Rebuffed on earlier attempts to speed up the elimination of West Virginia's business franchise tax, Senate Republicans on Monday evening prevailed with an amendment to accelerate a reduction in state corporate net income taxes.

Senate Minority Leader Don Caruth successfully amended a Manchin administration bill intended to roll back the corporate net income tax.

The bill would have reduced the tax, currently at 8.75 percent, to 6.5 percent by 2014. Caruth's amendment would bring it to that level by 2012.

Caruth, R-Mercer, convinced Democratic colleagues that the Legislature should act now to reduce corporate taxes - arguing that the bulk of the Manchin administration's tax cut proposals take effect six to nine years in the future.

"What have we done this session? We have said, six years from now, we are going to reduce taxes," he argued.

Sen. Brooks McCabe, D-Kanawha, who has brokered the various tax reform bills in the Senate, argued that the tax reform package is a "delicate balancing act," and said changing one aspect of the package could hurt chances to pass comprehensive tax reform this session.

"It's hard to change one piece of the puzzle without having ripple effects," said McCabe, who said the effect in the 2008-09 budget year alone would be the loss of $40 million to $50 million in taxes.

Caruth argued that without the amendment, corporations could effectively see a tax increase in 2008-09, with the enactment of combined reporting legislation.

Combined reporting effectively will prevent corporations from redirecting profits made in West Virginia to out-of-state subsidiaries, a change Caruth said will bring in an additional $30 million a year in corporate tax collections.

McCabe argued unsuccessfully that current and proposed tax reductions actually would reduce taxes by a total of $140 million in the 2008-09 budget year, including another $24 million reduction in the sales tax on food.

Tax issues dominated the day in the Senate:

Rebuffed on earlier attempts to speed up the elimination of West Virginia's business franchise tax, Senate Republicans on Monday evening prevailed with an amendment to accelerate a reduction in state corporate net income taxes.

Senate Minority Leader Don Caruth successfully amended a Manchin administration bill intended to roll back the corporate net income tax.

The bill would have reduced the tax, currently at 8.75 percent, to 6.5 percent by 2014. Caruth's amendment would bring it to that level by 2012.

Caruth, R-Mercer, convinced Democratic colleagues that the Legislature should act now to reduce corporate taxes - arguing that the bulk of the Manchin administration's tax cut proposals take effect six to nine years in the future.

"What have we done this session? We have said, six years from now, we are going to reduce taxes," he argued.

Sen. Brooks McCabe, D-Kanawha, who has brokered the various tax reform bills in the Senate, argued that the tax reform package is a "delicate balancing act," and said changing one aspect of the package could hurt chances to pass comprehensive tax reform this session.

"It's hard to change one piece of the puzzle without having ripple effects," said McCabe, who said the effect in the 2008-09 budget year alone would be the loss of $40 million to $50 million in taxes.

Caruth argued that without the amendment, corporations could effectively see a tax increase in 2008-09, with the enactment of combined reporting legislation.

Combined reporting effectively will prevent corporations from redirecting profits made in West Virginia to out-of-state subsidiaries, a change Caruth said will bring in an additional $30 million a year in corporate tax collections.

McCabe argued unsuccessfully that current and proposed tax reductions actually would reduce taxes by a total of $140 million in the 2008-09 budget year, including another $24 million reduction in the sales tax on food.

Tax issues dominated the day in the Senate:

The amendment, offered by Caruth, clarifies that the constitutional amendment could not be extended to any other personal property tax collections.

"It's certainly one of those things we don't want to take away from the counties," said Caruth.

Last week, Kanawha County Commissioner Kent Carper sent senators a letter warning that the resolution theoretically could devastate tax collections in the counties, since personal property taxes are a major source of county revenue.

The Senate did not act on the bill Monday, but Unger said he will offer an amendment today to clarify that the freeze would be prospective.

In other words, seniors over 65 could not go back and freeze property tax rates retroactively to the year they turned 65, he said.

"It wasn't our intention to go back, if someone is 75 or 80," Unger said.

Manchin aides had raised concerns that, as originally proposed, Unger's amendment could cost $10 million a year in property tax collections.

To contact staff writer Phil Kabler, use e-mail or call 348-1220.