FISCAL NOTE
Date Requested: February 10, 2017
Time Requested: 01:15 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1493 |
Introduced |
HB2323 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
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 benefits from personal income tax.
The 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, 2017.
According to our interpretation, passage of the bill would reduce General Revenue Fund collections by roughly $90.0 million in FY2018 due to the exclusion of taxable social security benefits from the State Personal Income Tax. The value of the proposed tax exclusion will escalate over time as members of the baby-boom generation begin receiving Social Security benefits.
Additional administrative cost incurred by the State Tax Department would be $14,000 a year for FY2019 and fiscal years thereafter.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2017
Increase/Decrease
(use"-") |
2018
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
14,000 |
| Personal Services |
0 |
0 |
5,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
9,000 |
| 2. Estimated Total Revenues |
0 |
-90,000,000 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, passage of the bill would reduce General Revenue Fund collections by roughly $90.0 million in FY2018 due to the exclusion of taxable social security benefits from the State Personal Income Tax. The value of the proposed tax exclusion will escalate over time as members of the baby-boom generation begin receiving Social Security benefits.
Additional administrative cost incurred by the State Tax Department would be $14,000 a year for FY2019 and fiscal years thereafter.
Memorandum
The stated purpose of this bill is to exempt social security benefits from personal income tax.
The bill’s title and the bill’s purpose describe this as “exempting social security benefits from personal income tax.” The bill is not accurately described as an exemption, but, rather, as a modification allowing taxpayers to subtract social security benefits from their federal adjusted gross income for purposes of personal income tax. However, the effect would be that social security benefits would not be subject to West Virginia personal income tax.
The bill fails to mention an internal effective date.
There is conflicting language in the bill with regards to the Schedule M $8,000 modification permitted to the spouse who was 65 years of age or older or was permanently disabled. Due to the re-numbering in the bill, the $8,000 modification subdivision (8) will refer to the new social security modification and the $8,000 modification permitted to the spouse who was 65 years of age or older or who was permanently disabled will not be considered in determining the $8,000 modification of the surviving spouse, since that is now under subdivision (9) under this bill. This was likely not the intended result and, therefore, the list of the modifications under W.Va. Code §11-21-12(c)(9), now (10) in this bill, should be revised.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov