FISCAL NOTE
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
A New Program
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of the bill is to provide a nonrefundable earned income tax credit from the state personal income tax for taxpayers with qualifying children. The earned income tax credit is equal to 15% of the federal credit.
According to our interpretation, passage of this bill would reduce General Revenue Fund collections by up to $18.5 million per year beginning in Fiscal Year 2005-2006. The credit would equal 15 percent of the earned income credit claimed on taxpayer’s federal return. West Virginia credit amounts in excess of the taxpayer’s tax liability would be disregarded.
Additional administrative costs to the State Tax Department would be approximately $10,000 per year.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2005
Increase/Decrease
(use"-") |
2006
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
10,000 |
10,000 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
10,000 |
10,000 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-18,500,000 |
-18,500,000 |
Explanation of above estimates (including long-range effect):
This bill would create a nonrefundable earned income tax credit from the state personal income tax for taxpayers with qualifying children. The earned income tax credit is equal to 15% of the federal credit. The bill requires the Tax Commissioner to provide notice to eligible taxpayers regarding their eligibility for the credit and it also requires the Tax Commissioner to prepare a written report regarding the credit. Approximately 80,000 taxpayers would be eligible to claim the credit provided by this bill.
Additional administrative costs to the Tax Department would be approximately $10,000 per year. Computer programming, printing and postage costs would be incurred to alert taxpayers who may be eligible for the credit and to prepare the annual report of statistical information on the credit.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us