FISCAL NOTE
Date Requested: January 10, 2020
Time Requested: 10:31 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1278 |
Introduced |
82 |
|
|---|
| CBD Subject: |
Education (K12), 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 a credit against personal income tax for classroom teachers for nonreimbursed costs of supplies. The bill sets a maximum credit of $500.
The proposed bill would create a Personal Income Tax credit of up to $500 for classroom teachers employed by a public or private school for the purchase of supplementary education materials or professional development costs. However, the bill is silent on a number of other provisions, including but not limited to whether a qualifying teacher may teach in a public or private school, if the teacher must be a West Virginia resident, or if the teacher must teach in a West Virginia school. For the purpose of this analysis, we assume a qualifying teacher must teach in a West Virginia-based primary or secondary school and that teachers in either public or private settings would qualify. Based on our understanding, the revenue loss from this credit for classroom teachers would be $10.1 million per year beginning in FY2020.
The State Tax Department would incur $92,000 in additional administrative costs in FY2021 and $80,000 per year in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2019
Increase/Decrease
(use"-") |
2020
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
80,000 |
| Personal Services |
0 |
0 |
80,000 |
| 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 |
-10,100,000 |
Explanation of above estimates (including long-range effect):
The proposed bill would create a Personal Income Tax credit of up to $500 for classroom teachers employed by a public or private school for the purchase of supplementary education materials or professional development costs. However, the bill is silent on a number of other provisions, including but not limited to whether a qualifying teacher may teach in a public or private school, if the teacher must be a West Virginia resident, or if the teacher must teach in a West Virginia school. For the purpose of this analysis, we assume a qualifying teacher must teach in a West Virginia-based primary or secondary school and that teachers in either public or private settings would qualify. Based on our understanding, the revenue loss from this credit for classroom teachers would be $10.1 million per year beginning in FY2020.
The State Tax Department would incur $92,000 in additional administrative costs in FY2021 and $80,000 per year in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to provide a credit against personal income tax for classroom teachers for nonreimbursed costs of supplies. The bill sets a maximum credit of $500.This would result in a loss in State revenue of $10.1 million beginning in Tax Year 2021.
The bill is vague, it would be difficult for the Tax Department to verify money was spent on classroom supplies, how supplies were purchased (e.g. by the teacher out of his own funds, and if teacher was reimbursed).
As written, the proposed bill does not define several terms, including “classroom teachers” and “classroom supplies,” which would be necessary to properly administer such a tax credit. The proposed bill makes no distinction between public or private education and does not expressly allow or prohibit teachers in special circumstances that may qualify (e.g., teacher’s aides, those working in juvenile detention centers, and teachers providing services to homebound students).
Language of the proposed bill does not provide sufficient guidance as to residency or school location requirements. As written, the proposed bill does not appear to limit the tax credit to classroom teachers in this State. It is plausible that a West Virginia resident who teaches in a neighboring state or a non-resident teacher who has to file a Personal Income Tax return in West Virginia may qualify.
The bill implies, but does not explicitly state, that the tax credit is equal to the amount that the teacher spent on classroom supplies up to $500. Further, it would be extremely difficult for the Tax Department to verify that the money was spent on classroom supplies.
The bill is silent as to whether the tax credit is refundable or if it may be carried back to prior periods or forward to subsequent periods. The bill is also silent as to a specified rulemaking authority.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov