Fiscal Note - SB 0101 - Increases Dependency Exemption to $1200
L.R. NO. 0473-01
BILL NO. SB 101
SUBJECT: Taxation and Revenue: General-Income
TYPE: Original
DATE: December 18, 1996
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue ($24,507,779) ($65,484,787) ($65,615,757)
Total Estimated
Net Effect on All
State Funds ($24,507,779) ($65,484,787) ($65,615,757)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
None
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
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 ($0) in FY 98, ($65,484,787) in FY 99 and
($65,615,757) in FY 2000 in lost General Revenue funds annually. COA staff
assume that taxpayers will not adjust their withholdings in FY 98 to take
advantage of the increased dependent deduction. 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 $24,507,779 for FY 1998 due
to the possibility of reduced withholding and estimated income tax payments
for five months of calendar year 1998.
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.
This proposal would result in a decrease in Total State Revenues since the
Individual Income tax collections are included in the calculation of Total
State Revenue.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(6 Mo.)
GENERAL REVENUE FUND
Loss - General Revenue Fund
Increased Dependency Deduction ($24,507,779) ($65,484,787) ($65,615,757)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND ($24,507,779) ($65,484,787) ($65,615,757)
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(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 1998 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
This Fiscal Note is not an official copy and should not be quoted or cited.