SB 0639 - Fiscal Note

Fiscal Note - SB 0639 - Raises the Dependency Exemption From $400 to $1,200

L.R. NO.  2545-01
BILL NO.  SB 639
SUBJECT:  Children; Income Tax; Taxation
TYPE:     Original
DATE:     January 29, 1996



                              FISCAL SUMMARY
                    ESTIMATED NET EFFECT ON STATE FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999
General Revenue      ($26,089,453)       ($65,354,079)     ($65,484,787)

Total Estimated
Net Effect on All
State Funds          ($26,089,453)       ($65,354,079)     ($65,484,787)

                   ESTIMATED NET EFFECT ON FEDERAL FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999
None

Total Estimated
Net Effect on All
Federal Funds                   $0                  $0                $0

                    ESTIMATED NET EFFECT ON LOCAL FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999
Local Government                $0                  $0                $0


                              FISCAL ANALYSIS

ASSUMPTION

Officials of the Department of Revenue assume this proposal would have a
minimal impact on the individual income tax system. Revisions would be
completed by existing staff.

Office of Administration (COA) officials assume this proposal would have an
estimated impact of approximately $65,000,000 in lost General Revenue funds
annually.  COA states the estimate is based on State of Missouri Individual
Income Tax data, data from the Tax Expenditure Report, and population
projections from the State Demographer.  COA officials assumed a marginal
income tax rate of 6% in calculating the estimate.

Oversight estimates a loss to General Revenue of $26,089,453 for FY 1997 due
to the possibility of reduced withholding and estimated income tax payments
for the first six months of calendar year 1997.

Oversight has not estimated or included a potential loss to the General
Revenue Fund for the effects of taxpayers' corresponding increase in federal
income taxes which in turn would result in a slight reduction to income taxes
paid to the State of Missouri. Factors which would influence this amount
include the ability of the taxpayer to itemize deductions, the income level
of the taxpayer and the limitation of the federal income tax deduction on the
Missouri return.


FISCAL IMPACT - State Government        FY 1997       FY 1998       FY 1999
                                        (6 Mo.)

GENERAL REVENUE FUND

Loss - General Revenue Fund
   Increased Dependency Deduction ($26,089,453) ($65,354,079) ($65,484,787)

ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND              ($26,089,453) ($65,354,079) ($65,484,787)


FISCAL IMPACT  - Local Government       FY 1997       FY 1998       FY 1999
                                        (6 Mo.)

                                             $0            $0            $0

DESCRIPTION

This proposal would raise the Missouri income tax dependency exemption
deduction from $400 to $1,200 beginning with the 1997 tax year.

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