| TO: | Honorable Rene Oliveira, Chair, House Committee on Ways & Means |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | HB1735 by Burnam (Relating to the imposition of an income tax on income that exceeds $100,000 to provide property tax relief and fund public education; providing penalties.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2010 | ($29,747,000) |
| 2011 | ($44,682,000) |
| 2012 | $1,374,203,000 |
| 2013 | $1,473,203,000 |
| 2014 | $1,579,203,000 |
| Fiscal Year | Probable Savings/(Cost) from General Revenue Fund 1 |
Probable Revenue Gain/(Loss) from Foundation School Fund 193 |
Probable Revenue Gain/(Loss) from New GR-Dedicated - Ad Valorem Maintenance & Operations |
Change in Number of State Employees from FY 2009 |
|---|---|---|---|---|
| 2010 | ($29,747,000) | $0 | $0 | 100.0 |
| 2011 | ($44,682,000) | $0 | $0 | 663.0 |
| 2012 | ($44,797,000) | $1,419,000,000 | $2,881,000,000 | 664.0 |
| 2013 | ($44,797,000) | $1,518,000,000 | $3,082,000,000 | 664.0 |
| 2014 | ($44,797,000) | $1,624,000,000 | $3,297,000,000 | 664.0 |
The bill would add new Chapter 261 to the Tax Code, regarding the imposition of a personal income tax.
The bill would impose a personal income tax on persons making more than $100,000 per year. Incomes would be reported separately for joint returns and the tax due would be based on each single income. For incomes above $100,000 and not exceeding $150,000, the tax due would be 2 percent of the income above $100,000. For incomes above $150,000 and not exceeding $250,000, the tax due would be $1,000 plus 3 percent of the income above $150,000. For incomes above $250,000 and not exceeding $500,000, the tax due would be $4,000 plus 4 percent of the income above $250,000. For incomes above $500,000 and not exceeding $1,000,000, the tax due would be $14,000 and plus 5 percent of the income above $500,000. For incomes in excess of $1,000,000, the tax due would be $39,000 plus 6 percent of the income above $1,000,000.
The bill would provide allowances for income tax paid to other states, for dual residents, and Texas nonresidents; conform Texas taxpayer's method of accounting to the federal income tax; and exempt partnerships from the tax. Tax payments would be due April 15, and estimated tax payments for certain returns would be due at such time as federal prepayments are due.
From the revenue generated by this tax, two-thirds would be deposited into new GR Account—Ad Valorem Maintenance & Operations, and could be appropriated only for the purpose of reducing the rate of ad valorem maintenance and operations taxes levied for public education. The remaining one-third would be deposited into GR Account—Foundation School 0193.
A constitutional referendum would be submitted to Texas voters on November 3, 2009 authorizing the enactment of statutes to implement the income tax provisions.
The bill would take effect September 1, 2009.
The fiscal analysis was based on Internal Revenue Service data regarding Texas individual and joint federal income tax filers. The estimate assumes passage of the required referendum in November 2009, followed by a period of implementation by the Comptroller's Office in which computer systems would be prepared for the new tax, personnel hired and trained, and forms and rules adopted. It is assumed the first collections would occur in fiscal 2012.
This legislation would do one or more of the following: create or recreate a dedicated account in the General Revenue Fund, create or recreate a special or trust fund either with or outside of the Treasury, or create a dedicated revenue source. The fund, account, or revenue dedication included in this bill would be subject to funds consolidation review by the current Legislature.
The administrative cost estimate reflects the funds that would be necessary to hire additional auditors, enforcement officers, processing staff and programmers to administer the new state income tax. In fiscal 2010, the administrative cost estimate reflects a one-time technology cost of $23,008,000 for computer hardware, software and programming to develop an automated system for the new tax.
There would be a technology cost to the Comptroller's Office of $23,008,000 in fiscal 2010 for computer hardware, software and programming to develop an automated system for the new tax.
| Source Agencies: | 302 Office of the Attorney General, 304 Comptroller of Public Accounts, 701 Central Education Agency
|
| LBB Staff: | JOB, MN, SD, SM
|