BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1827|
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UNFINISHED BUSINESS
Bill No: SB 1827
Author: Migden (D)
Amended: 6/14/06
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 4-2, 4/26/06
AYES: Machado, Alquist, Cedillo, Scott
NOES: Dutton, Runner
NO VOTE RECORDED: Poochigian
SENATE APPROPRIATIONS COMMITTEE : 8-5, 5/25/06
AYES: Murray, Alarcon, Alquist, Escutia, Florez, Ortiz,
Romero, Torlakson
NOES: Aanestad, Ashburn, Battin, Dutton, Poochigian
SENATE FLOOR : 25-13, 5/30/06
AYES: Alarcon, Alquist, Bowen, Cedillo, Chesbro, Ducheny,
Dunn, Escutia, Figueroa, Florez, Kehoe, Kuehl, Lowenthal,
Machado, Migden, Murray, Ortiz, Perata, Romero, Scott,
Simitian, Soto, Speier, Torlakson, Vincent
NOES: Aanestad, Ackerman, Ashburn, Battin, Cox, Denham,
Dutton, Hollingsworth, Maldonado, Margett, McClintock,
Morrow, Poochigian
NO VOTE RECORDED: Runner, Vacancy
ASSEMBLY FLOOR : Not available
SUBJECT : Taxation: domestic partners
SOURCE : Equality California
CONTINUED
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DIGEST : This bill requires registered domestic partners
to file personal income tax returns, as either (1) married
filing joint, or (2) married filing separate.
Assembly Amendments add declaratory language and make
technical changes.
ANALYSIS : The Personal Income Tax Law imposes tax on
taxable income and provides, among other things, that
specified definitions govern the construction of that law.
Existing law allows married couples to file joint or
separate state tax returns, as specified.
This bill allows registered domestic partners to file joint
or separate state tax returns, as specified.
This bill:
1. Contains legislative declarations and findings on the
treatment of registered domestic partners with respect
to state income taxes.
2. Requires registered domestic partners to file either a
joint state income tax return, or a separate state
income tax return, applying the standards applicable to
spouses under federal income tax law.
3. Provides a rule to determine the application of limits
based on adjusted gross income for domestic partners by
combining the amounts reflected as adjusted gross income
on the federal income tax return of each domestic
partner.
4. Revises existing provisions of law to treat registered
domestic partners as spouses for purposes of filing
status as follows: (a) If couples were registered as
domestic partners as of the close of the taxable year,
they may file separate returns if either partner was
either an active member of the Armed Forces or any
auxiliary branch thereof, or was a nonresident for the
entire taxable year who had no income from a California
source, (b) domestic partners may not file separate
returns for any taxable year where a joint return has
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already been filed after the original filing period to
file a return has expired, (c) no joint return can be
made if the domestic partners have different taxable
years, subject to exception, and (d) extends to
registered domestic partners the same rules with respect
to filing status that are applicable in the event of the
death of one or both spouses.
5. Applies the California community property rules to
registered domestic partners in the same manner as
married couples.
Comments
According to supporters of the bill, there have been unfair
financial burdens on domestic partners and their families,
especially those they bear under the state's tax laws.
After the passage of the comprehensive domestic partnership
law enacted in 2003, registered domestic partners have
assumed mutual financial responsibility of each other on
the same terms as spouses. Yet, the state's laws deny
them equal treatment with respect to state income taxes
denying the convenience and financial benefits that
sometimes come with filing a joint return. This bill,
according to the supporters, will make a significant
difference in the lives of thousands of same-sex couples in
the state and will be a statement of respectful inclusion
for all.
Prior legislation . AB 205 (Goldberg), Chapter 421,
Statutes of 2003, as introduced on January 28, 2003,
allowed domestic partners to file personal income tax
returns as either (1) married filing joint, or (2) married
filing separate. In addition, the bill, as chaptered, made
changes to various California laws regarding domestic
partners, including the creation of community property
rights. It also added language that required the same
filing status on a state income tax return as used on the
federal income tax return and provided that earned income
is not community property for state income tax purposes.
The provisions of joint filing were removed from the bill.
AB 25 (Migden), Chapter 893, Statutes of 2001, allowed
several existing taxpayer benefits for medical expenses and
health insurance benefits to include a taxpayer's domestic
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partner and a domestic partner's dependents.
Other states' legislation . For tax periods ending on or
after May 16, 2004, Massachusetts recognizes the right of
same-sex couples to be married. As a consequence, same-sex
spouses that marry shall file Massachusetts income tax
returns as married filing joint or married filing separate.
Massachusetts is not a community property state.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Franchise Tax Board, this bill would have
the following fiscal impact:
2007-08: -$8 million
2008-09: -$9 million
2009-10: -$10 million
SUPPORT : (Verified 8/23/06)
Equality California (source)
Attorney General Bill Lockyer
Gay and Lesbian Alliance of the Central Coast
Lambda Letters Project
Los Angeles Gay and Lesbian Center
San Francisco AIDS Foundation
San Francisco LGBT Community Center
State Bar of California, Taxation Section
State Controller Steve Westly
State Treasurer Phil Angelides
Stonewall Democratic Club of Greater Sacramento
OPPOSITION : (Verified 8/23/06)
California Catholic Conference
Concerned Women for America
ARGUMENTS IN SUPPORT : According to the Assembly Revenue
and Taxation Committee analysis, supporters of this bill
contend that there have been unfair financial burdens on
domestic partners and their families, especially those they
bear under the state's tax laws. After the passage of the
comprehensive domestic partnership law enacted in 2003,
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registered domestic partners have assumed mutual financial
responsibility of each other on the same terms as spouses.
Yet, the state's laws deny them equal treatment with
respect to state income taxes denying the convenience and
financial benefits that sometimes come with filing a joint
return. This bill, according to the supporters, will make
a significant difference in the lives of thousands of
same-sex couples in the state and will be a statement of
respectful inclusion for all.
ARGUMENTS IN OPPOSITION : According the Assembly Revenue
and Taxation Committee analysis, opponents assert that the
tax benefit that is conferred to domestic partners under
this bill is the last marital benefit still reserved for
married couples. They comment that the benefits of
marriage have been largely transferred to same-sex
relationships without the consent of California voters,
despite the passage of Proposition 22, which defined
marriage as between one man and one woman. Opponents also
comment that this bill could create confusion with federal
law, leading to additional taxpayer expense.
DLW:mel 8/23/06 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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