This Fiscal Note is not an official copy and should not be quoted or cited.
This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0065 - Restores full federal income tax deductibility for corporations
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO.: 0277-01
BILL NO.: SB 65
SUBJECT: Corporations; Revenue Department; Taxation and Revenue - General; Taxation and Revenue - Income
TYPE: Original
DATE: February 12, 1999
FISCAL SUMMARY
|
ESTIMATED NET EFFECT ON STATE FUNDS | |||
| FUND AFFECTED | FY 2000 | FY 2001 | FY 2002 |
| General Revenue | $0 | $0 | $0 |
| Outstanding Schools Trust | $0 | ($24,000,000) | ($24,800,000) |
| Total Estimated
Net Effect on All State Funds |
$0 | ($24,000,000) | ($24,800,000) |
|
ESTIMATED NET EFFECT ON FEDERAL FUNDS | |||
| FUND AFFECTED | FY 2000 | FY 2001 | FY 2002 |
| None | |||
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
|
ESTIMATED NET EFFECT ON LOCAL FUNDS | |||
| FUND AFFECTED | FY 2000 | FY 2001 | FY 2002 |
| Local Government | (UNKNOWN) | (UNKNOWN) | (UNKNOWN) |
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 3 pages.
FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Revenue assume this proposal would not fiscally impact their agency. All modifications to the income tax system, forms, and reports would be completed by the Division of Taxation with existing staff and resources.
Office of Administration (COA) officials state the estimates are from the FY 2000 Consensus Revenue Forecast and COA's Corporate Income Tax Simulator. COA states the revenue deductions from this proposal would require an equivalent amount of general revenue in order to fully fund the Foundation Formula. COA assumes that taxpayers would not adjust their withholdings in FY 2000 to take advantage of this deduction.
Oversight will reflect the impact of this proposal as a loss to the Outstanding Schools Trust Fund.
This proposal would result in a decrease in Total State Revenues.
| FISCAL IMPACT - State Government | FY 2000 | FY 2001 | FY 2002 |
| (6 Mo.) | |||
| GENERAL REVENUE FUND | |||
| Loss - General Revenue Fund | |||
| Increase in federal income tax deduction | $0 | ($24,000,000) | ($24,800,000) |
| Savings - General Revenue Fund | |||
| Reduction in funds transferred to | |||
| Outstanding Schools Trust Fund | $0 | $24,000,000 | $24,800,000 |
|
ESTIMATED NET EFFECT ON |
|||
| GENERAL REVENUE FUND | $0 | $0 | $0 |
| OUTSTANDING SCHOOLS TRUST FUND | |||
| Loss - Outstanding Schools Trust Fund | |||
| Reduction in funds transferred from | |||
| Outstanding Schools Trust Fund | $0 | ($24,000,000) | ($24,800,000) |
|
ESTIMATED NET EFFECT ON |
|||
| OUTSTANDING SCHOOLS | |||
| TRUST FUND | $0 | ($24,000,000) | ($24,8000,000) |
| FISCAL IMPACT - Local Government | FY 2000 | FY 2001 | FY 2002 |
| (6 Mo.) | |||
| LOCAL SCHOOL DISTRICTS | |||
| Loss - Local School Districts | |||
| Reduction in funds transferred from the | |||
| Outstanding Schools Trust Fund | (Unknown) | (Unknown) | (Unknown) |
|
ESTIMATED NET EFFECT ON |
|||
| LOCAL SCHOOL DISTRICTS | (UNKNOWN) | (UNKNOWN) | (UNKNOWN) |
| FISCAL IMPACT - Small Business | |||
| Small businesses would be expected to be fiscally impacted to the extent that they pay income taxes. The increase in the federal income tax deduction would cause small businesses to pay less state income tax. | |||
DESCRIPTION
Current law limits the deduction for federal income taxes paid by corporations to 50% of the taxes paid. This proposal would remove that limitation and would allow full deductibility of federal income taxes for corporations beginning January 1, 2000.
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
Division of Budget and Planning
Jeanne Jarrett, CPA
Director
February 12, 1999