If you or I go to Walmart or Pennys or CVS to buy toothpaste or socks or kitty litter, we pay sales tax on our purchases immediately on the spot. If we work for a wage or salary, income taxes, both state and federal, are taken out of our pay before it ever gets to us. And if we underestimate our income and therefore our tax liability, we get fined and ordered to make estimated payments in the future.
Then there are property taxes. Property taxes fund schools, law enforcement, parks, libraries and other necessary county and local services. Across West Virginia, services like these are chronically underfunded. Fayette County schools, for example, are in crisis because millions of dollars worth of maintenance has been deferred. As the schools literally crumble before our eyes, we end up focusing not on the quality of education, but simply with insuring that children are safe.
Unlike other taxes, property taxes are collected on a delayed basis. Taxes owed in one year are not due until a year or two later. This delay presents an opportunity for avoiding property taxes entirely. For example, a few years ago, an outfit called Royal Coal Co., owned by a Daniel Ludwig - who was then one of the richest men in the world - was operating in Fayette County. One day, Royal suddenly closed down and pulled out of the county, leaving abandoned mine lands and owing tens of thousands in property taxes.
This scenario has been repeated over and over in the state, particularly in the coalfields. Currently, coal companies are declaring bankruptcy with increasing frequency, thereby depriving counties of owed property taxes. The bankruptcy process voids obligations, whether they are union contracts negotiated in good faith, obligations to retirees, agreements to reclaim mined property or payment of property taxes. One coal company has used the bankruptcy process more than once in Fayette County, settling on paying just 30 cents on the dollar owed. Over time, this process has cost the state millions, perhaps billions.
The property tax collection system needs an overhaul. If we ordinary citizens fail to pay property tax on our cars, we can't register them and put them on the road. If we fail to play property tax on homes and lands, they can be put up for auction. According to the Supreme Court, corporations are citizens and, as such, should be expected to pay their taxes in a timely fashion. Particularly, those companies which extract resources and have a history of tax avoidance should be required to pay this year's taxes this year, or even this quarter's taxes this quarter.
Currently, a debate is raging on the role of taxation in creating prosperity. What is missing from that debate is a discussion about the need to collect taxes that are already owed. Fairness, as well as common sense, suggests that corporations, like citizens, should be expected to pay all the taxes they owe and not be allowed to laugh all the way to the bank while leaving the rest of us with an underfunded educational system, poor roads, contaminated lands and social turmoil.
Dr. John David, a retired WVU-Tech professor, is a Gazette-Mail contributing columnist. His wife, Jan Young, is a retired Tech counselor.