FISCAL NOTE

Date Requested: January 11, 2019
Time Requested: 03:19 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2071 Introduced SB280
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 exempt social security income from state income taxation
    
    The bill proposes a modification that would reduce federal adjusted gross income, for West Virginia Personal Income Tax purposes, by the amount of Social Security benefits paid to the extent that the benefits are included in federal adjusted gross income. The modification would be effective for taxable years beginning on or after January 1, 2020.
    
    According to our interpretation, passage of the bill would reduce General Revenue Fund collections by roughly $96.0 million in FY2021 due to the exclusion of taxable social security benefits from the State Personal Income Tax. The value of the proposed tax exclusion will grow over time as members of the baby-boom generation begin receiving Social Security benefits.
    
    The Governor’s official revenue estimate incorporates the assumption that the legislature would enact the Governor’s proposed bill to exempt taxable social security benefits from state taxation beginning in tax year 2019. Given that the provisions of this bill would not be in effect until TY2020 or FY2021, actual estimated revenues would be nearly $50 million higher for FY2020 relative to the official estimated under the assumption that this bill would pass in lieu of the Governor’s proposed bill.
    
    Additional administrative costs incurred by the State Tax Department would be $51,000 in FY2021 and $40,000 in each of the fiscal years thereafter.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2019
Increase/Decrease
(use"-")
2020
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 40,000
Personal Services 0 0 40,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 -96,000,000


Explanation of above estimates (including long-range effect):


    The bill proposes a modification that would reduce federal adjusted gross income, for West Virginia Personal Income Tax purposes, by the amount of Social Security benefits paid to the extent that the benefits are included in federal adjusted gross income. The modification would be effective for taxable years beginning on or after January 1, 2020.
    
    According to our interpretation, passage of the bill would reduce General Revenue Fund collections by roughly $96.0 million in FY2021 due to the exclusion of taxable social security benefits from the State Personal Income Tax. The value of the proposed tax exclusion will grow over time as members of the baby-boom generation begin receiving Social Security benefits.
    
    The Governor’s official revenue estimate incorporates the assumption that the legislature would enact the Governor’s proposed bill to exempt taxable social security benefits from state taxation beginning in tax year 2019. Given that the provisions of this bill would not be in effect until TY2020 or FY2021, actual estimated revenues would be nearly $50 million higher for FY2020 relative to the official estimated under the assumption that this bill would pass in lieu of the Governor’s proposed bill.
    
    Additional administrative costs incurred by the State Tax Department would be $51,000 in FY2021 and $40,000 in each of the fiscal years thereafter.
    
    
    



Memorandum


    



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov