FISCAL NOTE

Date Requested: February 08, 2017
Time Requested: 05:46 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1492 Introduced HB2163
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 abolish the personal income tax. According to our interpretation, this bill would abolish the Personal Income Tax for Tax Years beginning after December 31, 2017. Abolishing this tax would result in an estimated reduction in General Revenue Fund monies of $95.5 million in FY2018 and more than $1.9 billion per year beginning in FY2019. These estimates do not consider other residual impacts related to abolishing this tax. The State would realize some improvement in consumption tax revenue as a result of increased disposable household income, but would also be negatively affected through reduced functions funded by the State Treasury and some offsetting losses of income and consumption due to such a change. Costs to the State Tax Department would decline by approximately $1.5 million per year beginning in FY2019.



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 -1,460,000
Personal Services 0 0 -1,300,000
Current Expenses 0 0 -205,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 45,000
2. Estimated Total Revenues 0 -95,500,000 1,900,000,000


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


According to our interpretation, this bill would abolish the Personal Income Tax for Tax Years beginning after December 31, 2017. Abolishing this tax would result in an estimated reduction in General Revenue Fund monies of $95.5 million in FY2018 and more than $1.9 billion per year beginning in FY2019. These estimates do not consider other residual impacts related to abolishing this tax. The State would realize some improvement in consumption tax revenue as a result of increased disposable household income, but would also be negatively affected through reduced functions funded by the State Treasury and some offsetting losses of income and consumption due to such a change. Costs to the State Tax Department would decline by approximately $1.5 million per year beginning in FY2019.



Memorandum


The stated purpose of this bill is to abolish the personal income tax. As proposed, this bill would remove the revenue source for the Post Employment Benefit Trust Fund but would not remove the statutory transfer.



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