FISCAL NOTE
Date Requested: February 03, 2022
Time Requested: 04:15 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2107 |
Introduced |
HB4552 |
|
|---|
| CBD Subject: |
Professions and Occupations |
|---|
|
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 relates to a tax credit for certain employers who employ West Virginia community and technical college graduates. The bill provides for the application of the credit to corporation net income taxes and sets forth a limitation.
This bill would allow a one-time $500 credit for any taxpayer with 50 or fewer employees against Corporation Net Income Tax. This bill would be effective for tax years beginning on and after January 1, 2023. According to our research, there are roughly 40,000 private sector businesses in West Virginia with 50 or fewer employees. Of those eligible businesses, roughly 2,000 are C-Corporations. The most commonly earned degrees from West Virginia’s community and technical colleges are in the fields of health sciences, business, information technology, engineering, and technical studies. Current data indicates roughly 2,800 new graduates from in-state community and technical colleges are initially employed in West Virginia each year. If a $500 tax credit was claimed for each of these individuals, the maximum cost would be $1.4 million per year. Not all of these qualified graduates would work for employers subject to this credit. Based on our interpretation, the proposed legislation would likely decrease General Revenue Fund collections by less than $600,000 per year beginning in FY2024.
Additional administrative costs incurred by the State Tax Department would be $20,000 in FY2023.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2022
Increase/Decrease
(use"-") |
2023
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
20,000 |
0 |
| Personal Services |
0 |
5,000 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
15,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
-600,000 |
Explanation of above estimates (including long-range effect):
This bill would allow a one-time $500 credit for any taxpayer with 50 or fewer employees against Corporation Net Income Tax. This bill would be effective for tax years beginning on and after January 1, 2023. According to our research, there are roughly 40,000 private sector businesses in West Virginia with 50 or fewer employees. Of those eligible businesses, roughly 2,000 are C-Corporations. The most commonly earned degrees from West Virginia’s community and technical colleges are in the fields of health sciences, business, information technology, engineering, and technical studies. Current data indicates roughly 2,800 new graduates from in-state community and technical colleges are initially employed in West Virginia each year. If a $500 tax credit was claimed for each of these individuals, the maximum cost would be $1.4 million per year. Not all of these qualified graduates would work for employers subject to this credit. Based on our interpretation, the proposed legislation would likely decrease General Revenue Fund collections by less than $600,000 per year beginning in FY2024.
Additional administrative costs incurred by the State Tax Department would be $20,000 in FY2023.
Memorandum
The stated purpose of this bill relates to a tax credit for certain employers who employ West Virginia community and technical college graduates. The bill provides for the application of the credit to corporation net income taxes and sets forth a limitation.
Clarification is needed for proper administration. For example, what does “employee” mean? Full-time, part-time, temporary? How long does the employee have to work there? Does “one-time” mean per employee or per employer? If it means per employee, what if the employee leaves employment and then returns? Is there a threshold for wages paid? Is there a degree threshold? What is a “West Virginia community and technical college?” Must the school be accredited by the State? Are there any requirements that the employer or employee must function in a specific industrial code? Must the employee be employed in his or her field of certification?
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov