COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO.: 2456-01
BILL NO.: SB 695
SUBJECT: Revenue Dept.; Taxation and Revenue-General-Income
TYPE: Original
DATE: February 10, 2000
FISCAL SUMMARY
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| General Revenue | $0 | $0 | $0 |
| Outstanding Schools Trust | $0 | $0 | $0 |
| Total Estimated
Net Effect on All State Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| Local Government | $0 | ($351,500,000) | ($372,600,000) |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 4 pages.
ASSUMPTION
Officials of the Department of Revenue (DOR) state this proposal eliminates the limit on the individual federal income tax deduction on January 1, 2001. This proposal will have little or no administrative impact to the Department of Revenue.
In a similar proposal officials of the Office of Administration (COA) stated this proposal restores the full federal income tax deduction for individual income taxpayers.
COA staff state that their estimate for restoring the full federal income tax deduction is from the FY 2002 Consensus Revenue Forecast and Budget and Planning's Individual Income Tax Simulator. The amount of the revenue loss is ($351.5 million) in FY 2002 and ($372.6 million) in FY 2003. COA stated the revenue reductions from this proposal would require an equivalent amount of General Revenue in order to fully fund the Foundation Formula. A six percent growth rate was assumed.
Oversight will reflect the impact of this proposal as a loss to local school districts.
This proposal would result in a decrease in Total State Revenues.
| FISCAL IMPACT - State Government | FY 2001
(10 Mo.) |
FY 2002 | FY 2003 |
| GENERAL REVENUE FUND | |||
|
Loss to General Revenue Fund Increase in Federal Income Tax Deduction |
$0 |
($351,500,000) |
($372,600,000) |
|
Savings to General Revenue Fund Reduction in funds transferred to Outstanding Schools Trust Fund |
$0 |
$351,500,000 |
$372,600,000 |
|
ESTIMATED NET EFFECT ON GENERAL REVENUE FUND |
$0 |
$0 |
$0 |
|
OUTSTANDING SCHOOLS TRUST FUND |
|||
|
Loss to Outstanding Schools Trust Fund Increase in Federal Income Tax Deduction |
$0 |
($351,500,000) |
($372,600,000) |
|
Savings Outstanding Schools Trust Fund Reduction in funds transferred to local school districts |
$0 |
$351,500,000 |
$372,600,000 |
|
ESTIMATED NET EFFECT TO OUTSTANDING SCHOOLS TRUST FUND |
$0 |
$0 |
$0 |
| FISCAL IMPACT - Local Government | FY 2001
(10 Mo.) |
FY 2002 | FY 2003 |
| SCHOOL DISTRICTS | |||
|
Loss to Local School Districts Reduction in funds transferred from The Outstanding Schools Trust Fund |
$0 |
($351,500,000) |
($372,600,000) |
|
ESTIMATED NET EFFECT ON SCHOOL DISTRICTS |
$0 |
($351,500,000) |
($372,600,000) |
FISCAL IMPACT - Small Business
Small business would be expected to be fiscally impacted to the extent that they pay income taxes. The increase in the federal income tax deduction would cause small businesses to pay less income tax.
DESCRIPTION
Current law limits the deduction for federal income taxes paid by individuals to $5,000 for single filers and $10,000 for married couples filing a combined return. This act removes those limitations and allows full deductibility of federal income taxes for individuals beginning January 1, 2001.
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
Jeanne Jarrett, CPA
Director
February 10, 2000