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 enact the Twenty-First Century Tax Credit Act to encourage the development and use of emerging technologies to create good jobs and grow West Virginia’s economy.
As written, this bill would provide a tax credit to taxpayers who make investment resulting in the creation of at least 10 new jobs with a median compensation of at least $45,000. When the qualified investment is $0 to $1 million, the taxpayer would be exempt from the Business Franchise Tax and the Corporation Net Income Tax attributable to the taxpayer’s business activity in West Virginia for the tax year in which the new employees are first employed and the next four succeeding years. When the business is a partnership or other entity treated as a partnership, the member would be exempt from the Personal Income Tax on the member’s distributive share attributable to the business. Eligible businesses would also be exempt from the Consumers Sales and Service Tax and Use Tax on tangible personal property, other than motor fuel, and on services purchased during the same five-year period. An alternative credit calculation consisting of the product of the taxpayer’s qualified investment times the taxpayer’s new job percentage is available for taxpayers who do not meet the ten new jobs with investment under $1 million criteria. The State Tax Department does not have access to information on how many taxpayers would be potentially eligible for the credit or their estimated tax liability. Therefore, we are unable to accurately estimate the revenue impact of this bill. For certain industries (e.g. manufacturing), the provisions of this bill generally result in a tax credit with very similar provisions to the existing Economic Opportunity Tax Credit.
Additional administrative costs to the State Tax Department associated with passage of this bill would be minimal.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2009
Increase/Decrease
(use"-") |
2010
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):
As written, this bill would provide a tax credit to taxpayers who make investment resulting in the creation of at least 10 new jobs with a median compensation of at least $45,000. When the qualified investment is $0 to $1 million, the taxpayer would be exempt from the Business Franchise Tax and the Corporation Net Income Tax attributable to the taxpayer’s business activity in West Virginia for the tax year in which the new employees are first employed and the next four succeeding years. When the business is a partnership or other entity treated as a partnership, the member would be exempt from the Personal Income Tax on the member’s distributive share attributable to the business. Eligible businesses would also be exempt from the Consumers Sales and Service Tax and Use Tax on tangible personal property, other than motor fuel, and on services purchased during the same five-year period. An alternative credit calculation consisting of the product of the taxpayer’s qualified investment times the taxpayer’s new job percentage is available for taxpayers who do not meet the ten new jobs with investment under $1 million criteria. The State Tax Department does not have access to information on how many taxpayers would be potentially eligible for the credit or their estimated tax liability. Therefore, we are unable to accurately estimate the revenue impact of this bill. For certain industries (e.g. manufacturing), the provisions of this bill generally result in a tax credit with very similar provisions to the existing Economic Opportunity Tax Credit.
Additional administrative costs to the State Tax Department associated with passage of this bill would be minimal.
Memorandum
The stated purpose of this bill is to enact the Twenty-First Century Tax Credit Act to encourage the development and use of emerging technologies to create good jobs and grow West Virginia’s economy.
In proposed W. Va. Code §11-13Z-4(b), the second stanza begins with the term “provided” and refers only to eligible pass-through taxpayers, but the remaining stanza beginning with “The eligible business” seems to refer to any eligible taxpayer. Proposed W. Va. Code §11-13Z-8 provides that new jobs created for purposes of the credit must have median compensation of at least $45,000, but later states that any job falling below that amount fails to qualify. Given the normal definition of median, the language may lead to some confusion as to the appropriate interpretation. Numerous “Twenty-First Century” definitions fail to tie to the definition of eligible taxpayers or qualified investment.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us