FISCAL NOTE
Date Requested: January 23, 2023
Time Requested: 04:13 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2669 |
Amendment |
SB438 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
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 provide for a nonrefundable $25,000 tax credit against state personal income taxes and encourage West Virginians to return to West Virginia to pursue employment opportunities.
The tax credit offered in this bill would be allowed for individuals who had been employed in West Virginia for at least ten years, then moved out of state for at least ten years, and then returned to the state on or after January 1, 2023. According to the most recently available Census data, West Virginia has experienced a loss of an average of approximately 2,000 residents to other states each year over the past ten years. Over a recent 10-year period, an average of more than 45,000 people moved to West Virginia each year and an average of more than 48,000 moved out of the state each year. Only a very small fraction of those moving to the state would qualify for the personal income tax cut. Any portion of the $25,000 personal income tax credit that is unused may be applied to a future tax year to which this credit applies. No carryback to a prior taxable year is allowed for any unused portion of the credit. The tax credit limit is significantly larger than the average tax liability of West Virginia residents. Given the limited available data concerning net migration to West Virginia, we cannot reasonably estimate the amount of revenue loss associated with this bill.
Additional administrative costs incurred by the Tax Department would be $10,000 in FY2024 and $5,000 in subsequent years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2023
Increase/Decrease
(use"-") |
2024
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
10,000 |
5,000 |
| Personal Services |
0 |
0 |
5,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
10,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The tax credit offered in this bill would be allowed for individuals who had been employed in West Virginia for at least ten years, then moved out of state for at least ten years, and then returned to the state on or after January 1, 2023. According to the most recently available Census data, West Virginia has experienced a loss of an average of approximately 2,000 residents to other states each year over the past ten years. Over a recent 10-year period, an average of more than 45,000 people moved to West Virginia each year and an average of more than 48,000 moved out of the state each year. Only a very small fraction of those moving to the state would qualify for the personal income tax cut. Any portion of the $25,000 personal income tax credit that is unused may be applied to a future tax year to which this credit applies. No carryback to a prior taxable year is allowed for any unused portion of the credit. The tax credit limit is significantly larger than the average tax liability of West Virginia residents. Given the limited available data concerning net migration to West Virginia, we cannot reasonably estimate the amount of revenue loss associated with this bill.
Additional administrative costs incurred by the Tax Department would be $10,000 in FY2024 and $5,000 in subsequent years.
Memorandum
The stated purpose of this bill is to provide for a nonrefundable $25,000 tax credit against state personal income taxes and encourage West Virginians to return to West Virginia to pursue employment opportunities.
The title presumes purposes that are not addressed in the bill’s text.
There is no requirement that the individual work again in West Virginia upon returning on or after January 1, 2023. It just requires that they reside in the State.
The amount of the credit is set at $25,000. Whatever amount of the credit is not used in any tax year may be carried forward to future tax years but may not be carried back to any tax year. The credit “may be claimed after December 31, 2023,” which should probably be interpreted to mean that it can first be claimed after that date, i.e., with the 2023 tax return that is due to be filed in 2024.
The bill provides that the credit “shall expire and not be authorized or applied for any taxable year after December 31, 2029.” It is not clear whether a credit that is earned prior to December 31, 2029 would still be available to be applied after December 31, 2029 (i.e., claimed on a tax form submitted in 2030 for the 2029 tax year), either initially or as a carry forward.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov