NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.



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F I S C A L I M P A C T R E P O R T





SPONSOR: Robinson DATE TYPED: 02/04/00 HB
SHORT TITLE: Eliminate Personal Income Tax on Capital Gains SB 153
ANALYST: Williams


REVENUE



Estimated Revenue
Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY00 FY01
$ (119,000.0) $ (114,800.0) Recurring General Fund



(Parenthesis ( ) Indicate Revenue Decreases)



Relates to SB23



SOURCES OF INFORMATION



Taxation and Revenue Department (TRD)



SUMMARY



Synopsis of Bill



Authorizes a 100% capital gains deduction phased-in over a three year period which would be applicable for sales of capital assets on or after January 1, 2000.



FISCAL IMPLICATIONS



TRD estimates General Fund net revenue loss of $119,000.0 in FY01 and $114,800.0 for a full year. TRD notes a slight gain of $10,000.0 in the full year estimate for deduction recovery, or that state income taxes for tax year 2000 are deductible from state taxes in tax year 2001, through federal piggy-backing.



ADMINISTRATIVE IMPLICATIONS



TRD estimates an additional 3 FTE would be required to FY01 at a cost of $150.0 for auditing.



CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP



Senate Bill 23 proposes a 100% capital gains deduction phased in over a three-year period.



DISTRIBUTIONAL IMPACTS



Almost 90% of the benefit of this proposal is received by 6% of taxpayers with taxable incomes in excess of $70,000, i.e. approximately $100,000 in household income.



Attached table summarizes capital gains realizations on 1997 returns based on AGI class as reported by TRD.



AW/njw