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 provide for a five percent reduction to all personal income tax rates. According to our interpretation of this bill and based upon available data, it is estimated that passage of this bill would result in a reduction in the State General Revenue Fund of approximately $30 million in Fiscal Year 2010 and $73 million in Fiscal Year 2011 and each year after that. The proposed reduced rates would be effective for tax years beginning on or after January 1, 2010. Due to revised Withholding Tax attributable to the reduced tax rates, some revenue reduction will occur in Fiscal Year 2010. Additional administrative costs to the State Tax Department associated with this bill would be minimal.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2009
Increase/Decrease
(use"-")
2010
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 -30,000,000 -30,000,000


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


As written, this bill would reduce the Personal Income Tax marginal rates by 5% for tax years beginning on or after January 1, 2010. Assuming that new withholding tax tables would be distributed by January 1, 2010, a partial reduction in the General Revenue Fund of roughly $30 million would occur in Fiscal Year 2010 due to revised Withholding Tax liabilities. The full annual reduction of roughly $73 million would occur in Fiscal Year 2011 and each year thereafter. Based upon tax year 2007 returns, approximately 560,000 of the roughly 794,000 Personal Income Tax filers would pay less tax under the rates proposed by the bill. The other filers currently have little or no tax liability due to existing deductions and tax credits. Additional administrative costs to the State Tax Department associated with this bill would be minimal.



Memorandum






    Person submitting Fiscal Note: Mark Muchow
    Email Address: kpetry@tax.state.wv.us