“One Big Beautiful Bill’s” Tax Provisions a Bad Deal for WV (Unless You’re Rich)
Proponents of the “One Big Beautiful Bill” (HR 1), including all four of West Virginia’s members of Congress, have repeatedly touted the tax provisions of the legislation as benefiting most or all West Virginia families. The WVCBP has already covered in detail how the SNAP and Medicaid provisions of HR 1 are particularly harmful for West Virginians and our broader economy, so it’s unsurprising that proponents have shied away from highlighting those provisions. But independent analyses find that many West Virginia households will see their taxes increase compared to what they are paying now, even before accounting for the harmful income impacts of sweeping cuts to Medicaid and SNAP. Moreover, the figures proponents tout as the “average” tax cuts for West Virginians are skewed by counting existing tax cuts as “new” and the massive tax breaks given to the state’s wealthiest households.
Congress did not have to craft their tax policy legislation in a way that overwhelmingly benefited the nation’s wealthiest households. An analysis from the Institute on Taxation and Economic Policy (ITEP) found that Congress could have extended the expiring 2017 Trump tax provisions for every household making less than $400,000, extended the expanded health insurance premium tax credits under the Affordable Care Act, and reinstated an expansion of the Child Tax Credit (CTC) that was in effect in 2021 all for less than half the cost of HR 1.
While proponents have also attempted to frame HR 1 as “pro-family”, an analysis by Third Way dispels that myth by calculating that the cuts impacting children will outweigh any tax benefits for children and will leave future generations significantly worse off.
ITEP’s analysis also found that in West Virginia:
HR 1 will raise taxes on average for the poorest 40 percent of households, primarily as a result of expiring tax credits that help pay for health coverage on the individual market. This worsens these households’ overall economic standing compared to prior policy even before impacts of SNAP and Medicaid cuts are factored in.
The median (middle income) West Virginia household will get a tax cut less than half the size of the “average” touted by bill supporters. Meanwhile, the wealthiest households will reap the biggest benefits, with two-thirds of the total benefit going to the wealthiest 20 percent of households.
The richest 1 percent in West Virginia get a tax cut 55 times larger than the median household in WV.
The richest 5 percent of West Virginians alone will benefit more than the entire bottom 80 percent of households combined.
For middle-income West Virginia households, any tax cuts will be quite small and, in most cases, will be completely outweighed by higher import taxes, or tariffs. For example, even before considering the tariffs, the poorest 20 percent will see an average tax increase of $50 compared to what they currently pay. The middle 20 percent will see an average tax cut of $270 annually, which is barely 10 percent of their expected household cost increase due to tariffs of $2,100 annually.
A new analysis finds that, by 2027, 99 percent of U.S. households will see their incomes lowered as a result of HR 1 and tariff policies. Only the top 1 percent will see their incomes increased.
West Virginia is among just 14 states with more than 30 percent of children who are ineligible for the full Child Tax Credit because their family income is not high enough to qualify for the full benefit. This represents 114,000 children left behind: 105,000 children previously ineligible for the full credit who see no gains under HR 1 and remain ineligible for the full credit plus roughly 9,000 children in moderate-income families newly ineligible for the full credit. While 35 percent of child in West Virginia are left out of the CTC currently, an estimated 93 percent benefited from the enhanced CTC that expired at the end of 2021.
