The state has reviewed tax credit programs before, albeit on a spotty basis. According to the 2006 report of the West Virginia Tax Modernization Project, the state eliminated 10 ineffective tax credits, enacted three new ones, and updated three existing credit programs in 2002.
Still, tax credit programs need to be thoroughly evaluated and their results reported to the Legislature every year. Tax credit programs that work can be kept, and those that are ineffective should be terminated or revised.
Ideally, the state needs an effective and fair system of taxation that stimulates business investment while also bringing in adequate revenue without the need for specific credits that favor one industry or another. Such a system may bring the state's ranking on Forbes "Best States for Business" list up from its current 45th.
Tax credits can be effective, particularly when West Virginia is competing for business with other states, or when lawmakers see the need to support a fledgling industry or a new technology that holds much in-state promise.
Still, they should be used on a limited basis and should be terminated when they are not effective.
A tax credit needs to be a tool to spur investment and boost economic activity, not simply a tax giveaway.