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 low-income workers with a refundable state tax credit based on the federal Earned Income Tax Credits. Current law provides for a nonrefundable tax credit.
As written, this bill would create a tax credit equal to 20 percent of the federal earned income tax credit that can be used against the Personal Income Tax. The bill provides that the credit, effective for tax years beginning on or after January 1, 2010, is allowed to offset the Personal Income Tax. Also, the bill provides that any credit in excess of tax owed, is to be paid to the taxpayer. According to our interpretation that the proposed credit is in addition to the Family Tax Credit provided by W. Va. Code §11-21-22(a), (b) and (c), passage of this bill would result in a reduction in the General Revenue Fund of roughly $64 million in Fiscal Year 2011 and a reduction of roughly $60 million per year thereafter. The larger reduction in FY2011 is attributable to the temporary increase in the federal Earned Income Tax Credit for tax years 2009 and 2010 resulting from passage of the American Recovery and Reinvestment Act of 2009. The bill also requires the State Tax Commissioner to make efforts every year to alert taxpayers who may be eligible for the credit.
There would be no additional administrative costs to the State Tax Department associated with passage of this bill.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2010
Increase/Decrease
(use"-") |
2011
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 |
-60,000,000 |
-60,000,000 |
Explanation of above estimates (including long-range effect):
As written, this bill would create a tax credit equal to 20 percent of the federal earned income tax credit that can be used against the Personal Income Tax. The bill provides that the credit, effective for tax years beginning on or after January 1, 2010, is allowed to offset the Personal Income Tax. Also, the bill provides that any credit in excess of tax owed, is to be paid to the taxpayer. According to our interpretation that the proposed credit is in addition to the Family Tax Credit provided by W. Va. Code §11-21-22(a), (b) and (c), passage of this bill would result in a reduction in the General Revenue Fund of roughly $64 million in Fiscal Year 2011 and a reduction of roughly $60 million per year thereafter. The larger reduction in FY2011 is attributable to the temporary increase in the federal Earned Income Tax Credit for tax years 2009 and 2010 resulting from passage of the American Recovery and Reinvestment Act of 2009. The bill also requires the State Tax Commissioner to make efforts every year to alert taxpayers who may be eligible for the credit.
In addition to the estimated 80,000 taxpayers eligible for the existing Family Tax Credit, passage of the bill would provide additional tax relief benefits to roughly another 60,000 taxpayers.
There would be no additional administrative costs to the State Tax Department associated with passage of this bill.
Memorandum
The stated purpose of this bill is to provide low-income workers with a refundable state tax credit based on the federal Earned Income Tax Credits. Current law provides for a nonrefundable tax credit.
Our interpretation of the changes proposed by this bill is that the credit in proposed W. Va. Code §11-21-22(d) is in addition to the Family Tax Credit provided by W. Va. Code §11-21-22(a), (b) and ( c). If the proposal was intended to replace the existing credit, language to that effect may be necessary.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov