Fiscal Note & Local Impact Statement
127 th General Assembly of Ohio
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BILL: |
DATE: |
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STATUS: |
SPONSOR: |
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LOCAL IMPACT
STATEMENT REQUIRED: |
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CONTENTS: |
Create an income tax deduction for living organ donors and
income tax credit for deceased organ donors |
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STATE FUND |
FY 2007 |
FY 2008 |
FUTURE YEARS |
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General Revenue Fund |
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Revenues |
Loss of approximately
$260,450 |
Potentially higher losses |
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Expenditures |
- 0 - |
- 0 - |
- 0 - |
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Note: The state
fiscal year is July 1 through June 30.
For example, FY 2007 is July 1, 2006 – June 30, 2007.
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The
tax deduction for living donors and tax credit for deceased donors are
estimated to reduce income tax revenues by approximately $291,000 in FY 2008,
based on 2006 organ donation levels in Ohio.
·
For
future years the potential loss could be higher as the number of donors may
increase due to the tax incentives.
·
Based
on the Revised Code formula for distributing income tax revenue, the GRF
receives 89.5% of personal income tax revenue.
Hence the GRF will bear a loss of approximately $260,450 in FY 2008.
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LOCAL
GOVERNMENT |
FY 2007 |
FY 2008 |
FUTURE YEARS |
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Counties, municipalities,
townships, and libraries (LGF, LGRAF, and LLGSF) |
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Revenues |
- 0 - |
Loss of approximately
$31,000 |
Potentially higher losses |
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Expenditures |
- 0 - |
- 0 - |
- 0 - |
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School Districts |
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Revenues |
- 0 - |
Potential loss of
approximately $73,800 |
Potentially higher losses |
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Expenditures |
- 0 - |
- 0 - |
- 0 - |
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Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.
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H.B. 25 would establish an
income tax deduction for qualified organ donation expenses up to $10,000, and
would establish a $500 tax credit for taxpayers who died during a tax year and
donated an organ following death. The
qualified organ donation expenses for which a deduction would be allowable are
defined to be travel and lodging expenses and foregone wages. To be eligible for the tax deduction, the
expenses must not have been otherwise compensated for by any other source. The tax credit is a refundable credit.
According to Organ
Procurement and Transplantation Network, there were 657 organ donations in Ohio
during 2006. Of these 657 donations,
369 were made by living donors and 288 were made by deceased donors.
Based on 2006 donor levels,
the refundable tax credit for deceased organ donors would reduce revenues under
the income tax by $144,000 (288 x $500 = $144,000), assuming that all eligible
donors take full advantage of the tax credit.
Similarly, based on 2006 donor levels, and assuming the average donor
has a federal adjusted gross income (FAGI) of $55,338 and an average personal
income tax liability of $1,787,[1]
the tax liability for each of the 369 living donors would have been reduced by
an estimated $398.[2] The estimated revenue loss from the
deduction would therefore be approximately $147,000 (369 x $398 = $146,987),
assuming that all 369 eligible donors take full advantage of the tax deduction.
Adding the revenue losses
from the two tax provisions yields a total estimated revenue loss of
approximately $291,000. To the extent
that the bill would successfully encourage Ohio taxpayers to donate organs,
actual revenue losses would be greater than this estimate. The revenue loss would be shared by the GRF
and the local government funds according to the Revised Code formula for
distributing the income tax revenue.
The statutory distribution of receipts from the income tax is as
follows: 89.5% to the GRF, 5.7% to the
Library and Local Government Support Fund, 4.2% to the Local Government Fund,
and 0.6% to the Local Government Revenue Assistance Fund. The income tax rate reductions scheduled for
tax years 2007 through 2009 will act to reduce any revenue losses from the
deduction.
The tax deduction for
qualified organ donation expenses would also reduce the tax base for school
district income taxes. The revenue loss
for each deduction claimed would depend on the school district in which the
donor resides, the school district income tax rate for that district, and the
value of deduction claimed. If a donor
were in a district without a school district income tax, there would be no
revenue loss due to that donor's deduction.
If all 369 donors were living in districts without a school district
income tax, then there would be no statewide revenue loss. If all 369 donors were from school districts
that levy a school district income tax at the current maximum rate of 2%[3]
and took the full $10,000 deduction, then the statewide revenue loss would be
$73,800 (369 x $10,000 x 2% = $73,800).
LSC fiscal staff: Isabel Louis, Economist
[1] These figures were based on average taxpayer FAGI and tax liability for taxable year 2004.
[2] The effective tax rate in this bracket was approximately 3.00% in taxable year 2004.
[3] There is no rate limit. The only stipulation by law is that the rate must be in increments of a quarter percent (0.25%). Currently, the minimum rate levied by a school district is 0.50%, the maximum rate is 2.00%, the median rate is 1.00%, and the most frequently charged rate is 1.00%.