SB 0931 - Fiscal Note

Fiscal Note - SB 0931 - Authorizes income tax credit for dependents of taxpayers at certain income levels

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 3826-02

BILL NO. SB 931

SUBJECT: Children and Minors; Revenue Department; Taxation and Revenue - General; Taxation and Revenue - Income

TYPE: Original

DATE: March 9, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	($23,422)	($53,976,103)	($54,084,632)
Total Estimated Net Effect on All State Funds	($23,422)	($53,976,103)	($54,084,632)

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 4 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials from the Department of Revenue (DOR) state this proposal would allow a $250 income tax credit for each dependent claimed on the Missouri return. The credit would be given only to those taxpayers whose income is $15.000 or less (filing single) or $30,000 or less (filing combined).

ADMINISTRATIVE IMPACT:

The Division of Taxation does not anticipate the credit would create many errors. However, if the number of errors generated by this credit exceed 20,000, one Tax Processing Technician I would be needed for correction and would be requested through next year's budget process.

Changes to the telefile script would have to be coordinated with MCI. MCI would charge $250 for the script change and $.21 for each additional minute a taxpayer uses when telefiling. The Division of Taxation estimates that this credit would create an additional minute to each telefile return. The number of taxpayers eligible for this credit is unknown. The Division of Taxation estimates the total cost for the additional usage of the 800 number to be $20,000. However, if the cost exceeds $20,000, DOR would request the additional cost through next year's budget process. The Information Systems Division estimates a $6,505 cost to the State Data Center. All other changes to the income tax system, forms, and reports would be complete with existing staff and resources.

Officials of the Office of Administration (COA) state the proposal is unclear as to whether the tax credit if refundable. COA assumes that if the tax credit is non-refundable, the proposal would have an estimated fiscal impact of $0 in FY1999, ($53,955,503) in FY2000, and ($54,063,414) in FY2001. COA assumes that taxpayers would not adjust their withholdings in FY1999 to take advantage of the dependent tax credit. COA states the estimate is based on State of Missouri Individual Income Tax data, data from Tax Expenditure Report, and population projections from the State Demographer.

This proposal would result in a decrease in Total State Revenues.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
GENERAL REVENUE FUND
Loss - General Revenue Fund
Increase in tax credit for
dependents claims	$0	($53,955,503)	($54,063,414)
Cost - Department of Revenue
Expense and equipment	($23,422)	($20,600)	($21,218)
NET EFFECT ON GENERAL
REVENUE FUND	($23,422)	($53,976,103) to	($54,084,632) to
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
	$0	$0	$0
FISCAL IMPACT - Small Business

No direct fiscal impact to small businesses would be expected as a result of this proposal.

DESCRIPTION

This proposal would authorize an income tax credit for each dependent for whom a taxpayer is allowed to claim a dependency exemption deduction. The credit would be equal to $250 per dependent, and would be allowed for married taxpayers filing a combined return with Missouri adjusted gross income of $30,000 or less and for other filers (single, head of household, qualifying widow or widower, married filing separately) with Missouri adjusted gross income of $15,000 or less.

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

Office of Administration

Department of Revenue

Jeanne Jarrett, CPA

Director

March 9, 1998