FISCAL NOTE
Date Requested: January 18, 2018
Time Requested: 02:45 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1312 |
Introduced |
SB316 |
|
|---|
| CBD Subject: |
|
|---|
|
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 reduce the impact of the so-called marriage penalty by providing a refundable tax credit to persons who have a reduction in their public assistance benefits due to becoming married.
According to our interpretation, the proposed bill would create a 100 percent refundable tax credit up to $5,000 against the Personal Income Tax for those individuals who lost or experienced a reduction in public assistance benefits received prior to marriage. Among other requirements, the proposed bill would require individuals to prove the presence of a means tested public assistance benefit prior to marriage, that the amount of public assistance benefit received prior to marriage had been reduced or lost due solely to the marriage, and that the individuals were married within the previous five taxable years and are currently married and filing a joint tax return at the time of filing.
As written, individuals receiving benefits from a variety of public assistance programs could potentially qualify for the refundable credit. The proposed bill provides four examples: Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), Medicaid, and the Children’s Health Insurance Program (CHIP). This analysis assumes that individuals receiving other public assistance programs, such as Supplemental Security Income (SSI), could also qualify. The amount of the proposed refundable credit is the lesser of either (a) the actual annualized amount lost or (b) $5,000. Since the tax credit is refundable, the individual claiming the credit would be entitled to the amount determined by these provisions, whether or not his or her income tax liability meets or exceeds that amount.
Tax Department and public data are limited to determine how many individuals may qualify for this credit. In addition, the criteria outlined in the proposed bill would make determination of qualifying individuals complex given the variety of factors that can alter payments of public assistance benefits. Based on limited data, the proposed bill could result in annual revenue losses between roughly $63 million and $93 million beginning in FY2020. This estimate assumes the first applicable tax year for the refundable credit would be Tax Year 2019.
Additional costs incurred by the State Tax Department are expected to be $97,000 in the first full year of implementation and $70,000 for each year thereafter.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2018
Increase/Decrease
(use"-") |
2019
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
70,000 |
| Personal Services |
0 |
0 |
70,000 |
| 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):
According to our interpretation, the proposed bill would create a 100 percent refundable tax credit up to $5,000 against the Personal Income Tax for those individuals who lost or experienced a reduction in public assistance benefits received prior to marriage. Among other requirements, the proposed bill would require individuals to prove the presence of a means tested public assistance benefit prior to marriage, that the amount of public assistance benefit received prior to marriage had been reduced or lost due solely to the marriage, and that the individuals were married within the previous five taxable years and are currently married and filing a joint tax return at the time of filing.
As written, individuals receiving benefits from a variety of public assistance programs could potentially qualify for the refundable credit. The proposed bill provides four examples: Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), Medicaid, and the Children’s Health Insurance Program (CHIP). This analysis assumes that individuals receiving other public assistance programs, such as Supplemental Security Income (SSI), could also qualify. The amount of the proposed refundable credit is the lesser of either (a) the actual annualized amount lost or (b) $5,000. Since the tax credit is refundable, the individual claiming the credit would be entitled to the amount determined by these provisions, whether or not his or her income tax liability meets or exceeds that amount.
Tax Department and public data are limited to determine how many individuals may qualify for this credit. In addition, the criteria outlined in the proposed bill would make determination of qualifying individuals complex given the variety of factors that can alter payments of public assistance benefits. Based on limited data, the proposed bill could result in annual revenue losses between roughly $63 million and $93 million beginning in FY2020. This estimate assumes the first applicable tax year for the refundable credit would be Tax Year 2019.
Additional costs incurred by the State Tax Department are expected to be $97,000 in the first full year of implementation and $70,000 for each year thereafter.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov