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 add new language to West Virginia Code relating to tax rates on bonuses earned, and increases on salary and providing credits for these.
The State Tax Department does not have sufficient data to estimate the potential revenue loss associated with this proposal. The bill would reduce the Personal Income Tax rate on bonus payments to half of the regular rate, beginning with Tax Year 2015. In addition, beginning with Tax Year 2015, taxpayers would receive a refund in an amount equal to the amount of tax paid on any amount of salary above that earned in the previous year for which they were subject to Personal Income Tax in West Virginia. The bill also allows a credit for any corporation which is a West Virginia employer who pays an increase in the salary of any of its employees over the amount paid in the prior tax year, beginning with the tax year beginning after December 31, 2015. The tax credit is equal to the amount of income tax paid by that employee on the increased salary.
Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $101,000 in FY2016 and roughly $70,000 each year thereafter.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2014
Increase/Decrease
(use"-") |
2015
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
101,000 |
| Personal Services |
0 |
0 |
70,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
21,000 |
| Other |
0 |
0 |
10,000 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The State Tax Department does not have sufficient data to estimate the potential revenue loss associated with this proposal. The bill would reduce the Personal Income Tax rate on bonus payments to half of the regular rate, beginning with Tax Year 2015. In addition, beginning with Tax Year 2015, taxpayers would receive a refund in an amount equal to the amount of tax paid on any amount of salary above that earned in the previous year for which they were subject to Personal Income Tax in West Virginia. The bill also allows a credit for any corporation which is a West Virginia employer who pays an increase in the salary of any of its employees over the amount paid in the prior tax year, beginning with the tax year beginning after December 31, 2015. The tax credit is equal to the amount of income tax paid by that employee on the increased salary.
Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $101,000 in FY2016 and roughly $70,000 each year thereafter. The additional costs would be for two additional personnel (one to review, audit and track Personal Income Tax returns claiming the benefits provided by the bill and one to review, audit and track Corporation Net Income Tax returns claiming the benefits provided by the bill), equipment for the additional personnel and testing of computer programs.
Memorandum
The stated purpose of this bill is add new language to West Virginia Code relating to tax rates on bonuses earned, and increases on salary and providing credits for these.
This bill, as written, would mean that two taxpayers with the same earned income could be taxed at different rates. A taxpayer whose earned income includes a bonus payment or salary increase would pay less tax than another taxpayer with the same earned income that does not include a bonus payment or salary increase. This could arguably be contrary to taxation being equal and uniform throughout the State in Article X, Section 1 of the West Virginia Constitution.
The bill authorizes a Personal Income Tax “refund” in an amount equal to the amount of tax paid on any amount of salary above that earned in the previous year for which they were subject to Personal Income Tax in West Virginia. This should probably be a credit for that amount.
Person submitting Fiscal Note: Mark B. Muchow
Email Address: Roger.D.Cox