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.
| SPONSOR: | Cisneros | DATE TYPED: | 02/15/01 | HB | |||
| SHORT TITLE: | Adjust Income Tax | SB | 213 | ||||
| ANALYST: | Williams | ||||||
| Subsequent
Years Impact |
Recurring
or Non-Rec |
Fund
Affected | ||
| FY01 | FY02 | |||
| $ (42,800.0) | $ (42,500.0) | Recurring | General Fund | |
(Parenthesis ( ) Indicate Revenue Decreases)
SOURCES OF INFORMATION
LFC Files
Taxation and Revenue Department
SUMMARY
Synopsis of Bill
The bill is a personal income tax reduction package. The provisions of the bill would be applicable beginning tax year 2001.
The bill authorizes an expansion of the low income comprehensive tax rebate. This component of the bill is an increase of 20 percent in every cell of the LICTR table.
The bill creates a zero bracket amount at $3,200 for married filing joint as well as for other taxpayer filing categories. Zero bracket proposals typically impact lower income tax payers, while reducing general fund revenue on a recurring basis. TRD estimates 49,000 returns would be dropped from liability from this tax package.
The bill would reduce the top tax rate from 8.2% to 7.9% and broaden brackets. These approaches also reduce general fund revenue on a recurring basis.
Tables provided from the Taxation and Revenue Department fiscal impact report are attached to provide a basis for comparing current and proposed income brackets and tax rates.
FISCAL IMPLICATIONS
TRD has estimated that the proposed changes would decrease general fund revenues by $42,800.0 million in FY02 and by $42,500.0 in FY03. TRD's estimate of the distribution of tax relief by income class is shown on the attached table.
ADMINISTRATIVE IMPLICATIONS
TRD reports that 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 reductions by income groups, tax relief by group, share of taxpayers in each group and each group's share of tax relief are summarized in the attached table.
AW/ar