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 subtract social security benefits from federal adjusted gross income to determine West Virginia adjusted gross income for purposes of personal income tax. This bill proposes a modification that would reduce federal adjusted gross income, for West Virginia Personal Income Tax purposes, by the amount of Social Security benefits paid to the extent that the benefits are included in federal adjusted gross income. The modification would be effective for taxable years beginning after December 31, 2009. According to our interpretation, passage of this bill would reduce the Personal Income Tax liability of persons with taxable Social Security benefits by $40.8 million in tax year 2010 and by $46.4 million in tax year 2011. The fiscal year effect on the General Revenue Fund would be a reduction of $10.2 million in Fiscal Year 2010 and a reduction of $42.2 million in Fiscal Year 2011. The value of this proposed tax exclusion will escalate over time as members of the baby-boom generation begin receiving Social Security benefits. There would be no additional costs to the State Tax Department.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2010
Increase/Decrease
(use"-")
2011
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 -10,200,000 -42,200,000 -46,400,000


Explanation of above estimates (including long-range effect):


This bill proposes a modification that would reduce federal adjusted gross income, for West Virginia Personal Income Tax purposes, by the amount of Social Security benefits paid to the extent that the benefits are included in federal adjusted gross income. The modification would be effective for taxable years beginning after December 31, 2009. According to our interpretation, passage of this bill would reduce the Personal Income Tax liability of persons with taxable Social Security benefits by $40.8 million in tax year 2010 and by $46.4 million in tax year 2011. The fiscal year effect on the General Revenue Fund would be a reduction of $10.2 million in Fiscal Year 2010 and a reduction of $42.2 million in Fiscal Year 2011. The value of this proposed tax exclusion will escalate over time as members of the baby-boom generation begin receiving Social Security benefits. According to IRS Statistics of Income Data for Tax Year 2007, 91,791 West Virginia residents included nearly $873 million of social security benefits in adjusted gross income. Taxable social security benefits are expected to rise to roughly $1,453 million by 2011. There would be no additional costs to the State Tax Department.



Memorandum






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