CHARLESTON, WV (WVNS) – Amendment 2 is a popular topic given its importance in the upcoming election on November 8, 2022.
Business leaders and local government officials differ greatly on how it should be voted. What is amendment 2, and why is it important?
Amendment 2, nicknamed the ‘Property Tax Modernization Amendment’ proposes to amend Article X of the West Virginia Constitution to exempt tangible personal property (machinery, equipment, and inventory) used for business activity and personal property tax on motor vehicles from ad valorem property taxes.
Amending the Tangible Property Tax will result in exemption of taxes on all personal property used for business activity and personal vehicle property taxes.
- A “yes” vote supports amending the West Virginia Constitution to authorize the state legislature to exempt personal property (machinery, equipment, and inventory) used for business activity and personal motor vehicle property tax from ad valorem property taxes.
- A “no” vote opposes amending the West Virginia Constitution to authorize the state legislature to exempt personal property (machinery, equipment, and inventory) used for business activity and personal motor vehicle property tax from ad valorem property taxes.
The West Virginia Manufacturer’s Association issued an impact statement: a report on how manufacturing in West Virginia is affected by the Tangible Personal Property (TPP) Tax. The findings in the impact report found that businesses that recently considered locations in West Virginia considered the TPP tax a competitive disadvantage when compared to other states. West Virginia Manufacturer’s Association President Rebecca McPhail spoke on the benefit of the amendment.
“The challenge that we have right now, because of the way these taxes are applied to our industry, specifically places us in the top 10 worst states for taxation on manufacturing… This is not just limited to manufacturing. This is a broader constitutional amendment that would allow the Legislature at some future date to address a number of types of personal property tax, including the taxation that affects our members — but also small business inventory as well as personal vehicles.”West Virginia Manufacturer’s Association President Rebecca McPhail
The full impact statement can be read here.
According to Ballotpedia 2018’s revenue from TPP taxes generated $523.9 million. Of that revenue, 65.3% was allocated to schools, 27.2% was allocated to counties, and 7.5% was allocated to municipalities.
This revenue is the basis for a large portion of opposition to Amendment 2. Jonathan Adler, of the West Virginia Association of Counties believes that the revenue has to been made up from another place even if the amendment is passed.
“I think counties do certainly support jobs [and] job creation. But if there’s no mechanism to replace the lost revenues for counties, then we’re kind of scratching our heads wondering exactly what that revenue replacement is going to be.”Jonathan Adler, West Virginia Association of Counties
Opponents of the amendment also worry about the potential for larger effects to the state’s constitution, the Governor among them. Governor Jim Justice just announced an elimination of the car tax in the state through the ‘Car and All Vehicles Property Tax Elimination and Protection of Local Government Act’
“The proponents of Amendment 2 claim that we must change our Constitution forever to eliminate the car tax. Not only is that untrue, it’s just plain deceptive. It can be done, and we have the way right here, without making a major amendment to our Constitution.”Governor Jim Justice (R-WV)
West Virginia Chamber President Steve Roberts reacted to Governor Justice’s Act, in favor of Amendment 2.
“West Virginia is currently sitting on a tremendous amount of money in the form of budget surpluses. This means one thing: the government is collecting far more money from taxpayers than it needs to run its operations, and it’s time to return some of that money to the taxpayers who can better spend it and stimulate the economy.”West Virginia Chamber President Steve Roberts
Amendment 2 is a hot-button topic in West Virginia right now, with plenty of legislators and business representatives taking sides. The Governor even stepped in with his own solution to the problem which can be enticing for opponents and supporters of amendment 2 alike. Regardless of which side you might be on, it’s important to know just how amendment 2 will affect West Virginia’s Constitution and tax laws.