FISCAL NOTE
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 provide a tax deduction on interest paid on student loans and automobile loans.
The passage of this bill would result in a loss to the General Revenue Fund of approximately $11 million annually due to the reducing modification for automobile and student loan interest expense.
If all returns are accepted as filed, there would be no additional administrative cost to the State Tax Department.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2008
Increase/Decrease
(use"-") |
2009
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 |
-11,000,000 |
-11,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation of the most recent available data, the passage of this bill would result in a loss to the General Revenue Fund of approximately $10 million annually due to the reducing modification for automobile loan interest expense. The reducing modification for student loan interest expense would result in an additional annual revenue loss of $1 million to the General Revenue Fund.
The amount of the modifications to gross income for qualified interest payments are limited to the extent they are not allowed as a deduction when arriving at the taxpayer’s federal adjusted gross income for the taxable year in which the payments are made. This limits the impact of the student loan interest expense modification, but does not affect the automobile loan interest expense modification as that interest is not deductible on the federal return.
If all returns are accepted as filed, there would be no additional administrative cost to the State Tax Department.
Memorandum
The stated purpose of this bill is to provide a tax deduction on interest paid on student loans and automobile loans. The bill adds the new section §11-21-12i to the West Virginia Code.
The purposed bill, as written, could lead to an interpretation that the new section permits a decreasing modification for loan payments only when the loan or loans are taken for both student loan purposes and automobile purchase.
The terms “student loan”, “institution of higher learning”, “vocational school”, “technical school”, “personal use”, “business use” and “automobile” are not defined in the proposed legislation.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us