FISCAL NOTE
FUND(S):
General Revenue Fund, local governments
Sources of Revenue:
General Fund,Other Fund local governments
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 exempt start-up businesses founded by West Virginia college or university graduates from various state, county and municipal taxes for the first three years of operation.
The bill provides an exemption from business-related Personal Income Tax, capital gains tax, or any municipal, county or state business and occupation tax for any resident who graduates from a state sanctioned institution of higher education and who engages in any lawful business activity as a sole proprietorship. The bill also provides an exemption from business related corporate, partnership or limited liability company taxes, capital gains tax, or any municipal, county or state business and occupation tax for any resident who graduates from a state sanctioned institution of higher education and who is a stockholder and officer of a corporation, or general partner in a partnership or partner in a limited liability company. The exemption is available for the first three years the stockholder or officer is involved with the business activity. Due to the lack of available data on the taxes attributable to such businesses, we are unable to accurately estimate the loss to the General Revenue Fund or to local governments. The provisions of this bill would first become effective for tax years beginning on or after January 1, 2006 due to the lack of an internal effective date.
Additional administrative costs to the State Tax Department and local governments, attributable to the collection and processing of information necessary for this tax exemption program, could be significant.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2005
Increase/Decrease
(use"-") |
2006
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):
This bill provides an exemption from business-related Personal Income Tax, capital gains tax, or any municipal, county or state business and occupation tax for any resident who graduates from a state sanctioned institution of higher education and who engages in any lawful business activity as a sole proprietorship. The bill also provides an exemption from business related corporate, partnership or limited liability company taxes, capital gains tax, or any municipal, county or state business and occupation tax for any resident who graduates from a state sanctioned institution of higher education and who is a stockholder and officer of a corporation, or general partner in a partnership or partner in a limited liability company. The exemption is available for the first three years the stockholder or officer is involved with the business activity. Due to the lack of available data on the taxes attributable to such businesses, we are unable to accurately estimate the loss to the General Revenue Fund or to local governments. The provisions of this bill would first become effective for tax years beginning on or after January 1, 2006 due to the lack of an internal effective date.
Additional administrative costs to the Tax Department and local governments, attributable to the collection and processing of information necessary for this tax exemption program, could be significant.
Memorandum
The stated purpose of this bill is to exempt start-up businesses founded by West Virginia college or university graduates from various state, county and municipal taxes for the first three years of operation.
The bill, as written, contains terms such as “residential graduate,” “state sanctioned institution of higher education,” “partner in a limited liability company,” “capital gains tax,” “business related corporate, partnership or limited liability company taxes” and some others that are not adequately defined.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us