Date Requested:March 21, 2005
Time Requested:01:17 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R1717 Intro SB608
CBD Subject: Social Security/WV Adjusted Gross Income
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 subtract social security benefits from federal adjusted gross income to determine West Virginia adjusted gross income for purposes of personal income tax.
    
    According to our interpretation, passage of this bill would reduce General Revenue Fund collections by roughly $28.0 million per year due to the exclusion of social security benefits from the State personal income tax. The proposed change takes effect for tax years beginning on or after January 1, 2006. Based upon anticipated estimated tax payment changes, collections would decrease by $7 million in Fiscal Year 2005-2006, by $34.2 million in FY2007, and by $28.0 million per year, thereafter.
    
    There would be no additional costs to the Tax Department.

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 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -7,000,000 -28,000,000
3. Explanation of above estimates (including long-range effect):
    According to our interpretation, passage of this bill would reduce General Revenue Fund collections by roughly $28.0 million per year due to the exclusion of social security benefits from the State personal income tax. The proposed change takes effect for tax years beginning on or after January 1, 2006. Based upon anticipated estimated tax payment changes, collections would decrease by $7 million in Fiscal Year 2005-2006, by $34.2 million in FY2007, and by at least $28.0 million per year, thereafter.
    
    According to IRS Statistics of Income Data for Tax Year 2002, 60,066 West Virginia residents included nearly $461.8 million of social security benefits in adjusted gross income. Taxable social security benefits are expected to rise to roughly $500 million by 2006.
    
    There would be no additional costs to the Tax Department.


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