Date Requested:February 18, 2005
Time Requested:12:49 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R196 Intro HB2066
CBD Subject: Corporate Net Income Reduced
FUND(S)
General Revenue Fund
Sources of Revenue
General Fund
Legislation creates:
Neither Program nor Fund

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 primary rate of tax on corporations 1/2% a year for 6 years so that the corporation net income tax rate will be 6% at the end of 6 years.
    
    According to our interpretation, passage of this bill would result in a decline in the General Revenue Fund as shown in the table below.
    
    General Revenue Fund
    
    FY2006 ($4.3 million)
    
    FY2007 ($11.1 million)
    
    FY2008 ($18.0 million)
    
    FY2009 ($24.9 million)
    
    FY2010 ($31.9 million)
    
    FY2011 ($37.6 million)
    
    FY2012 ($40.9 million)
    
    FY2013 ($42.9 million)
    
    FY2014+ ($44.9 million)
    
    Additional administrative costs to the Tax Department associated with this bill would be approximately $27,000 in Fiscal Year 2005 and approximately $16,000 per year in Fiscal Year 2006 through 2010.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2005
Increase/Decrease
(use"-")
2006
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 27,000 16,000 16,000
Personal Services 0 0 0
Current Expenses 27,000 16,000 16,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -4,300,000 -44,900,000
3. Explanation of above estimates (including long-range effect):
    This bill would phase-in a reduction of the corporate net income tax rate from nine percent to six percent by reducing the rate by fifty one hundredths of one percent per year, commencing July 1, 2005.
    
    According to our interpretation, passage of this bill would result in a decline in the General Revenue Fund as shown in the table below.
    General Revenue Fund
    
    FY2006 ($4.3 million)
    
    FY2007 ($11.1 million)
    
    FY2008 ($18.0 million)
    
    FY2009 ($24.9 million)
    
    FY2010 ($31.9 million)
    
    FY2011 ($37.6 million)
    
    FY2012 ($40.9 million)
    
    FY2013 ($42.9 million)
    
    FY2014+ ($44.9 million)
    
    Additional administrative costs to the Tax Department associated with this bill would be for printing and mailing information material and revised returns to taxpayers and for modifying computer addressing and audit programs.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us