FISCAL NOTE
Date Requested: February 08, 2023
Time Requested: 12:14 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3532 |
Introduced |
HB3351 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to reduce the amount of personal income tax paid by West Virginia taxpayers to $0 for those earning $60,000 or less.
Based on our interpretation, the proposed legislation would reduce the Personal Income Tax liability for filers with taxable incomes of $60,000 or less ($30,000 or less for married filing separate) to $0. The wording of the legislation creates a tax “cliff” for those filing with taxable incomes over $60,000 ($30,000 for married filing separate) with these taxpayers receiving no reduction in tax liability. For example, a single taxpayer with taxable income of $60,000 would pay $0 tax and a single taxpayer with taxable income of $60,001 would owe $2,775 in tax. This huge marginal tax difference will likely encourage behavioral modifications to lower incomes. The legislation is effective for tax years beginning after December 31, 2023.
According to our interpretation, the bill would decrease General Revenue Fund collections by $207.6 million in FY2024, $544.5 million in FY2025 and by increasing amounts in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $45,000 in FY2025.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2023
Increase/Decrease
(use"-") |
2024
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 |
-207,600,000 |
-544,500,000 |
Explanation of above estimates (including long-range effect):
Based on our interpretation, the proposed legislation would reduce the Personal Income Tax liability for filers with taxable incomes of $60,000 or less ($30,000 or less for married filing separate) to $0. The wording of the legislation creates a tax “cliff” for those filing with taxable incomes over $60,000 ($30,000 for married filing separate) with these taxpayers receiving no reduction in tax liability. For example, a single taxpayer with taxable income of $60,000 would pay $0 tax and a single taxpayer with taxable income of $60,001 would owe $2,775 in tax. This huge marginal tax difference will likely encourage behavioral modifications to lower incomes. The legislation is effective for tax years beginning after December 31, 2023.
According to our interpretation, the bill would decrease General Revenue Fund collections by $207.6 million in FY2024, $544.5 million in FY2025 and by increasing amounts in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $45,000 in FY2025.
Memorandum
PThe stated purpose of this bill is to reduce the amount of personal income tax paid by West Virginia taxpayers to $0 for those earning $60,000 or less.
The title of the bill is defective, in that it only references the reduction for individuals, joint filers, heads of household, estates and trusts; and fails to reference the reduction for married individuals filing separately.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov