FISCAL NOTE
Date Requested: February 21, 2017
Time Requested: 01:13 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2155 |
Introduced |
HB2616 |
|
|---|
| 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 decrease the personal income tax rate for the certain taxpayers and raising personal income tax rate for certain other taxpayers.
According to our interpretation, the proposed bill alters the current Personal Income Tax structure by reducing the current top-tier income bracket and rate and adding additional income tiers and rates. The number of tax rate brackets would expand from five to nine, and the top marginal rate would increase from 6.5% to 8.9%. Our analysis assumes that the intent of the bill is to make these changes effective for taxable years beginning on and after January 1, 2018. Other interpretation could alter the estimates contained in this note. The proposed bill is anticipated to increase General Revenue Fund collections by $131.4 million per year beginning in FY2019.
Additional administrative costs incurred by the State Tax Department are expected to be $18,000 in FY2019. No other 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 |
0 |
18,000 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
18,000 |
| 2. Estimated Total Revenues |
0 |
0 |
131,400,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the proposed bill alters the current Personal Income Tax structure by reducing the current top-tier income bracket and rate and adding additional income tiers and rates. The number of tax rate brackets would expand from five to nine, and the top marginal rate would increase from 6.5% to 8.9%. Our analysis assumes that the intent of the bill is to make these changes effective for taxable years beginning on and after January 1, 2018. Other interpretation could alter the estimates contained in this note. The proposed bill is anticipated to increase General Revenue Fund collections by $131.4 million per year beginning in FY2019.
Additional administrative costs incurred by the State Tax Department are expected to be $18,000 in FY2019. No other costs are anticipated.
Memorandum
The stated purpose of this bill is to decrease the personal income tax rates for certain taxpayers and raise personal income tax rates for others.
The proposed bill inadvertently affects Personal Income Tax rates for both the current tax year and prior periods. As written, the bill alters West Virginia Code §11-21-4e, which describes tax rates for taxable years beginning on and after January 1, 1987. Modifying this section as the proposed bill has done may lead to complications in administering the tax. While it appears the intent is to alter the Personal Income Tax rate for taxable years beginning on and after January 1, 2018, the bill would, as written, affect TY2017 Personal Income Tax filers, late filers, any returns which are still subject to the three-year amendment rule, and posthumously alter the rates applied on prior tax years. It may be more effective to create a new section for taxable periods beginning on and after January 1, 2018.
In addition to typographical errors, the bill contains a possible title defect. The bill’s title fails to mention the new internal effective date and does not mention that the bill includes new income ranges and rates.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov