FISCAL NOTE
Date Requested: July 25, 2022
Time Requested: 09:34 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 6002 |
Introduced |
HB301 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to retroactively reduce the personal income tax rates for taxable years beginning on or after the first day of January 2022.
Per our interpretation, the bill would reduce current personal income tax rates, the tax rate on nonresident composite and withholding obligations, and the rate of withholding on gambling winnings for all taxable years beginning on and after January 1, 2022. Effective retroactively to January 1, 2022 the graduated personal income tax rates will be 2%, 3.7%, 4.2%, 5.5% and 5.98%. The current tax rate of 6.5% for nonresident composite and withholding obligations and withholding on gambling winnings will be reduced to 5.98%. Due to the retroactive aspect of the bill, there will be an additional impact in FY2023 which is attributable to excess withholding and estimated payments collected in FY2022.
According to our interpretation, the proposed legislation, if passed, would decrease General Revenue Fund collections by roughly $357.3 million in FY2023, $270.9 million in FY2024, and by increasing amounts, due to underlying tax base growth, in subsequent fiscal years. The estimate for FY2023 is inclusive of $255.2 million in direct impact and $102.1 million due to the retroactive portion of the bill. Actual total personal income tax collections in FY2022 were nearly $2.548 billion with the impact of an average 10 percent tax rate reduction equal to slightly more than $254.0 million.
Additional administrative costs incurred by the State Tax Department would be $35,000 in FY2023.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2022
Increase/Decrease
(use"-") |
2023
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
35,000 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
35,000 |
0 |
0 |
| 2. Estimated Total Revenues |
-357,300,000 |
-270,900,000 |
-282,900,000 |
Explanation of above estimates (including long-range effect):
Per our interpretation, the bill would reduce current personal income tax rates, the tax rate on nonresident composite and withholding obligations, and the rate of withholding on gambling winnings for all taxable years beginning on and after January 1, 2022. Effective retroactively to January 1, 2022 the graduated personal income tax rates will be 2%, 3.7%, 4.2%, 5.5% and 5.98%. The current tax rate of 6.5% for nonresident composite and withholding obligations and withholding on gambling winnings will be reduced to 5.98%. Due to the retroactive aspect of the bill, there will be an additional impact in FY2023 which is attributable to excess withholding and estimated payments collected in FY2022.
According to our interpretation, the proposed legislation, if passed, would decrease General Revenue Fund collections by roughly $357.3 million in FY2023, $270.9 million in FY2024, and by increasing amounts, due to underlying tax base growth, in subsequent fiscal years. The estimate for FY2023 is inclusive of $255.2 million in direct impact and $102.1 million due to the retroactive portion of the bill. Actual total personal income tax collections in FY2022 were nearly $2.548 billion with the impact of an average 10 percent tax rate reduction equal to slightly more than $254.0 million.
Additional administrative costs incurred by the State Tax Department would be $35,000 in FY2023.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
Person submitting Fiscal Note: Mark Muchow
Email Address: brooke.a.oxley@wv.gov