FISCAL NOTE
Date Requested: February 23, 2016
Time Requested: 02:52 PM |
| Agency: |
Tax Department, State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2896 |
Introduced |
HB4691 |
|
|---|
| 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 the bill is to establish two new tax brackets for personal income tax in West Virginia for persons whose income tax in West Virginia exceeds $500,000 and $1,000,000.
The bill creates two new tax brackets for taxpayers whose income exceeds $500,000, not those whose tax liability exceeds $500,000 as stated in the purpose of the bill. According to our analysis, creating two new tax brackets for the upper income levels will increase revenue, but the gains would come with increased revenue volatility.
The provisions of this bill would increase State General Revenue by no more than $60 million per year, and possibly less. Net yield could fall short of the $60 million due to income shifting and the possibility of increased use of available tax preferences. Nearly two-thirds of potentially affected taxpayers are non-residents deriving income from property or business interests in this State.
The proposed new tax brackets for married filing separate filers are not consistent with other tax brackets for those filers. Therefore, some high income joint filers may find it advantageous to migrate to the separate filing status for West Virginia tax purposes.
Administrative costs to the Tax Department will be $28,000 in FY2017.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2016
Increase/Decrease
(use"-") |
2017
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
28,000 |
0 |
| Personal Services |
0 |
10,000 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
18,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The bill creates two new tax brackets for taxpayers whose income exceeds $500,000, not those whose tax liability exceeds $500,000 as stated in the purpose of the bill. According to our analysis, creating two new tax brackets for the upper income levels will increase revenue, but the gains would come with increased revenue volatility.
The provisions of this bill would increase State General Revenue by no more than $60 million per year, and possibly less. Net yield could fall short of the $60 million due to income shifting and the possibility of increased use of available tax preferences. Nearly two-thirds of potentially affected taxpayers are non-residents deriving income from property or business interests in this State.
The proposed new tax brackets for married filing separate filers are not consistent with other tax brackets for those filers. Therefore, some high income joint filers may find it advantageous to migrate to the separate filing status for West Virginia tax purposes.
Administrative costs to the Tax Department will be $28,000 in FY2017.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov