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| SPONSOR: | Thompson | DATE TYPED: | 01/28/00 | HB | 59 | ||
| SHORT TITLE: | Personal Income Tax Reduction | SB | |||||
| ANALYST: | Williams | ||||||
| Subsequent
Years Impact |
Recurring
or Non-Rec |
Fund
Affected | ||
| FY00 | FY01 | |||
| $ (14,900.0) | $ (34,200.0) | Recurring | General Fund | |
(Parenthesis ( ) Indicate Revenue Decreases)
Duplicates/Conflicts with/Companion to/Relates to
SOURCES OF INFORMATION
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of Bill
This personal income tax cut package would provide tax relief which is fully phased in after three years, with inflation indexing continuing into the future. Beginning in tax year 2000, a "zero bracket" for lower income taxpayers is created which over three years would impact an estimated 98,000 taxpayers. In its first year, the proposed rate schedules exempt the first $1,100 to $2,200 of taxable income from state income taxes, depending on filing status. In addition, the bill would reduce most marginal rates. According to TRD, the proposal makes a significant reduction in the "marriage tax penalty" for higher income, married taxpayers. Ultimately the current seven bracket income tax rate tables would become six brackets. Tables provided from the Taxation and Revenue fiscal impact report are attached to provide a basis for comparing current and proposed income brackets and tax rates.
FISCAL IMPLICATIONS
Total recurring General Fund loss is estimated by TRD at $14,900.0 in FY01, $34,200.0 in FY02 and grows to $84,400.0 in FY04. Indexing is estimated to reduce recurring General Fund revenues by $2,000.0 to $4,000.0 per point of inflation.
ADMINISTRATIVE IMPLICATIONS
TRD reports it can absorb the proposed changes within existing resources.
DISTRIBUTION OF TAX REDUCTIONS
The TRD FIR provides information as to the distributional changes implied by the proposed tax cuts. The overall reduction by income groups, tax relief by group, share of taxpayers in each group and each group's share of tax relief for tax year 2000 and tax year 2003 are shown in the attached table.
AW/njw
Attachment