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 bill is to reduce state income taxes for state and federal retirees by increasing the exemption on retirement income in calculating the federal gross income for state personal income tax purposes.
The bill, as written, allows the $8,000 senior citizens modification in addition to a $20,000 decreasing modification for federal retirees and retirees receiving benefits from PERS or the West Virginia Teachers Retirement System. Assuming that the bill is effective for taxable years beginning after December 31, 2008, General Revenue Fund collections by would be reduced by approximately $22.0 million in FY2010. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time.
There would be no additional administrative costs associated with the change in the modification for current tax years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2008
Increase/Decrease
(use"-") |
2009
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 |
-22,000,000 |
0 |
Explanation of above estimates (including long-range effect):
The bill, as written, allows the $8,000 senior citizens modification in addition to a $20,000 decreasing modification for federal retirees and retirees receiving benefits from PERS or the West Virginia Teachers Retirement System. Assuming that the bill is effective for taxable years beginning after December 31, 2008, General Revenue Fund collections by would be reduced by approximately $22.0 million in FY2010. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time.
There would be no additional administrative costs associated with the change in the modification for current tax years.
Memorandum
The stated purpose of this bill is to reduce state income taxes for state and federal retirees by increasing the exemption on retirement income in calculating the federal gross income for state personal income tax purposes.
The changes in this bill include the striking out of the effective dates after December 31, 1986 relating to policy limiting the retirement modification to $2,000 and substituting an effective date after December 31, 2008 for a policy limiting the retirement modification to $20,000. Striking out the year 1986 could lead to questions as to what the state of the law is from 1987 to 2008. An alternative additional proviso in lieu of the stricken dates providing that changes made effective for taxable years beginning after 2008 may be preferable.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us