FISCAL NOTE

Date Requested: February 12, 2019
Time Requested: 12:54 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
3277 Introduced HB3026
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 offer tax credit against either personal or corporate income taxes for hiring women or minorities into executive, administrative or professional jobs.
    
    According to our interpretation of this bill, a tax credit of $200 against Personal Income Tax or Corporation Net Income Tax would be granted to the business owners that hire female or minority employees or who promotes an existing woman or minority employee into an executive, administrative, or professional position in the business per the United States Fair Labor Standards Act. The female or minority employee would have to retain an executive, administrative or professional position in the business for at least 12 months. This proposed tax credit can be applied to Corporation Net Income Tax and Personal Income Tax owed by the business over a two-year period following the period in which it was earned. This proposed credit would begin on July 1, 2019 and end on December 31, 2024. The Commissioner of Labor would certify a completed tax credit application from a business owner or executive and would issue certification acceptable to the State Tax Commissioner.
    
    According to the US Census Bureau in 2018, 50.5 percent of the West Virginia population comprised of women, 3.6 percent of the population was African American, 1.7 percent were mixed ethnicity, 1.6 percent comprised of Hispanics and 0.8 percent were classified as Asian. Based on these percentages, roughly 140,000 people in West Virginia are classified as minorities and 910,000 people in the State are women. It would be difficult to estimate the number of West Virginia business owners who hire female or minority employees or who promote an existing woman or minority employee into an executive, administrative, or professional position. Further, many states who have women and minority job incentives do not have stand-alone credits, but rather incorporate these special incentives into existing business tax credits. We would not be able to determine the loss to the General Revenue Fund in FY2020 and thereafter.
    
    Additional administrative costs incurred by the State Tax Department are $60,000 in FY2021 and $40,000 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 40,000
Personal Services 0 0 40,000
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 of this bill, a tax credit of $200 against Personal Income Tax or Corporation Net Income Tax would be granted to the business owners that hire female or minority employees or who promotes an existing woman or minority employee into an executive, administrative, or professional position in the business per the United States Fair Labor Standards Act. The female or minority employee would have to retain an executive, administrative or professional position in the business for at least 12 months. This proposed tax credit can be applied to Corporation Net Income Tax and Personal Income Tax owed by the business over a two-year period following the period in which it was earned. This proposed credit would begin on July 1, 2019 and end on December 31, 2024. The Commissioner of Labor would certify a completed tax credit application from a business owner or executive and would issue certification acceptable to the State Tax Commissioner.
    
    According to the US Census Bureau in 2018, 50.5 percent of the West Virginia population comprised of women, 3.6 percent of the population was African American, 1.7 percent were mixed ethnicity, 1.6 percent comprised of Hispanics and 0.8 percent were classified as Asian. Based on these percentages, roughly 140,000 people in West Virginia are classified as minorities and 910,000 people in the State are women. It would be difficult to estimate the number of West Virginia business owners who hire female or minority employees or who promote an existing woman or minority employee into an executive, administrative, or professional position. Further, many states who have women and minority job incentives do not have stand-alone credits, but rather incorporate these special incentives into existing business tax credits. We would not be able to determine the loss to the General Revenue Fund in FY2020 and thereafter.
    
    Additional administrative costs incurred by the State Tax Department are $60,000 in FY2021 and $40,000 in subsequent fiscal years.
    



Memorandum


    The stated purpose of this bill is to offer tax credit against either personal or corporate income taxes for hiring women or minorities into executive, administrative or professional jobs.
    
    The bill does not provide a definition of “minorities”. Chapter 30 of the West Virginia Code contains provisions very different from the language in the United States Fair Labor Standards Act, therefore, there is a high potential for conflict.
    
    Owner or owners of businesses can claim this credit. For pass-through entities this could include many eligible taxpayers. Some types of pass-through entities distinguish between types of partners or members. The bill does not specify clearly who can claim this credit based on these issues.
    
    The bill does not specify how the Division of Labor would determine how an employee would stay in a position for at least twelve months.
    
    



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