Overview
This fall, West Virginians will vote on amending the state’s constitution to take property taxing authority away from local communities and give increased power to the state legislature, which is expected to pursue a major tax cut for mostly out-of-state businesses if the amendment passes.
Read the full issue brief.
Amendment Two, or the Property Tax Modernization Amendment, would amend the constitution to give the state legislature the authority to exempt business machinery and equipment, business inventory, and personal vehicles from property taxation, resulting in a severe loss of revenue for counties and local governments and marking a significant shift in power away from local governments and to state government.
While there is little evidence to support claims of the economic benefits of eliminating property taxes on businesses, doing so would hamper the ability of local governments and schools to provide vital services that do promote growth and benefit all West Virginians.
Key Findings
- Property taxes are primarily a local tax in West Virginia, with over two-thirds of property tax revenue funding local school districts.
- 40 percent of property tax revenue comes from voter-approved bond and excess levies.
- West Virginia has some of the lowest property tax rates in the country.
- Amendment Two would give the state legislature control over 27 percent of total property tax revenue, a total of $515 million. The legislature’s anticipated goal is to eliminate this portion of property tax revenue entirely by exempting new items from property taxation.
- Businesses – not individuals – would receive two-thirds of the proposed tax cuts under Amendment Two.
- If Amendment Two is passed and the legislature moves forward with exempting new items from property taxation, county governments would lose an estimated $138 million in revenue, municipal governments would lose an estimated $35 million, and school districts would lose an estimated $209 million, after adjusting for anticipated impacts to the school aid formula.
- Very little evidence exists to support claims that West Virginia’s property taxes are a significant barrier to economic growth. Instead, studies have shown that factors such as educational attainment, infrastructure, and quality of public services – all factors that are funded by property taxes – are more important to economic growth and attracting businesses than taxes.
