NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Suite 101 of the State Capitol Building North.

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates HB 97

SOURCES OF INFORMATION

LFC Files

Taxation and Revenue Department

SUMMARY

Synopsis of Bill

The bill would authorize changes and expansion of the low income comprehensive tax rebate. Each filing category could claim one exemption and an additional exemption for each qualifying family member meeting criteria including age 65 and over, blind or children. In contrast, under current law, the exemptions: 1) match the federal exemptions, 2) two can be claimed for qualifying seniors and 3) one can be claimed for the qualifying blind.

The maximum amount of modified gross income for which filers are eligible would remain at $22,000; however, the income categories are collapsed from current law. If claiming the maximum number of exemptions, the amount of the credit increases across the board in this bill. If claiming the maximum number of exemptions, the largest credit amount would increase from $450 with modified gross income of $1,500 to $5,000 in current law to a credit amount of $1,080 for filers with modified gross income from $6,000 to $8,000. The proposed changes in the credit amount for filers claiming fewer qualifying exemptions are significantly less. In a few cases, there are reductions.

The bill applies to tax years beginning 2001.

Significant Issues

Targeted beneficiaries include the elderly, grandparents raising grandchildren, families with children and the working poor. Average changes in LICTR amounts by beneficiary are shown by TRD.

FISCAL IMPLICATIONS

According to TRD, the recurring revenue loss is estimated at $28,000.0 thousand for General Fund beginning in FY01, with a full year impact of $29,500.0 thousand.

ADMINISTRATIVE IMPLICATIONS

Anticipated by TRD to be minimal.

OTHER SUBSTANTIVE ISSUES

TRD notes there is more uncertainty than ususal in calculating the impacts of this proposal.

The estimated distribution of fiscal impact as calculated by TRD is shown below:

AW/ar