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 create the West Virginia Jobs Incentive Act by providing tax refunds for taxes paid on increases of salary and tax credits for certain salary increases. The State Tax Department does not have sufficient data to estimate the potential revenue loss associated with this proposal. Under the provisions of this bill, beginning in Tax Year 2015, individuals who began employment in West Virginia after January 1, 2014, 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 or the full amount of tax paid on any salary earned in the current tax year, whichever is greater. In addition, any individual who receives income from a pass-through entity which paid an increase in the salary of any of its employees is entitled to a credit against Personal Income Tax owed of $2,500 for each newly hired employee. 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. Under the provisions of this bill, beginning in Tax Year 2015, individuals who began employment in West Virginia after January 1, 2014, 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 or the full amount of tax paid on any salary earned in the current tax year, whichever is greater. In addition, any individual who receives income from a pass-through entity which paid an increase in the salary of any of its employees is entitled to a credit against Personal Income Tax owed of $2,500 for each newly hired employee. 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 create the West Virginia Jobs Incentive Act by providing tax refunds for taxes paid on increases of salary and tax credits for certain salary increases. 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@wv.gov