Date Requested:January 24, 2014
Time Requested:02:14 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2014R1762 Introduced HB4334
CBD Subject: SMALL BUSINESS ECONOMIC IMPACT TAX CREDIT
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 create tax credits for small business economic impact in order to assist and encourage the growth of small business owners in the State of West Virginia, as well as promoting job growth from within this state by hiring residents of the state, for those tax years beginning on or after January 1, 2014 through June 2016.
    
     As written, this bill would allow businesses based in West Virginia and operating entirely within West Virginia and employing less than fifty employees a tax credit for each new hired employee. The bill requires qualifying new employees to be full-time residents of West Virginia and to be employed on a full-time basis (which the bill indicates is 32 hours or more per week). The tax credit allowable per new hired employee would be equal to the smaller of $2,500, or 50 percent of the actual wages paid in the tax year. And, the credit would be available “during each of the calendar years of 2014 through June 2016.”
    
     The State Tax Department does not have sufficient information to accurately estimate how many new businesses would become eligible for the proposed tax credit. Thus, we are unable to estimate the potential revenue impact attributable to passage of this bill.
    
     Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $50,000 in FY2015, and roughly $35,000 each year thereafter.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2014
Increase/Decrease
(use"-")
2015
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 50,000 35,000
Personal Services 0 35,000 35,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 10,000 0
Other 0 5,000 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
     Passage of this bill would allow businesses based in West Virginia and operating entirely within West Virginia and employing less than fifty employees a tax credit for each new hired employee. The bill requires qualifying new employees to be full-time residents of West Virginia and to be employed on a full-time basis (which the bill indicates is 32 hours or more per week). The tax credit allowable per new hired employee would be equal to the smaller of $2,500, or 50 percent of the actual wages paid in the tax year. And, the credit would be available “during each of the calendar years of 2014 through June 2016.”
    
     The State Tax Department does not have sufficient information to accurately estimate how many new businesses would become eligible for the proposed tax credit. Thus, we are unable to estimate the potential revenue impact attributable to passage of this bill.
    
     Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $50,000 in FY2015, and roughly $35,000 each year thereafter.
    


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated purpose of this bill is to create tax credits for small business economic impact in order to assist and encourage the growth of small business owners in the State of West Virginia, as well as promoting job growth from within this state by hiring residents of the state, for those tax years beginning on or after January 1, 2014 through June 2016.
    
     As written, this bill would appear to limit the proposed tax credit to businesses based in West Virginia and operating entirely within West Virginia who hire full-time residents of West Virginia. The limitations may be in conflict with the privileges and immunities clause of the Federal Constitution, which states that the citizens of each state of the U.S. shall be entitled to all the privileges and immunities of the other states. Also, the limitation may be in conflict with the “dormant” Commerce Clause which prohibits states from passing legislation that improperly burdens or discriminates against interstate commerce.
    
     The bill states that the proposed tax credit would be available “during each of the calendar years of 2014 through June 2016.” As specified, the period over which the tax credit would be available could be subject to varying interpretations.