FISCAL NOTE
Date Requested: February 23, 2021
Time Requested: 12:26 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2182 |
Introduced |
HB2640 |
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| CBD Subject: |
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FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to offer tax credit against either personal or corporate income taxes for hiring women or minorities into executive, administrative, or professional jobs.
According to our interpretation of this bill, a tax credit of $200 against Personal Income Tax or Corporation Net Income Tax would be granted to the business owners that hire female or minority employees or who promotes an existing woman or minority employee into an executive, administrative, or professional position in the business per the United States Fair Labor Standards Act. The female or minority employee would have to retain an executive, administrative, or professional position in the business for at least 12 months. This proposed tax credit can be applied to Corporation Net Income Tax and Personal Income Tax owed by the business over a two-year period following the period in which it was earned. This proposed credit would begin on July 1, 2021, and end on December 31, 2026. The Commissioner of Labor would certify a completed tax credit application from a business owner or executive and would issue certification acceptable to the State Tax Commissioner.
According to the US Census Bureau, as of July 1, 2019, 50.5 percent of the West Virginia population comprised of women, 3.6 percent were African American, 1.8 percent were two or more races, 1.7 percent were Hispanic, 0.8 percent were Asian, and 0.3 percent of the population were American Indian. Based on these percentages, approximately 150,000 people in West Virginia were classified as minorities and 910,000 people in the state were women. It would be difficult to estimate the number of West Virginia business owners who hire female or minority employees or who promote an existing woman or minority employee into an executive, administrative, or professional position. Further, many states who have women and minority job incentives do not have stand-alone credits, but rather incorporate these special incentives into existing business tax credits. Due to the lack of key definitions necessary to fully measure eligibility, we are not able to accurately determine the loss to the General Revenue Fund in FY2022 and thereafter.
Additional administrative costs incurred by the State Tax Department would be $61,000 in FY2022 and $45,000 thereafter.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2021
Increase/Decrease
(use"-") |
2022
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
61,000 |
45,000 |
| Personal Services |
0 |
45,000 |
45,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,000 |
0 |
| Other |
0 |
15,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation of this bill, a tax credit of $200 against Personal Income Tax or Corporation Net Income Tax would be granted to the business owners that hire female or minority employees or who promotes an existing woman or minority employee into an executive, administrative, or professional position in the business per the United States Fair Labor Standards Act. The female or minority employee would have to retain an executive, administrative, or professional position in the business for at least 12 months. This proposed tax credit can be applied to Corporation Net Income Tax and Personal Income Tax owed by the business over a two-year period following the period in which it was earned. This proposed credit would begin on July 1, 2021, and end on December 31, 2026. The Commissioner of Labor would certify a completed tax credit application from a business owner or executive and would issue certification acceptable to the State Tax Commissioner.
According to the US Census Bureau, as of July 1, 2019, 50.5 percent of the West Virginia population comprised of women, 3.6 percent were African American, 1.8 percent were two or more races, 1.7 percent were Hispanic, 0.8 percent were Asian, and 0.3 percent of the population were American Indian. Based on these percentages, approximately 150,000 people in West Virginia were classified as minorities and 910,000 people in the state were women. It would be difficult to estimate the number of West Virginia business owners who hire female or minority employees or who promote an existing woman or minority employee into an executive, administrative, or professional position. Further, many states who have women and minority job incentives do not have stand-alone credits, but rather incorporate these special incentives into existing business tax credits. Due to the lack of key definitions necessary to fully measure eligibility, we are not able to accurately determine the loss to the General Revenue Fund in FY2022 and thereafter.
Additional administrative costs incurred by the State Tax Department would be $61,000 in FY2022 and $45,000 thereafter.
Memorandum
The stated purpose of this bill is to offer tax credit against either personal or corporate income taxes for hiring women or minorities into executive, administrative, or professional jobs.
The bill is vague and will be difficult to administer. The bill does not define key terms such as “owner of a business”, “promote”, or “minority.”
The tax credit under Corporation Net Income Tax says that the company is entitled to $200 for each new hire or promotion. It does not seem to be limited to those employees located in West Virginia. For the personal income tax credit, it does not state that the credit is for each hire and, therefore, appears to be limited to $200, regardless of the number of persons hired.
The executive, administrative, and professional positions are defined in reference to the US Fair Labor Standards Act. What may be considered an executive, administrative, and professional position under federal law may change and, as a result, this bill may run into issues with State v. Grinstead, 157 W.Va. 1001, 206 S.E.2d 912 (1974), which provides that “[a]lthough statutes adopting laws or regulations of other states, the federal government, or any of its agencies, effective at the time of adoption, are valid, attempted adoption of future laws, rules or regulations of other states, or of the federal government, or of its agencies, is unconstitutional as an unlawful delegation of the legislative power.” Id. at Syl. Pt. 1.
The Commissioner of Labor is to certify whether the employee qualifies the business owner to receive a credit and is to send the certification to the Tax Commissioner. It is unclear how much will be certified by the Commissioner of Labor. The bill title does not mention that the tax credits terminate or that the Commissioner of Labor sends a certification.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov