FISCAL NOTE
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Neither Program nor Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to provide a state tax credit for amounts paid for health insurance. The bill provides up to an eight thousand dollar tax credit for amounts paid for health insurance plans not backed by an employer or federal government.
In addition to limiting the credit to amounts paid for health insurance plans not backed by an employer or federal government, as indicated in the bill’s stated purpose, the credit would not be available for amounts paid for health insurance plans backed by state government. The credit would be available to offset the Personal Income Tax liability of qualifying taxpayers for tax years beginning on or after January 1, 2008.
Due to the wide variety of health insurance plan options available, the State Tax Department is unable to accurately estimate the potential General Revenue Fund reduction that would result from passage of this bill. However, since the US Census Bureau’s report entitled Income, Poverty, and Health Insurance Coverage in the United States: 2006 indicates that more than 9 percent of the US population had private insurance that was not employment-based, the potential revenue loss could be significant.
Assuming that all Personal Income Tax return claiming the proposed credit would be accepted as filed, additional administrative costs to the State Tax Department attributable to passage of this bill would be minimal. However, if any verification of the credit claim is required, the additional administrative costs could be significant.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2008
Increase/Decrease
(use"-") |
2009
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
Passage of this bill would create a state tax credit for amounts paid for health insurance. The bill provides up to an eight thousand dollar tax credit for amounts paid for health insurance plans not backed by an employer, state government, or federal government. The credit would be available to offset the Personal Income Tax liability of qualifying taxpayers for tax years beginning on or after January 1, 2008.
Due to the wide variety of health insurance plan options available, the State Tax Department is unable to accurately estimate the potential General Revenue Fund reduction that would result from passage of this bill. However, since the US Census Bureau’s report entitled Income, Poverty, and Health Insurance Coverage in the United States: 2006 indicates that more than 9 percent of the US population had private insurance that was not employment-based, the potential revenue loss could be significant.
Assuming that all Personal Income Tax return claiming the proposed credit would be accepted as filed, additional administrative costs to the State Tax Department attributable to passage of this bill would be minimal. However, if any verification of the credit claim is required, the additional administrative costs could be significant.
Memorandum
The stated purpose of this bill is to provide a state tax credit for amounts paid for health insurance. The bill provides up to an eight thousand dollar tax credit for amounts paid for health insurance plans not backed by an employer or federal government.
As written, the bill uses the term “health insurance plan” without providing a definition. Additionally, the proposed language allowing the credit “for all amounts paid for a health insurance plan” does not necessarily limit the credit to the amount paid by the taxpayer. That is, the proposal may be subject to a broader application than intended. Additionally, the credit may create an incentive for employers to drop their employees’ health care coverage, thus leaving it up to the State to subsidize their private coverage through the tax credit.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us