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| SPONSOR: | Russell | DATE TYPED: | 05-10-99 | HB | 8 | ||
| SHORT TITLE: | Reduce Income Tax Rates | SB | |||||
| ANALYST: | Taylor | ||||||
| Recurring
or Non-Rec |
Fund
Affected | |||
| FY99 | FY2000 | FY2001 | ||
| $ 0.0 | $ (24,800.0) | $ (24,200.0) | Recurring | General Fund |
(Parenthesis ( ) Indicate Revenue Decreases)
Duplicates Senate Bill 11
SOURCES OF INFORMATION
Taxation and Revenue Department
SUMMARY
Synopsis of Bill
House Bill 8 would reduce income tax rates for tax years beginning after January 1, 2000. The proposed rate schedules exempt the first $1,000 to $2,000 of taxable income, depending upon the type of return. Specifically, for taxpayers filing single or married separate returns, the first $1,000 of taxable income would be exempt from state income taxes; for married joint filers, the first $2,000 of taxable income; and for head of household filers, the first $1,500. In addition, the bill would reduce most marginal tax rates. 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
TRD has estimated that the proposed changes would decrease general fund revenues by $24.8 million in FY 2000, and by $25.5 million on a tax year basis. The fiscal impact estimate assumes an average reduction of $46 for 549 thousand taxpayers. TRD's estimate of the distribution of tax relief by income class is shown below.
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 groups share of tax relief is summarized in the following table.
| Taxable Income | Tax Relief Per Taxpayer | Number of Taxpayers | Total Tax Relief | Percent of Taxpayers | Percent of Reduction |
| $0 to $15,000 | $13 | 245,109 | $3.2 million | 45 percent | 13 percent |
| $15,000 to $25,000 | $23 | 92,243 | $2.1 million | 17 percent | 8 percent |
| $25,000 to $40,000 | $40 | 89,399 | $3.6 million | 16 percent | 14 percent |
| $40,000 to $75,000 | $77 | 83,216 | $6.4 million | 15 percent | 25 percent |
| More than $75,000 | $257 | 39,556 | $10.2 million | 7 percent | 40 percent |
| Overall Average | $ 47 | 549,533 | $25.3 million | 100 percent | 100 percent |
BT/gm
Attachment