Date Requested:February 16, 2009
Time Requested:04:55 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2009R1204 Introduced HB2148
CBD Subject: CORPORATE TAX CREDIT FOR HEALTH INSURANCE
FUND(S)
General Revenue Fund
Sources of Revenue
General Fund
Legislation creates:
A New Program

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 corporate net income tax credit of $2,000 per employee, per year, against the net corporate income tax for qualified health insurance policies provided by corporate employers to employees. The maximum yearly credit for eligible corporations would total $30,000.
    
    The State Tax Department does not possess the necessary information to accurately estimate the potential revenue impact of this proposal. However, the revenue reduction would likely be significant.
    
    Assuming that all Corporation Net Income Tax returns claiming the new credit would be accepted as filed, additional administrative costs for the State Tax Department would be minimal.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2009
Increase/Decrease
(use"-")
2010
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
3. Explanation of above estimates (including long-range effect):
    Passage of this bill would provide a corporate net income tax credit of $2,000 per employee, per year, against the net corporate income tax for qualified health insurance policies provided by corporate employers to employees. The maximum yearly credit for eligible corporations would total $30,000.
    
    The State Tax Department does not possess the necessary information to accurately estimate the potential revenue impact of this proposal. However, the revenue reduction would likely be significant.
    
    Assuming that all Corporation Net Income Tax returns claiming the new credit would be accepted as filed, additional administrative costs for the State Tax Department would be minimal.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to provide a corporate net income tax credit of $2,000 per employee, per year, against the net corporate income tax for qualified health insurance policies provided by corporate employers to employees. The maximum yearly credit for eligible corporations would total $30,000.
    
    As written, the bill does not provided definitions of key terms, including “qualified health insurance policy.” Also, there does not appear to be any restriction as to residency of the corporation’s employee. Thus, a corporate employer who has tax nexus with West Virginia, but does not have employees located in the state would benefit from the tax credit, despite not providing “qualified health insurance policies” to West Virginia residents. Additionally, there is no provision that a corporation must offer all of their employees a qualified health insurance policy. It is conceivable that a corporation could offer a few employees a qualified health insurance policy and then claim the credit for a larger number of employees.