CCS SS SCS HS HB 516 -- TAXATION

This bill makes various changes to provisions of taxation.

(1)  Under current law, the personal exemption for individual
income taxpayers is $1,200.  The head of household personal
exemption is an additional $800.  The bill increases the
personal exemption by $900 to $2,100 and increases the
additional head of household exemption by $600 to $1,400,
beginning with tax year 1999;

(2)  Under current law, corporate franchise tax is levied only
when the par value of a corporation's outstanding shares and
surplus of stock exceeds $200,000.  The bill increases the
$200,000 minimum base to $1 million.  The current franchise tax
rate is one-twentieth of 1%.  The bill reduces the tax rate to
one-thirtieth of 1%.  Under current law, the corporate franchise
tax is administered and collected by the Secretary of State.
The bill transfers the administration and collection of the
corporate franchise tax to the Department of Revenue.  These
provisions will become effective January 1, 2000;

(3)  Individual income taxpayers are allowed to deduct the
amount paid for health insurance for the taxpayer, his or her
spouse, and dependents if the taxpayer is self-employed.  The
state income tax deduction will only be allowed to the extent
the amount of the deduction is not allowed on the taxpayer's
federal income tax return;

(4)  Under current law, the income tax exemption for public and
private source pension income received is limited by maximum
adjusted gross income levels for the taxpayer.  Under current
levels, the exemption is limited to adjusted gross incomes of
$25,000 for single taxpayers and $32,000 for combined
taxpayers.  The maximum amount of exemption allowed is $6,000
for public source and $3,000 for private source.  The bill
extends the maximum adjusted gross income levels by phasing out
the pension exemption amount by $1 for each $1 of income over
the maximum levels.  The bill also changes various provisions
related to the qualifying of different pension plans and
clarifies the maximum deduction per taxpayer at $6,000;

(5)  An income tax credit is authorized for eligible
expenditures made by a taxpayer to comply with the Americans
with Disabilities Act of 1990.  The tax credit is limited to 50%
of any qualified expenditure made and may not exceed $5,000.
Any unused credit may be carried forward into future tax years;

(6)  The burden of proof is placed on the Department of Revenue
in tax cases involving taxpayers with net worth of less than $7
million and businesses with less than 500 employees, with
adequate documentation by the taxpayer.  The provisions do not
apply to applicability of tax exemptions and credits.  The bill
also requires the department to provide certain audit findings
and other documentation upon the request of the taxpayer and
requires department agents and employees to be held to the same
standards as those of the Federal Internal Revenue Service;

(7)  Certain property purchased by specific biotech, medical,
and veterinary labs for use for research and experimentation
activities is exempted from state and local sales and use tax.
Qualified taxpayers must certify the exemption with the
Department of Economic Development.  The exemption is limited
statewide to $1.3 million annually;

(8)  Machines or parts used in commercial coin-operated
amusement and vending machines are exempted from state and local
sales and use tax if sales tax is paid on the gross receipts
from the use of the machines;

(9)  Certain funds received or disbursed by the state on behalf
of counties and cities, towns, and villages are excluded from
deposit in the state treasury; and

(10)  Any taxing authority levying a tax on residential real
property is required to report such levy on a yearly basis to
the State Tax Commission which is then required to submit the
aggregate data to the General Assembly by January 31 of each
year.

Unless otherwise noted, provisions of the bill become effective
January 1, 2000.

HS HB 516 -- INCOME TAX PERSONAL EXEMPTION (Bray)

Under current law, the personal exemption for individual income
taxpayers is $1,200.  This bill increases the exemption by $900
to $2,100, beginning with tax year 1999.

FISCAL NOTE:  Estimated Net Loss to General Revenue Fund of
$145,700,000 in FY 2000, $147,900,000 in FY 2001, and
$150,100,000 in FY 2002.

HB 516 -- INDIVIDUAL INCOME TAX PERSONAL EXEMPTION

CO-SPONSORS:  Gaw, Kreider, Crump, Foley, Days, Scheve, Murray,
Bray, Williams (159)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Ways and
Means by a vote of 17 to 1.

Under current law, the personal exemption for individual income
taxpayers is $1,200.  This bill increases the exemption by $900
to $2,100 beginning with tax year 1999.

FISCAL NOTE:  Estimated Net Loss to General Revenue Fund of
$145,720,544 in FY 2000, $147,903,378 in FY 2001, and
$150,103,378 in FY 2002.

PROPONENTS:  Supporters say that increasing the personal
exemption will grant significant general tax relief to all
individual income taxpayers.

Testifying for the bill were Representative Bray; and American
Association of Retired Persons.

OPPONENTS:  There was no opposition voiced to the committee.

Bill Tucker, Assistant Director of Research

HB 516 -- Income Tax Personal Exemption

Co-Sponsors:  Gaw, Kreider, Crump, Foley, Days, Scheve, Murray,
Williams (159), Monaco, Franklin, Bray, Van Zandt, Campbell

Under current law, the personal exemption for individual income
taxpayers is $1,200.  This bill increases the exemption by $900
to $2,100 beginning with tax year 1999.