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 purpose of this bill is to expand the Military Incentive Program to include all economically disadvantaged veterans. According to our interpretation this bill would expand the definition of the employees eligible for an existing tax credit program. The tax credit would apply for each person or partnership or corporation which employs an economically disadvantaged veteran, or any disabled veteran, or an unemployed member of the West Virginia National Guard or a member of the reserve forces of the United States for a continuous period of one year. In the case of a person or partnership employing such individuals the tax credit provided would be applied against the employer’s Personal Income Tax liability. In the case of a corporation employing such individuals, the tax credit would be applied against the corporation’s Corporation Net Income Tax liability. The State Tax Department does not have sufficient data to accurately estimate the potential revenue impact of this expansion of an existing tax credit program. Assuming that all eligible individuals would be hired by businesses with a tax liability against which the Military Incentive Program Tax Credit could be applied, the potential annual reduction in revenue attributable to expansion of the program would be between $4.5 million and $5.5 million. However, past experience with this program suggests that actual use of this tax credit is always significantly lower than the potential use. The bill would provide tax credit in the amount of 30% of the first $5,000 in wages paid to each economically disadvantaged veteran employed. For employing each disabled veteran the tax credit allowed would be equal to the percentage of disability suffered by the veteran multiplied by the first $5,000 in wages paid by the employer. For employing each member of the West Virginia National Guard or member of the reserve forces of the United States, the amount of tax credit allowed will be 25% of the first $5,000 in wages paid by the employer. Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $10,000 per year.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2014 Increase/Decrease (use"-")	2015 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):

The purpose of this bill is to expand the Military Incentive Program to include all economically disadvantaged veterans. According to our interpretation this bill would expand the definition of the employees eligible for an existing tax credit program. The tax credit would apply for each person or partnership or corporation which employs an economically disadvantaged veteran, or any disabled veteran, or an unemployed member of the West Virginia National Guard or a member of the reserve forces of the United States for a continuous period of one year. In the case of person or partnership employing such individuals the tax credit provided would be applied against the employer’s Personal Income Tax liability. In the case of a corporation employing such individuals, the tax credit would be applied against the corporation’s Corporation Net Income Tax liability. The State Tax Department does not have sufficient data to accurately estimate the potential revenue impact of this expansion of an existing tax credit program. Assuming that all eligible individuals would be hired by businesses with a tax liability against which the Military Incentive Program Tax Credit could be applied, the potential annual reduction in revenue attributable to expansion of the program would be between $4.5 million and $5.5 million. However, past experience with this program suggests that actual use of this tax credit is always significantly lower than the potential use. The number of veterans seeking job placement assistance in West Virginia was roughly 6,500 in 2012. The bill would provide tax credit in the amount of 30% of the first $5,000 in wages paid to each economically disadvantaged veteran employed. For employing each disabled veteran the tax credit allowed would be equal to the percentage of disability suffered by the veteran multiplied by the first $5,000 in wages paid by the employer. For employing each member of the West Virginia National Guard or member of the reserve forces of the United States, the amount of tax credit allowed will be 25% of the first $5,000 in wages paid by the employer. Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $10,000 per year.

Memorandum

Person submitting Fiscal Note: Mark B. Muchow
Email Address: Roger.D.Cox@wv.gov