- Associated Press - Friday, May 5, 2017

CHARLESTON, W.Va. (AP) - West Virginia’s House voted Friday to reject Senate-passed legislation to cut state income taxes and raise sales and corporate income taxes, despite other changes meant to soften its opposition.

The Senate bill, also backed by Gov. Jim Justice, would raise sales taxes from 6 to 7 percent and eliminate the exemption for cellphone services, helping close the state’s budget deficit. It would raise the corporate tax from 6.5 to 7.5 percent.

“Obviously the sales tax increase is problematic. And the corporate net income tax increase is problematic,” House Speaker Tim Armstead said. “There are some concerns with the way the income tax reductions are structured. … We want to put all this on the table and discuss it.”

The proposed income tax cut next year would set a top rate of 6 percent for incomes above $300,000. Lower rates would also drop. The top rate now is 6.5 percent for incomes above $60,000.

The bill was revised after the House first voted it down Thursday night. The new version omitted an income tax surcharge on top earners and tiered tax rates on oil and natural gas production - lower rates when the market is down and higher rates when it’s booming. It’s currently taxed at 5 percent.

The Republican-controlled House voted 59-34 rejecting the latest bill. The Republican controlled Senate voted 32-1 earlier Friday for it.

“We can control what we do in this body,” Senate President Mitch Carmichael said. “And we’re providing a tax cut for working West Virginia families.”

Lawmakers in both houses are recessing until May 15. Armstead said he’s hoping to negotiate in the interim with Carmichael and Justice.

The Democratic governor said later that he has been negotiating and modifying his proposals for months, while the House Republican leadership hasn’t budged. There’s “no chance” the people of West Virginia aren’t with him and the bipartisan Senate legislation blocked by “a small network” of individuals opposing it, he said.

Justice said he’s open to talking. He also said he won’t stand idly by and allow West Virginians to be hurt by deep budget cuts in services for the poor and higher education that Republican lawmakers approved in a budget for the coming year he vetoed last month.

The tax bill would help reduce those cuts. The new fiscal year begins July 1.

Ted Boettner, executive director of the West Virginia Center on Budget and Policy, said the tax revisions would hurt poorer people, who have to spend their income on essentials. “You’re forcing low- and moderate-income families to pay for tax cuts for the wealthy,” he said.

Justice disagreed. “We really tried to make a concerted effort to try as hard as we possibly could to help the lowest-income brackets the very most,” he said.

The lowest state income tax rate in the legislation would drop from 3 percent for those earning up to $10,000 down to 1.85 percent for those earning up to $20,000.

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