FISCAL NOTE
Date Requested: February 10, 2017
Time Requested: 01:18 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1267 |
Introduced |
HB2326 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
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 provide an earned income tax credit against the personal income tax.
According to our interpretation, the proposed bill would allow an Earned Income Tax Credit equal to 15 percent of the federal Earned Income Tax Credit beginning in TY2018. The credit would be refundable to the extent that the amount of allowable credit exceeds the West Virginia Personal Income Tax liability for any given tax year. Taxpayers that also qualify for the Low-Income Family Tax Credit would be allowed to apply for both credits. This bill is expected to result in annual reductions of General Revenue Fund collections of approximately $55.4 million beginning in FY2019. Based on current information, it is anticipated that TANF funds may be sufficient to cover the refundable portion of the proposed credit in the near term. However, it is likely such funds will be insufficient to fund the refundable portion of the proposed tax credit indefinitely, placing a greater burden of the tax credit cost on State General Revenues over time.
The State Tax Department would incur additional administrative costs of $75,000 in FY2019 to make form changes in preparation of the provisions of this proposed bill. Only a portion of these costs would be needed for each year thereafter.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2017
Increase/Decrease
(use"-") |
2018
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
75,000 |
| Personal Services |
0 |
0 |
64,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
2,000 |
| Other |
0 |
0 |
9,000 |
| 2. Estimated Total Revenues |
0 |
0 |
-55,400,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the proposed bill would allow an Earned Income Tax Credit equal to 15 percent of the federal Earned Income Tax Credit beginning in TY2018. The credit would be refundable to the extent that the amount of allowable credit exceeds the West Virginia Personal Income Tax liability for any given tax year. Taxpayers that also qualify for the Low-Income Family Tax Credit would be allowed to apply for both credits. This bill is expected to result in annual reductions of General Revenue Fund collections of approximately $55.4 million beginning in FY2019. Based on current information, it is anticipated that TANF funds may be sufficient to cover the refundable portion of the proposed credit in the near term. However, it is likely such funds will be insufficient to fund the refundable portion of the proposed tax credit indefinitely, placing a greater burden of the tax credit cost on State General Revenues over time.
The State Tax Department would incur additional administrative costs of $75,000 in FY2019 to make form changes in preparation of the provisions of this proposed bill. Only a portion of these costs would be needed for each year thereafter.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov