New Brief Highlights How Tax and Budget Cuts in the Wake of COVID-19 Will Slow WV’s Recovery and Harm Working Families

For Immediate Release: December 15, 2020
Contact: Renee Alves, 559-916-5939

Charleston, WV – With West Virginia still feeling the impacts of the COVID-19 pandemic recession, the state’s leaders face difficult choices in the upcoming legislative session. The choices legislators make will help determine whether or not the state will have a swift and equitable recovery with an economy that works for everyone.

Our newest issue brief, The Case Against Austerity: Why Protecting Investments in West Virginia Families and Communities is Key to COVID-19 Recovery, draws on available data, as well as the experiences of West Virginia and other states, to argue that tax cuts like those Governor Justice and legislative leaders have signaled they would like to implement actually impede economic recovery and disproportionately burden poor and working class families.

“Decades of research and West Virginia’s own experience show that cutting taxes will lead to budget cuts, which during a recession will delay the state’s recovery,” says Sean O’Leary, brief author and senior policy analyst at WVCBP. “West Virginia’s twin problems of looming deficits and stalling recovery are not a signal for more tax cuts. Instead, they call for the generation of new revenue to protect the economy-boosting jobs and investments that keep money flowing to workers, families, and communities.”

Key findings from the brief are as follows:

• Months into the COVID-19 pandemic recession, West Virginia is down tens of thousands of jobs and tens of millions in tax revenue.
• Even before the pandemic, West Virginia was facing structural revenue challenges and significant budget shortfalls in the years ahead.
• Experience shows that budget cuts will only slow down the state’s recovery, hurting families and making the recession worse.
• Experience also shows that more tax cuts will fail to produce growth, and in fact will lead to budget cuts that will further harm the economy.
• The pandemic recession has disproportionately impacted low-income workers, while high-income earners have nearly fully recovered.
• By abstaining from ineffective tax cuts, and instead raising the revenue necessary to prevent harmful budget cuts, West Virginia can keep money flowing to families and communities, and recover faster, benefiting residents and businesses.

Find the full issue brief here.