LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 209 HLS 21RS 214
Bill Text Version: ORIGINAL
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: April 19, 2021 8:24 AM Author: DEVILLIER
Dept./Agy.: Revenue
Subject: Corporate Income Tax Analyst: Greg Albrecht
TAX/CORP INCOME OR -$250,000,000 GF RV See Note Page 1 of 1
Provides for the rate of corporation income tax
Proposed law imposes a flat corporate income tax rate of 5%. Applicable to all tax years beginning on and after January 1,
2023.
Contingent upon adoption of the constitutional amendment contained in House Bill # of this session.
This fiscal note assumes both a constitutional amendment and a statutory companion are enacted, removing the federal
income tax deduction, and then a flat tax rate of 5% is applied to the expanded corporate income tax base.
EXPENDITURES 2021-22 2022-23 2023-24 2024-25 2025-26 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 $0 $0 $0 $0 $0
REVENUES 2021-22 2022-23 2023-24 2024-25 2025-26 5 -YEAR TOTAL
State Gen. Fd. $0 ($45,000,000) ($225,000,000) ($250,000,000) ($250,000,000) ($770,000,000)
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 ($45,000,000) ($225,000,000) ($250,000,000) ($250,000,000) ($770,000,000)
EXPENDITURE EXPLANATION
Tax system changes will have to be made to incorporate the elimination of the deduction from the tax processing system.
These changes are typically estimated as several thousands of dollars of staff time for design, modification, and testing.
REVENUE EXPLANATION
The Dept. of Revenue estimated the effect of this bill (single 5% tax rate), under the assumption that the deduction for
federal income taxes paid is also eliminated - expanding the corporate income tax base). The result was an aggregate
liability reduction of $250 million. Using the same corporate filing pattern discussed below translates tax year liability
changes into fiscal year receipts changes as follows: $45 million in FY23, $225 million in FY24, and $250 million in FY25 and
each year thereafter. These are the estimates reported in the revenue table above.
Corporate filing patterns are such that 18% of each tax year’s liability change is estimated to occur in the immediate fiscal
year (FY23 estimated payments), followed by 72% in the second fiscal year (FY24 returns & extensions), and the final 10%
in the third fiscal year (FY25 returns & extensions).
Actual annual revenue losses can differ materially from these estimates due to the inherent volatility of the corporate tax
base, and the ability of corporate tax filers to engage in tax planning. Thus, there is considerable uncertainty as to the level
of annual tax liability and tax receipt changes resulting from the bill.
Senate Dual Referral Rules House
13.5.1 >= $100,000 Annual Fiscal Cost {S & H} 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
Christopher A. Keaton
x 13.5.2 >= $500,000 Annual Tax or Fee 6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} Legislative Fiscal Officer
or a Net Fee Decrease {S}


Statutes affected:
HB209 Original: