Paying for the Economic Stimulus

The ties between the federal and West Virginia tax systems could end up costing the state under the recently approved economic stimulus package, The Charleston Gazette reports.

The article cites the Center on Budget and Policy Priorities, a center-left think tank in Washington, D.C., which "has said West Virginia state revenues will drop by as much as $72 million."

"The stimulus plan contains an accelerated business depreciation provision and an expensing provision, both of which will increase federal deductions for corporations and businesses," the Gazette explains. "The state and federal tax codes basically follow the same rules, so any increase in federal deductions probably means less state revenue."

The center's in-state affiliate, the West Virginia Center on Budget and Policy, says "the package includes tax credits for businesses totaling roughly $50 billion that could cost West Virginia $74 million in lost revenue."

"State officials say the center's estimate is far too high, but they do agree the stimulus package could result in a loss of revenue, probably in the 2010 fiscal year," the article said. "Their current prediction is the following fiscal year, the stimulus package would leave the state about even in tax collections, but the 2010 fiscal year could be a loss of about $20 million."