Provides for a six-year phase out of the state tax levied on the net income of individuals beginning Jan. 1, 2015 (OR -$135,000,000 GF RV See Note)
Impact
The bill significantly alters the taxation landscape for individuals in the state, effectively resulting in a $135 million reduction in general fund revenue by the time the phase-out is completed. The elimination of the income tax is likely to enhance disposable income for individuals, potentially stimulating consumer spending and economic activity. However, this loss of tax revenue raises concerns regarding the state's ability to fund essential services and govern effectively, particularly in areas like education and infrastructure that heavily rely on state funding.
Summary
House Bill 669 introduces a phased approach to transitioning away from the state income tax on individuals. Commencing on January 1, 2015, the bill outlines a six-year timeline during which the income tax rates will be gradually reduced until they are entirely eliminated by January 1, 2020. The proposed reductions in the tax rate are set at 83.33% for 2015, 66.66% for 2016, 50% for 2017, 33.33% for 2018, and 16.66% for 2019, after which no state income tax would be levied on individual earnings.
Sentiment
The sentiment towards HB 669 is mixed, with considerable support from proponents who argue that it will promote economic growth by attracting new residents and businesses that prefer states with lower taxes. On the other hand, critics warn about the long-term fiscal implications, arguing that such significant loss in tax revenue poses a risk to essential state services and could lead to budgetary shortfalls in future years. As such, the debate reflects broader tensions between fiscal conservatism and the need for sustainable public funding.
Contention
Key points of contention revolve around the potential impacts on state revenue and public services. Supporters claim that reducing individual tax burdens will lead to increased economic activity; however, skeptics argue that the rapid loss of tax income could lead to devastating cuts in state funding. The bill raises philosophical questions about the role of taxation in supporting public welfare versus incentivizing individual economic freedom. As discussions progress, balancing these values remains a central challenge.
Phases down the highest corporate income tax rates (5% to 8%) to 4% over a four-year period starting for tax years beginning in 2013. (gov sig) (OR -$207,000,000 GF RV See Note)
Provides for a 5-year phase out of the state tax levied on the net income of individuals and includes special provisions relating to persons age 65 and older
Phases down the highest individual income tax and estate and trust tax rate from 6% to 4% over a four-year period starting for tax beginning in 2013. (gov sig) (OR -$20,500,000 GF RV See Note)