Date Requested:February 15, 2005
Time Requested:02:34 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005r197 intro hb2358
CBD Subject: corporate net income tax
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 phase-in a reduction of the corporate net income tax rate from nine percent to six percent by reducing the rate by one half of one percent per year, commencing January 1, 2006.
    
    According to our interpretation, passage of this bill would result in a decline in the General Revenue Fund as shown in the table below.
    
    General Revenue Fund
    
    FY2006 ($4.2 million)
    
    FY2007 ($10.9 million)
    
    FY2008 ($17.7 million)
    
    FY2009 ($24.4 million)
    
    FY2010 ($33.7 million)
    
    FY2011 ($40.5 million)
    
    FY2012 ($42.5 million)
    
    FY2013 ($44.6 million)
    
    FY2014+ ($46.6 million)
    
    
    Additional administrative costs to the Tax Department associated with this bill would be approximately $27,000 in Fiscal Year 2006 and approximately $16,000 per year in Fiscal Year 2007 through 2010.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2005
Increase/Decrease
(use"-")
2006
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 27,000 16,000
Personal Services 0 0 0
Current Expenses 0 27,000 16,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -4,200,000 -46,600,000
3. Explanation of above estimates (including long-range effect):
    This bill would phase-in a reduction of the corporate net income tax rate from nine percent to six percent by reducing the rate by one half of one percent per year, commencing January 1, 2006.
    
    According to our interpretation, passage of this bill would result in a decline in the General Revenue Fund as shown in the table below.
    General Revenue Fund
    
    FY2006 ($4.2 million)
    
    FY2007 ($10.9 million)
    
    FY2008 ($17.7 million)
    
    FY2009 ($24.4 million)
    
    FY2010 ($33.7 million)
    
    FY2011 ($40.5 million)
    
    FY2012 ($42.5 million)
    
    FY2013 ($44.6 million)
    
    FY2014+ ($46.6 million)
    
    
    Additional administrative costs to the Tax Department associated with this bill would be for printing and mailing information material and revised returns to taxpayers and for modifying computer addressing and audit programs.
    
    
    
    
    
    
    Approved by: __________________________________________
    Date: March 9, 2005


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to phase-in a reduction of the corporate net income tax rate from nine percent to six percent by reducing the rate by one half of one percent per year, commencing January 1, 2006.
    
    The bill, as written, indicates that “beginning the first day of January, two thousand six and on each first day of January after that for six successive years, the rate will be reduced by one half of one percent per year, with the rate to be six percent on and after the first day of January, two thousand ten.” However, if the tax rate is reduced by one half of one percent per year beginning on the first day of January, two thousand six, the tax rate would not be six percent until January 1, 2011.