FISCAL NOTE
Date Requested: February 15, 2022
Time Requested: 05:34 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1555 |
Introduced |
HB4730 |
|
|---|
| 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 establish a tax credit for contributions to a state higher education institution against personal income taxes and corporate net income taxes imposed by WVC §11-21-1 et seq. and §11-24-1 et seq.
This bill would allow a credit against corporation net income tax and personal income tax for contributions made to a higher education institution. The qualified taxpayer must designate the major for which the donation is to support. The amount of the credit would be equal to 25 percent of contributions made to a higher education institution and is limited to $25,000 in expenses or $6,250 in tax credit for each student that graduates in the specified major. Additionally, the eligible taxpayer may claim up to $250,000 in tax credits in any given tax year. The effective date of this bill is for contributions made on or after January 1, 2023.
According to the most recent data from the West Virginia Higher Education Policy Commission, there were 17,090 graduates from higher education institutions in West Virginia and, of those, 9,288 accepted jobs in the state. According to data from Workforce West Virginia, there are 47,034 private sector businesses in the state. During fiscal year 2020, approximately $176.5 million were donated to public universities and community colleges in West Virginia by both individual and corporate donors. This bill would limit the amount of the tax credit to 25 percent of the contribution not to exceed $25,000 per student. Therefore, the eligible taxpayer would be able to claim $6,250 in tax credits for every student that benefits from the contribution. Lastly, to qualify for the tax credit, the student benefactor would be required to be employed by the taxpayer for at least one full year. Due to the specific nature of this bill, and the substantial eligibility requirements imposed therein, we cannot accurately estimate the revenue impact of this bill.
Additional administrative costs incurred by the State Tax Department would be $20,000 in FY2024 and $5,000 in subsequent fiscal years.
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 |
0 |
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 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
This bill would allow a credit against corporation net income tax and personal income tax for contributions made to a higher education institution. The qualified taxpayer must designate the major for which the donation is to support. The amount of the credit would be equal to 25 percent of contributions made to a higher education institution and is limited to $25,000 in expenses or $6,250 in tax credit for each student that graduates in the specified major. Additionally, the eligible taxpayer may claim up to $250,000 in tax credits in any given tax year. The effective date of this bill is for contributions made on or after January 1, 2023.
According to the most recent data from the West Virginia Higher Education Policy Commission, there were 17,090 graduates from higher education institutions in West Virginia and, of those, 9,288 accepted jobs in the state. According to data from Workforce West Virginia, there are 47,034 private sector businesses in the state. During fiscal year 2020, approximately $176.5 million were donated to public universities and community colleges in West Virginia by both individual and corporate donors. This bill would limit the amount of the tax credit to 25 percent of the contribution not to exceed $25,000 per student. Therefore, the eligible taxpayer would be able to claim $6,250 in tax credits for every student that benefits from the contribution. Lastly, to qualify for the tax credit, the student benefactor would be required to be employed by the taxpayer for at least one full year. Due to the specific nature of this bill, and the substantial eligibility requirements imposed therein, we cannot accurately estimate the revenue impact of this bill.
Additional administrative costs incurred by the State Tax Department would be $20,000 in FY2024 and $5,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to establish a tax credit for contributions to a state higher education against personal income taxes and corporate net income taxes imposed by WVC §11-21-1 et seq. and §11-24-1 et seq.
There is a lack of connection between a donation and a student of the designated major being employed, so record-keeping and application would be very difficult. There is no apparent relationship between the donation and a particular student being hired.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov