FISCAL NOTE

Date Requested: March 10, 2017
Time Requested: 01:31 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2872 Introduced HB2934
CBD Subject:


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 eliminate the tax brackets under the personal income tax and change the rate of the tax. According to our interpretation, the proposed bill would eliminate the use of the current tiered tax brackets for determining Personal Income Tax liability and would replace with a flat tax of 5.1 percent of taxable income. This change would be in effect for tax years beginning on and after January 1, 2018. The proposed changes are estimated to be effectively revenue neutral to current Tax Law. Any revenue impact associated with this change is expected to be minor, and would affect collections beginning in FY2018 due to changes in estimated payments and withholdings. Additional administrative costs to the State Tax Department would be $58,000 in FY2018 and $5,000 in FY2019. No additional costs are anticipated.



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 58,000 5,000
Personal Services 0 10,000 0
Current Expenses 0 35,000 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 13,000 5,000
2. Estimated Total Revenues 0 0 0


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


According to our interpretation, the proposed bill would eliminate the use of the current tiered tax brackets for determining Personal Income Tax liability and would replace with a flat tax of 5.1 percent of taxable income. This change would be in effect for tax years beginning on and after January 1, 2018. The proposed changes are estimated to be effectively revenue neutral to current Tax Law. Any revenue impact associated with this change is expected to be minor, and would affect collections beginning in FY2018 due to changes in estimated payments and withholdings. The proposed tax structure would place a higher burden on those with lower incomes, while reducing liabilities for those with higher incomes. Compared to the current structure, roughly 55 percent of Taxpayers would experience an increase in liability of $50 or more (median taxable income of $31,089 for those single, head of household, widowed, or filing jointly) while approximately 15 percent would experience a reduction of $50 or more (median taxable income $110,536 for those single, head of household, widowed, or filing jointly). Additional administrative costs to the State Tax Department would be $58,000 in FY2018 and $5,000 in FY2019. No additional costs are anticipated.



Memorandum






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