DOVER — Republican-backed legislation awaiting action in the House of Representatives would cut taxes and provide tax credits to individuals.
Of the five bills, the most impactful and least likely to become law is House Bill 191. Sponsored by Rep. Rich Collins, R-Millsboro, the measure would cut taxes on personal income, gross business receipts and corporations.
Under the bill, each individual income tax bracket would be reduced by 10%. For instance, the lowest level, income between $2,000 and $5,001, would be taxed at 1.98%, instead of 2.2%, while the highest bracket, representing all income greater than $60,000, would go from 6.6% to 5.94%.
The corporate income tax would be slashed from 8.7% to 6.1%, and the gross receipts tax, which covers business revenue, would be sliced in half.
Though there is no analysis indicating the exact revenue impact of those changes yet, the House Republican caucus said it would save taxpayers more than $420 million a year.
“This is an economic development bill,” Rep. Collins said in a statement. “In recent years, Delaware has had one of the worst economic growth rates in the nation. I believe allowing people and businesses to keep more of their own money will jumpstart investment, increase employment, and raise starting wages. The state will reap the benefits of this too, as better economic performance produces higher revenue.”
House Bill 172, meanwhile, would temporarily eliminate the state’s portion of the realty transfer tax for certain first-time homebuyers.
The bill, sponsored by Rep. Lyndon Yearick, R-Magnolia, would apply to individuals with a gross income of less than $45,000 for single buyers or less than $75,000 in combined income for joint purchasers, as long as the price of the home is no more than $250,000.
The legislation, which has a built-in expiration date of Dec. 31, 2022, has one Democratic co-sponsor along with its GOP backers.
House Bill 158, also introduced by Rep. Yearick, would create a tax credit for low-income Delawareans. The credit would be $500 for individuals earning between $18,000 and $30,000 and $1,000 for spouses filing jointly with combined income of between $36,000 to $60,000.
Additionally, the bill would increase a $110 personal income tax credit available to some members of the working poor to $500. If the credit exceeds the taxes a person owes, he or she would receive the remaining value in the form of a tax refund.
Both bills are awaiting fiscal notes from the legislature’s budget arm.
“I am committed to supporting our working poor with my bills to reduce the realty tax, create a new tax credit, and increase an existing personal tax credit,” Rep. Yearick said in a statement. “These proposals encourage work, offset the tax increases we implemented in 2017, and support individuals and families.”
Two proposals from Rep. Mike Ramone, R-Newark, would repeal tax increases enacted to close a budget gap in 2017. House Bill 108, which has bipartisan support, would increase a school property tax credit for seniors from $400 to $500. House Bill 71 would lower the realty transfer tax from 4% of the home purchase price to 3%.
A fiscal note for a version of HB 108 from 2019 estimates that it would save elderly Delawareans more than $4 million combined each year. The latter bill would, over a full year, divert $83 million from the state’s coffers back to homebuyers.
“These bills are two initiatives that I have been relentlessly fighting for over the past few years,” Rep. Ramone said in a statement. “With an extraordinarily improved revenue picture this year, there should be no reason to delay implementation of either proposal.”
While Delaware was expected to see a financial hit from COVID-19, budget projections are rosy. According to the panel that sets the state’s revenue forecast, which determines how much lawmakers can spend in the annual operating budget, projections have increased by about $750 million over the current and upcoming fiscal year since December.
That does not include funding the state is receiving in the federal coronavirus relief package.
All five bills are awaiting action in committee. Two have been sitting there for more than three months.