FISCAL NOTE
Date Requested: February 02, 2023
Time Requested: 05:28 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2724 |
Introduced |
SB283 |
|
|---|
| CBD Subject: |
Military and Veterans |
|---|
|
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 rename the act the “Military Incentive Program” and extend the program to all veterans.
Based on our interpretation, the legislation would expand the Military Incentive Program from a program designed as an incentive to hire certain qualified unemployed military to a program applying to all existing qualified employees including those employed more than one year and those seeking new employment. The program would include private sector employers who employ any eligible veterans, and members of the West Virginia National Guard or the reserve forces of the United States who are West Virginia residents. The tax credit can be applied against either the employer’s Personal Income Tax liability or Corporation Net Income Tax liability. The credit is not transferrable or refundable, and it must be used in the tax year in which it was earned. The credit would be available to the taxpayer for each qualifying employee for each tax year in which the employee was employed for a continuous period of one year. The maximum amount of credit that can be earned per employee per year is $1,500.
More than 30,000 Veterans, National Guard, and Reservists are employed by Private Sector employers in West Virginia. Combined these employees represent roughly 4 percent of employment in West Virginia. In West Virginia, an average of 50 percent of businesses have no tax liability in any given tax year. In addition, business income and the resulting tax liability can significantly vary year to year based on economic conditions. For Tax Year 2021, a review of business tax liabilities indicated that as few as 25 percent of businesses would have had sufficient tax liability to offset even a single $1,500 credit. Workforce West Virginia is responsible for administering the program. If the paperwork required to claim the credit is burdensome, many smaller businesses may elect not to participate.
According to our interpretation, passage of this bill, could reduce General Revenue Fund collections by up to $20 million in FY2024 and in subsequent fiscal years under the assumption of maximum participation.
Additional administrative costs incurred by the State Tax Department would be $25,000 in FY2024 and $10,000 in subsequent fiscal 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 |
25,000 |
10,000 |
| Personal Services |
0 |
10,000 |
10,000 |
| 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 |
-20,000,000 |
-20,000,000 |
Explanation of above estimates (including long-range effect):
Based on our interpretation, the legislation would expand the Military Incentive Program from a program designed as an incentive to hire certain qualified unemployed military to a program applying to all existing qualified employees including those employed more than one year and those seeking new employment. The program would include private sector employers who employ any eligible veterans, and members of the West Virginia National Guard or the reserve forces of the United States who are West Virginia residents. The tax credit can be applied against either the employer’s Personal Income Tax liability or Corporation Net Income Tax liability. The credit is not transferrable or refundable, and it must be used in the tax year in which it was earned. The credit would be available to the taxpayer for each qualifying employee for each tax year in which the employee was employed for a continuous period of one year. The maximum amount of credit that can be earned per employee per year is $1,500.
More than 30,000 Veterans, National Guard, and Reservists are employed by Private Sector employers in West Virginia. Combined these employees represent roughly 4 percent of employment in West Virginia. In West Virginia, an average of 50 percent of businesses have no tax liability in any given tax year. In addition, business income and the resulting tax liability can significantly vary year to year based on economic conditions. For Tax Year 2021, a review of business tax liabilities indicated that as few as 25 percent of businesses would have had sufficient tax liability to offset even a single $1,500 credit. Workforce West Virginia is responsible for administering the program. If the paperwork required to claim the credit is burdensome, many smaller businesses may elect not to participate.
According to our interpretation, passage of this bill, could reduce General Revenue Fund collections by up to $20 million in FY2024 and in subsequent fiscal years under the assumption of maximum participation.
Additional administrative costs incurred by the State Tax Department would be $25,000 in FY2024 and $10,000 in subsequent fiscal years.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov