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 reduce the rate of tax on corporate net income to five point nine percent (5.9%), effective the tax year beginning July 1, 2008.
As written, this bill would reduce the Corporation Net Income Tax rate from 8.75 percent to 5.9 percent for taxable periods beginning on or after July 1, 2008. According to our interpretation, passage of this bill would result in a reduction in the General Revenue fund of roughly $34 million in Fiscal Year 2009 and roughly $70.0 million annually in subsequent periods.
Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $32,000 in Fiscal Year 2008.
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 |
32,000 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
32,000 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-34,000,000 |
-70,000,000 |
Explanation of above estimates (including long-range effect):
Passage of this bill would reduce the Corporation Net Income Tax rate from 8.75 percent to 5.9 percent for taxable periods beginning on or after July 1, 2008. According to our interpretation, passage of this bill would result in a reduction in the General Revenue fund of roughly $34 million in Fiscal Year 2009 and roughly $70.0 million annually in subsequent periods.
Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $32,000 in Fiscal Year 2008. The additional costs would be for printing and mailing of notices to taxpayers of the rate change and for the development of a computer audit program to review calculations on filed returns.
Memorandum
The stated purpose of this bill is to reduce the rate of tax on corporate net income to five point nine percent (5.9%), effective the tax year beginning July 1, 2008.
The proposed revision first specifies that the rate change is applicable to “taxable periods beginning on or after the first day of July, two thousand eight” and then indicates that the provisions of the proposal “supercedes and replaces the provisions of subsection (4) of this section for the taxable year two thousand seven and thereafter.” Subsection (4) specified the tax rate for taxable periods beginning on or after January 1, 2007. This may lead to some confusion as to the rate applicable for the periods beginning on or after January 1, 2007.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us