This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0101 - Increases Dependency Exemption to $1200

L.R. NO.  0473-01
BILL NO.  SB 101
SUBJECT:  Taxation and Revenue: General-Income
TYPE:     Original
DATE:     December 18, 1996



                              FISCAL SUMMARY
                    ESTIMATED NET EFFECT ON STATE FUNDS


FUND AFFECTED              FY 1998             FY 1999           FY 2000
General Revenue      ($24,507,779)       ($65,484,787)     ($65,615,757)

Total Estimated
Net Effect on All
State Funds          ($24,507,779)       ($65,484,787)     ($65,615,757)

                   ESTIMATED NET EFFECT ON FEDERAL FUNDS


FUND AFFECTED              FY 1998             FY 1999           FY 2000
None

Total Estimated
Net Effect on All
Federal Funds                   $0                  $0                $0

                    ESTIMATED NET EFFECT ON LOCAL FUNDS


FUND AFFECTED              FY 1998             FY 1999           FY 2000
Local Government                $0                  $0                $0


                              FISCAL ANALYSIS

ASSUMPTION

Officials of the Department of Revenue assume this proposal would have a
minimal impact on the individual income tax system. Revisions would be
completed by existing staff.

Office of Administration (COA) officials assume this proposal would have an
estimated impact of approximately ($0) in FY 98, ($65,484,787) in FY 99 and
($65,615,757) in FY 2000 in lost General Revenue funds annually.  COA staff
assume that taxpayers will not adjust their withholdings in FY 98 to take
advantage of the increased dependent deduction. COA states the estimate is
based on State of Missouri Individual Income Tax data, data from the Tax
Expenditure Report, and population projections from the State Demographer.
COA officials assumed a marginal income tax rate of 6% in calculating the
estimate.

Oversight estimates a loss to General Revenue of $24,507,779 for FY 1998 due
to the possibility of reduced withholding and estimated income tax payments
for five months of calendar year 1998.

Oversight has not estimated or included a potential loss to the General
Revenue Fund for the effects of taxpayers' corresponding increase in federal
income taxes which in turn would result in a slight reduction to income taxes
paid to the State of Missouri. Factors which would influence this amount
include the ability of the taxpayer to itemize deductions, the income level
of the taxpayer and the limitation of the federal income tax deduction on the
Missouri return.

This proposal would result in a decrease in Total State Revenues since the
Individual Income tax collections are included in the calculation of Total
State Revenue.

FISCAL IMPACT - State Government        FY 1998       FY 1999        FY 2000
                                        (6 Mo.)
GENERAL REVENUE FUND

Loss - General Revenue Fund
   Increased Dependency Deduction ($24,507,779) ($65,484,787)  ($65,615,757)

ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND              ($24,507,779) ($65,484,787)  ($65,615,757)


FISCAL IMPACT  - Local Government       FY 1998       FY 1999        FY 2000
                                        (6 Mo.)

                                              0             0              0

DESCRIPTION

This proposal would raise the Missouri income tax dependency exemption
deduction from $400 to $1,200 beginning with the 1998 tax year.

This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.


SOURCES OF INFORMATION

Department of Revenue
Office of Administration