Date Requested:January 14, 2011
Time Requested:05:13 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R1832 Introduced SB52
CBD Subject: PERSONAL INCOME SOCIAL SECURITY EXEMPTION
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 exempt social security income from state income tax.
    
    This bill proposes a Personal Income Tax decreasing modification for “Social Security Benefits.” While “Social Security Benefits” could include payments and indirect benefits from a number of programs, it is our interpretation that the initial statement of West Virginia Code §11-21-12(c) would limit the decreasing modification to those Social Security benefits included in federal adjusted gross income. Also, according to our interpretation, the modification would first be applicable to Social Security Benefits received after December 31, 2011 due to the lack of an internal effective date. Based upon the above interpretations, passage of this bill would reduce General Revenue Fund collections by roughly $52 million per year due to the exclusion of taxable social security benefits from the State Personal Income Tax. Based upon anticipated estimated tax payment changes, collections would decrease by $13 million in Fiscal Year 2012 and by $52 million per year for each year thereafter. 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
Over-all effect
Effect of Proposal Fiscal Year
2011
Increase/Decrease
(use"-")
2012
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 -13,000,000 -52,000,000
3. Explanation of above estimates (including long-range effect):
    This bill proposes a Personal Income Tax decreasing modification for “Social Security Benefits.” While “Social Security Benefits” could include payments and indirect benefits from a number of programs, it is our interpretation that the initial statement of West Virginia Code §11-21-12(c) would limit the decreasing modification to those Social Security Benefits included in federal adjusted gross income. Also, according to our interpretation, the modification would first be applicable to Social Security Benefits received after December 31, 2011 due to the lack of an internal effective date. Based upon the above interpretations, passage of this bill would reduce General Revenue Fund collections by roughly $52 million per year due to the exclusion of taxable social security benefits from the State Personal Income Tax. Based upon anticipated estimated tax payment changes, collections would decrease by $13 million in Fiscal Year 2012 and by $52 million per year for each year thereafter. 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 2008, 92,465 West Virginia residents included nearly $886 million of social security benefits in adjusted gross income. Taxable social security benefits are expected to rise to roughly $1,261 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