FISCAL NOTE
Date Requested: January 20, 2023
Time Requested: 09:37 AM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1970 |
Introduced |
HB2158 |
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| CBD Subject: |
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FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Decreases 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 abolish the personal income tax.
According to our interpretation, the bill would eliminate the personal income tax for tax years beginning after December 31, 2023.
Based on our interpretation, the legislation, if passed, would decrease General Revenue Fund collections by roughly $1.1 billion in FY2024 and by $2.9 billion in FY2025, the first full fiscal year of effect. By Statute, $30 million of annual personal income tax collections are dedicated to the Post Employment Benefit Trust Fund each year. Passage of this bill may impact future transfers beginning as early as FY2025.
Passage of the bill would eventually eliminate the personal income tax and withholding tax units of the State Tax Department. Administrative costs reductions by the State Tax Department would be $1.48 million 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 |
-1,480,000,000 |
| 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 |
-1,094,000,000 |
-2,869,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the bill would eliminate the personal income tax for tax years beginning after December 31, 2023.
Per our interpretation, the legislation, if passed, would decrease General Revenue Fund collections by roughly $1.1 billion in FY2024 and by $2.9 billion in FY2025, the first full fiscal year of effect. By Statute, $30 million of annual personal income tax collections are dedicated to the Post Employment Benefit Trust Fund each year. Passage of this bill may impact future transfers beginning as early as FY2025.
The Federal American Rescue Plan Act (ARPA) contains provisions providing for some potential claw back of federal ARPA funds if enacted State level tax cuts result in actual total State revenues (i.e., both tax and non-tax revenues from own sources) falling below an inflation adjusted Fiscal Year 2019 baseline. The guideline applies to actual revenues for both CY2023 and CY2024. There is some risk that the proposed income tax cuts could result in actual revenues falling below the ARPA target in CY2024. We note that the U.S. Court of Appeals for the 11th Circuit issued an opinion on January 20, 2023, that the U.S Treasury Department could not prohibit states from cutting their taxes if they received direct federal aid from the 2021 American Rescue Plan Act (ARPA).
Passage of the bill would eventually eliminate the personal income tax and withholding tax units of the State Tax Department. Administrative costs reductions by the State Tax Department would be $1.48 million in FY2025.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov