FISCAL NOTE

Date Requested: February 22, 2016
Time Requested: 03:47 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2805 Introduced HB4645
CBD Subject: Taxation


FUND(S):

General Revenue Fund, Temporary Assistance for Needy Families 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.
    
    The proposed bill would allow a West Virginia Earned Income Tax Credit (EITC) against the Personal Income Tax at a rate of 15 percent of the eligible federal EITC amount. If passed, the bill would allow the credit beginning in TY2017. Taxpayers who also qualify for the low-income family tax credit could claim both credits. Based on our interpretation, a West Virginia EITC would result in an annual loss of approximately $54.0 million per year beginning in FY2018. The proposed bill provides that the refund portion will be appropriated from the Temporary Assistance for Needy Families (TANF) Fund. Based on our interpretation, roughly $23 million in refunds may be covered by TANF funds, leaving less money for other programmatic purposes. The balance, roughly $31 million, would result in a loss from General Revenues.
    
    Additional administrative costs incurred by the State Tax Department are expected to be $107,250 in FY2018 and $70,250 for each year thereafter.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 70,250
Personal Services 0 0 70,250
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 -54,000,000


Explanation of above estimates (including long-range effect):


    The proposed bill would allow a West Virginia Earned Income Tax Credit (EITC) against the Personal Income Tax at a rate of 15 percent of the eligible federal EITC amount. If passed, the bill would allow the credit beginning in TY2017. Taxpayers who also qualify for the low-income family tax credit could claim both credits. Based on our interpretation, a West Virginia EITC would result in an annual loss of approximately $54.0 million per year beginning in FY2018. The proposed bill provides that the refund portion will be appropriated from the Temporary Assistance for Needy Families (TANF) Fund. Based on our interpretation, roughly $23 million in refunds may be covered by TANF funds, leaving less money for other programmatic purposes. The balance, roughly $31 million, would result in a loss from General Revenues.
    
    Additional administrative costs incurred by the State Tax Department are expected to be $107,250 in FY2018 and $70,250 for each year thereafter.
    



Memorandum


    



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov