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 resolution is to abolish personal and corporate income tax. As written, this resolution proposes an amendment to the West Virginia Constitution. The resolution summarizes the proposed amendment as follows: “The purpose of this amendment is to abolish personal and corporate income tax.” Passage of this resolution would place the matter of abolishing the Personal Income Tax and Corporation Net Income Tax before the State’s voters. According to our interpretation, passage of the resolution and subsequent ratification of the proposed Constitutional amendment by the voters would reduce State Revenue by roughly $1.75 billion or more during the first full year of effect. There would be no additional administrative costs to the State Tax Department associated with passage of this resolution. Agencies responsible for administering elections may incur some additional administrative costs attributable to passage of this resolution. Passage of the resolution and subsequent ratification of the proposed Constitutional amendment by the voters would likely result in reduced administrative costs for the State Tax Department due to processing and mailing fewer returns and refunds.



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 0 0 0


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


As written, this resolution proposes an amendment to the West Virginia Constitution. The resolution summarizes the proposed amendment as follows: “The purpose of this amendment is to abolish personal and corporate income tax.” Passage of this resolution would place the matter of abolishing the Personal Income Tax and Corporation Net Income Tax before the State’s voters. According to our interpretation, passage of the resolution and subsequent ratification of the proposed Constitutional amendment by the voters would reduce State Revenue by roughly $1.75 billion or more during the first full year of enactment. The level of reduction would equal roughly 40% of combined General Revenue, Lottery Revenue and Excess Lottery Revenue funds. State expenditure gaps would likely be filled by additional taxes on consumption and property. There would be no additional administrative costs to the State Tax Department associated with passage of this resolution. Agencies responsible for administering elections may incur some additional administrative costs attributable to passage of this resolution. Passage of the resolution and subsequent ratification of the proposed Constitutional amendment by the voters would likely result in reduced administrative costs for the State Tax Department due to processing and mailing fewer returns and refunds.



Memorandum


The stated purpose of this resolution is to abolish personal and corporate income tax. As written, this resolution proposes an amendment to Article X, §5 of the West Virginia Constitution. Article X, §5 pertains to the power of taxation as to the purposes for which it is carried out, while Article X, §1 pertains to the power of taxation generally and provides that the “Legislature shall have authority to tax privileges, franchises, and incomes of persons and corporations . . . .”



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