in 1992, Cecil Underwood in 2000, Joe Manchin in 2008, and Earl Ray Tomblin in 2012), Manchin called the special session that fell closest to Election Day, and that was on June 24 — long before anyone was giving much thought to the election.
More importantly, none of the governors pandered to voters by proposing a big election year tax cut to boost their candidacies.
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Finally, I recently read “Truman,†the biography of President Harry S. Truman by David McCullough, and couldn’t help but see parallels to President Joe Biden.
Like Biden this year, Truman decided not to seek reelection in 1952 (he would have been the last president allowed to run for a third term under the 22nd Amendment), in part because of low approval ratings.
That was despite what McCullough described as unparalleled gains in income, standard of living, education and housing during Truman’s term. During his tenure, America added 11 million jobs, and unemployment had “all but disappeared.â€
Farm income, corporate income and dividends were at all-time highs, eight million veterans had gone to college under the G.I. Bill, Social Security benefits doubled, and the minimum wage was increased.
Truman also oversaw important advances in civil rights for the time, including the integration of the military.
He avoided what many feared would be a post-war economic collapse, much as Biden has been able to avoid what many economists thought would be a post-pandemic economic recession.
Truman’s approval ratings were hurt by severe post-war inflation, just as Biden’s ratings have been hurt by post-pandemic inflation — inflation that was a mere fraction of the 18% post-World War II rate, and was part of a global phenomenon.
(I’m not an economist, but we can see a pattern here: In times of pent-up demand — either because of wartime rationing and travel restrictions, or because of pandemic-driven supply chain breakdowns and inability to travel — consumer demand initially outpaces supply, resulting in inflation. Of course, corporate greed undoubtedly exacerbates those inflation numbers.)
Though he left office as one of the more unpopular presidents in history, the rehabilitation of Truman’s image began almost immediately, and today, Truman consistently ranks among the nation’s best presidents.
Given Biden’s many successes as president, and given that his magnanimous decision not to seek a second term ultimately may well save our democracy, one suspects that posterity will hold Biden in similar high esteem.
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