Date Requested:January 20, 2011
Time Requested:03:34 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R1788 Introduced HB2671
CBD Subject: CREDIT FOR CERTAIN HEALTH INSURANCE POLICIES
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 tax credit of three and one-forth percent against the net corporate income tax for qualified health insurance policies provided by corporate employers to employees. The tax credit would increase by one-forth percent yearly until reaching a maximum of six percent.
    
    The State Tax Department does not possess the 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
2011
Increase/Decrease
(use"-")
2012
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 tax credit of 3 1/4% against the Corporation Net Income Tax for qualified health insurance policies provided by corporate employers to employees. The tax credit would increase by 1/4% yearly until reaching a maximum of 6%.
    
    The State Tax Department does not possess the 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:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to provide a tax credit of three and one-forth percent against the net corporate income tax for qualified health insurance policies provided by corporate employers to employees. The tax credit would increase by one-forth percent yearly until reaching a maximum of six percent.
    
    As written, the bill uses the term “qualified health insurance policies” without providing a definition. Additionally, the bill does not provide any guidance of how a “qualified health insurance policy” would be determined or verified. Also, there appears to be no 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.