Date Requested: February 04, 2015
Time Requested: 01:49 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2717 Introduced HB2587
CBD Subject: Tax


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 new small businesses 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, 2015, through June 2024.
    
    The bill allows a credit of up to $2,500 for each new full-time employee to any taxpayer who is based in and operates entirely within West Virginia and has less than 100 employees. The amount of credit may not exceed 50 percent of the wages paid or $2,500, whichever is less. The tax credit would be allowed against the Corporation Net Income Tax and Personal Income Tax liabilities. We cannot estimate the revenue impact of this bill because we do not know how many small businesses would qualify for this credit.
    
    Additional administrative costs incurred by the State Tax Department would be $55,000 for FY2016 and $35,000 in subsequent fiscal years.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2015
Increase/Decrease
(use"-")
2016
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 55,000 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 10,000 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


    The bill allows a credit of up to $2,500 for each new full-time employee to any taxpayer who is based in and operates entirely within West Virginia and has less than 100 employees. The amount of credit may not exceed 50 percent of the wages paid or $2,500, whichever is less. The tax credit would be allowed against the Corporation Net Income Tax and Personal Income Tax liabilities. We cannot estimate the revenue impact of this bill because we do not know how many small businesses would qualify for this credit.
    
    Additional administrative costs incurred by the State Tax Department would be $55,000 for FY2016 and $35,000 in subsequent fiscal years.
    
    



Memorandum


    The stated purpose of this bill is to create tax credits for new small businesses 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, 2015, through June 2024.
    
    The bill might face legal challenges because of possible violations of the Privileges and Immunities Clause or the Commerce Clause of the United States Constitution.
    
    The note and title of the bill refer to tax credits for new small businesses created in the State. The language in the body of the bill, however, does not limit the credit to new small businesses. Instead it focuses on newly hired employees. Further, the language describing the eligible employer as “operating entirely with this state” is vague.
    
    It is unclear if the tax credit could be claimed only once for each new employee, or for each year through June 2024.
    
    



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov