Editorial:  West Virginia Is Not Competitive

Companies can avoid a state tax simply by ignoring the entire state

Charleston Daily Mail, September 06, 2005

For years, state officials have swung for the fences in economic development. Instead of making the state more competitive for all businesses, state officials loaded up a few companies with incentives in the hope of knocking one out of the park.

The strikeouts were many as the state failed to lift West Virginia from 50th among the states in median household income.

In recent years, though, the state has tried to make itself more competitive by tackling thorny issues such as workers' compensation reform, medical malpractice reform and even tort reform. To their credit, the last two governors and most legislators have put politics aside in order to bring the state in line with the rest of the nation.

This has not resulted in overnight success but the ship of state is large and needs wide berth to swing. Long, sustainable success is what West Virginians desire. Once the underpinnings of competitiveness are put in place, the state's other advantages -- its people, its beauty and its location -- will take over to close the deal.

Now the Manchin administration is reviewing another area where the state is not competitive: corporate taxes. Brian Kastick knows taxes well, having served as Gov. Bob Wise's tax secretary and now as Gov. Joe Manchin's director of public policy.

Meeting with business leaders at The Greenbrier last week, Kastick said the state's corporate net income tax rate of 9 percent simply is not competitive with other states. The administration wants to make it competitive.

"It's something we have to look at," he said, because a change "would send a message."

Right now, companies can avoid that tax simply by locating in another state. And they do.

Kastick also is not enamored with the state's business franchise tax. He said it makes less sense in an age when intellectual property is increasingly the most important asset of companies.

In the Wise administration, he said, the business franchise tax cost the state two business prospects.

In his speech to the West Virginia Chamber of Commerce's annual Business Summit, Kastick delineated a change in attitude toward competitiveness.

"Rates are more important than tax credits," he said.

Precisely. Rather than try to pick winners, the state should level the playing field for all companies.