HCS HB 351 & 295 -- PHARMACEUTICAL TAX CREDIT

SPONSOR:  Bray (Scheve)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Ways and
Means by a vote of 14 to 0.

This substitute authorizes a state income tax credit of up to
$1,000 per year for certain taxpayers for out-of-pocket costs
for prescription drugs.

A taxpayer must have income of less than $20,000 if single and
$22,000 if married to qualify for the full $1,000 credit and be:

(1)  at least 65 years of age; or

(2)  a disabled veteran or spouse of a disabled veteran; or

(3)  disabled as define in statute; or

(4)  at least 60 years old and receiving Social Security
surviving spouse benefits.

The substitute also eliminates a "dead drop off" of the credit
at a certain income level by phasing out the credit between
$20,000 and $30,000 of income for single taxpayers and between
$22,000 and $32,000 for married taxpayers.  This is accomplished
by reducing the $1,000 credit by $1 for every $10 of taxpayer
income over the income limit.

The credit is refundable (excess credit over the taxpayer's
liability will be refunded).

The effective date of the program will allow the taxpayer to
take the credit for tax year 1999.

FISCAL NOTE:  Estimated Net Cost to General Revenue Fund of
$65,544,250 in FY 2000, $65,567,172 in FY 2001, and $65,544,250
in FY 2002.

PROPONENTS:  Supporters say that this bill will give tax relief
to senior and disabled taxpayers on fixed incomes with high
prescription drugs costs.

Testifying for the bill were Representatives Scheve and
Reynolds; American Association of Retired Persons; Silver-haired
Legislature; Older Adult Community Action Center; Laborers
Union; and Pharmaceutical Manufacturer's Association.

OPPONENTS:  There was no opposition voiced to the committee.

Bill Tucker, Assistant Director of Research

HB 351 -- Income Tax Credit for Prescription Drug Costs

Co-Sponsors:  Scheve, Gaw

This bill authorizes a state individual income tax credit for
qualified taxpayers of up to $750 per tax year for non--
reimbursed prescription drug costs.

A qualified taxpayer is anyone 65 years of age or older, or who
is a disabled veteran or spouse of a disabled veteran, or who is
legally disabled, or who is 60 years of age or older who
receives surviving spouse Social Security benefits during the
tax year.

Prescription drugs are drugs prescribed by a physician,
including insulin, syringes, and needles used to administer
insulin.  Only costs that are not reimbursed from any source
will be allowed to determine the credit.

The bill also places a floor on the authorized credit amount
equal to 1% of the taxpayer's income.

If the credit exceeds the taxpayer's liability in any tax year,
the excess will be refunded to the taxpayer but cannot be
carried over to future tax years.

This bill will become effective January 1, 2000.