BILL NUMBER: SB 1014	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 23, 2007

INTRODUCED BY   Senator Kuehl

                        FEBRUARY 23, 2007

   An act to amend Section 19602 of, to add Sections 17044.1,
17044.2, 17044.3, and 19602.6 to, and to add Part 10.1 (commencing
with Section 18352) to Division 2 of, the Revenue and Taxation Code,
and to add Division 11 (commencing with Section 18200) to the
Unemployment Insurance Code, relating to taxation, and making an
appropriation therefor.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1014, as amended, Kuehl. Taxation: single-payer health care
coverage tax.
   The Personal Income Tax Law, which is administered by the
Franchise Tax Board, imposes taxes upon the taxable income of
individual taxpayers, at specified rates, based on the amount of the
taxpayer's taxable income and alternative minimum taxable income.
   This bill, for taxable years beginning on or after January 1,
2008, would impose  , at unspecified rates,  an
additional tax  at the rate of 1%  on the taxpayer's taxable
income that exceeds $200,000  ,   but is not
over $1,000,000,  a tax on self-employment income, as defined,
of an individual taxpayer and a tax on nonwage income, as defined, of
a taxpayer. This bill would require all revenues received by the
Franchise Tax Board from those taxes be deposited in the Health
Insurance Fund, as provided.
   This bill would also impose a health care coverage tax  ,
at an unspecified rate,  on the wages of an employee to be
paid by both the employee and his or her employer, as provided. This
bill would require that all revenues derived from the payroll health
care coverage taxes be transmitted to the Treasurer to be deposited
in the Health Insurance Fund. This bill would make an appropriation
by requiring that all moneys deposited in the Health Insurance Fund
be continuously appropriated to the California Health Insurance
Agency for purposes of administering health care benefits under the
California Health Insurance System, as defined.
   This bill would require an employer, as defined, to withhold and
remit to the Employment Development Department, for each payroll
period, the amount of payroll health care coverage taxes, as
provided, reasonably estimated to be due, as prescribed by the
Franchise Tax Board, and to file a withholding report in a form
prescribed by the Employment Development Department.
    This bill would also require the Franchise Tax Board and the
Employment Development Department  , jointly,  to promulgate
rules and regulations to implement the provisions imposing all those
additional taxes.
   This bill would result in a change in state taxes for the purpose
of increasing state revenues within the meaning of Section 3 of
Article XIII A of the California Constitution, and thus would require
for passage the approval of 2/3 of the membership of each house of
the Legislature.
   Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 17044.1 is added to the Revenue and Taxation
Code, to read:
   17044.1.  (a) For each taxable year beginning on or after January
1, 2008, in addition to any other taxes imposed by this 
part, an additional tax shall be imposed on the portion of a taxpayer'
s taxable income that exceeds two hundred thousand dollars
($200,000), at the following rates:  
   (1) ___ percent on that portion of a taxpayer's taxable income
that exceeds two hundred thousand dollars ($200,000) but is not over
one million dollars ($1,000,000). 
    (2)     ___ percent on
that portion of a taxpayer's taxable income that exceeds one million
dollars ($1,000,000).   part, an additional tax at the
rate of 1 percent shall be imposed on the portion of a taxpayer's
taxable income that exceeds two hundred thousand dollars ($200,000)
but is not over one million dollars ($1,000,000). 
   (b) For purposes of applying Part 10.2 (commencing with Section
18401) of Division 2, the tax imposed under this section shall be
treated as if imposed under Section 17041.
   (c) The following provisions do not apply to the tax imposed by
this section:
   (1) The provisions of Section 17039, relating to the allowance of
credits.
   (2) The provisions of Section 17041, relating to filing status and
recomputation of the income tax brackets.
   (3) The provisions of Section 17045, relating to joint returns.
  SEC. 2.  Section 17044.2 is added to the Revenue and Taxation Code,
to read:
   17044.2.  (a) For each taxable year beginning on or after January
1, 2008, in addition to any other taxes imposed by this part, there
shall be imposed a tax on the self-employment income of every
individual taxpayer in an amount equal to ____ percent of the amount
of that taxpayer's self-employment income for that taxable year.
   (b) For purposes of this section, all of the following definitions
apply:
   (1) (A) "Self-employment income" means the net earnings from
self-employment derived by an individual during any taxable year,
except as otherwise provided.
   (B) The term "self-employment income" does not include the amount
of net earnings for the taxable year that is less than seven thousand
dollars ($7,000) or more than two hundred thousand dollars
($200,000).
   (2) "Net earnings" means net earnings from self-employment, as
defined in Section 1402(a) of the Internal Revenue Code.
   (c) For purposes of applying Part 10.2 (commencing with Section
18401) of Division 2, the tax imposed under this section shall be
treated as if imposed under Section 17041.
   (d) The Franchise Tax Board shall prescribe rules and regulations
to implement the provisions of this section.
  SEC. 3.  Section 17044.3 is added to the Revenue and Taxation Code,
to read:
   17044.3.  (a) For each taxable year beginning on or after January
1, 2008, in addition to any other taxes, there shall be imposed on
nonwage income of every individual taxpayer a tax in an amount equal
to ____ percent of the amount of the nonwage income of that
individual for that taxable year.
   (b) (1) For purposes of this section, "nonwage income" means the
amount of adjusted gross income, as defined in Section 62 of the
Internal Revenue Code, of an individual minus net earnings, if any,
as defined in Section 17044.2, minus the amount of wages, if any, as
defined in Section 18354, received by the individual.
   (2) For purposes of this section, the term "nonwage income" does
not include any amount in excess of two hundred thousand dollars
($200,000).
   (c) For purposes of applying Part 10.2 (commencing with Section
18401) of Division 2, the tax imposed under this section shall be
treated as if imposed under Section 17041.
   (d) The Franchise Tax Board shall prescribe rules and regulations
to implement the provisions of this section.
  SEC. 4.  Part 10.1 (commencing with Section 18352) is added to
Division 2 of the Revenue and Taxation Code, to read:

      PART 10.1.  CALIFORNIA HEALTH INSURANCE PREMIUM


      CHAPTER 1.  GENERAL PROVISIONS


   18352.  (a) This part is known and may be cited as the "California
Health Insurance System Funding Law."
   (b) This part creates a health care coverage premium paid through
the imposition of taxes on wages.
   18353.  Except where the context otherwise requires, the
definitions given in this chapter govern the construction of this
part.
      CHAPTER 2.  ESTABLISHMENT OF THE HEALTH CARE COVERAGE PREMIUM


   18354.  (a) In addition to the taxes imposed pursuant to Part 10
(commencing with Section 17001), for each taxable year beginning on
or after January 1, 2008, there shall be imposed on the income of
every individual a tax equal to  ____   3.78
 percent of the amount of wages received by the individual with
respect to employment for the taxable year.
   (b) For purposes of this section, all of the following definitions
apply:
   (1) "Employment" means employment as defined in Article 1
(commencing with Section 601) and Article 2 (commencing with Section
629) of Chapter 3 of Part 1 of Division 1 of the Unemployment
Insurance Code, except as otherwise provided.
   (2) "Employer" means an employer as defined in Article 3
(commencing with Section 675) of Chapter 3 of Part 1 of Division 1 of
the Unemployment Insurance Code.
   (3) (A) "Wages" means wages as defined in Article 2 (commencing
with Section 926) of Chapter 4 of Part 1 of Division 1 of the
Unemployment Insurance Code, except as otherwise provided.
   (B) The term "wages" does not include either of the following
amounts:
   (i) The first seven thousand dollars ($7,000) of remuneration
received by an individual from an employer during any taxable year,
with respect to employment.
   (ii) Remuneration in excess of two hundred thousand dollars
($200,000) paid to an individual by an employer during any taxable
year, with respect to employment.
   (C) Section 930 of the Unemployment Insurance Code does not apply
to the definition of "wages."
   18355.  (a) In addition to other taxes imposed under the
Unemployment Insurance Code, for each calendar year beginning on or
after January 1, 2008, there shall be imposed on every employer an
excise tax in an amount equal to  ____   8.17
 percent of the wages paid by the employer to each employee,
with respect to employment, during a taxable year.
   (b) For purposes of this section, all of the following definitions
apply:
   (1) "Employment" means employment as defined in Article 1
(commencing with Section 601) and Article 2 (commencing with Section
629) of Chapter 3 of Part 1 of Division 1 of the Unemployment
Insurance Code, except as otherwise provided.
   (2) "Employer" means an employer as defined in Article 3
(commencing with Section 675) of Chapter 3 of Part 1 of Division 1 of
the Unemployment Insurance Code.
   (3) "Employee" means an employee as defined in Article 1.5
(commencing with Section 621) of Chapter 3 of Part 1 of Division 1 of
the Unemployment Insurance Code.
   (4) (A) "Wages" means wages as defined in Article 2 (commencing
with Section 926) of Chapter 4 of Part 1 of Division 1 of the
Unemployment Insurance Code, except as otherwise provided.
   (B) The term "wages" does not include remuneration in excess of
two hundred thousand dollars ($200,000) paid to an individual by an
employer during any calendar year, with respect to employment.
   (C) Section 930 of the Unemployment Insurance Code does not apply
to the definition of "wages."
   18356.  The Franchise Tax Board and the Employment Development
Department shall  jointly  prescribe rules and regulations
to implement the provisions of this article.
      CHAPTER 3.  DISPOSITION OF PROCEEDS


   18357.  All amounts required to be paid to the state under Chapter
2 of this part shall be paid to the Employment Development
Department in the form of remittances payable to the Employment
Development Department, as provided in Division 11 of the
Unemployment Insurance Code. The Employment Development Department
shall transmit the payments to the Treasurer to be deposited in the
Health Insurance Fund.
   18358.  Notwithstanding Section 13340 of the Government Code, all
moneys deposited in the Health Insurance Fund under this part shall
be continuously appropriated, without regard to fiscal years, to the
California Health Insurance Agency for purposes of administering
health care benefits under the California Health Insurance System, as
defined in Division 113 of the Health and Safety Code.
      CHAPTER 4.  ADMINISTRATION


   18359.  The Employment Development Department shall have the
powers and duties to administer this part and may prescribe, adopt,
and enforce rules and regulations relating to the administration and
enforcement of this part.
  SEC. 5.  Section 19602 of the Revenue and Taxation Code is amended
to read:
   19602.  Except for amounts collected or accrued under Sections
17935, 17941, 17948, 19532, and 19561, revenues deposited pursuant to
Section 19602.5, and revenues deposited pursuant to Section 19602.6,
all moneys and remittances received by the Franchise Tax Board as
amounts imposed under Part 10 (commencing with Section 17001), and
related penalties, additions to tax, and interest imposed under this
part, shall be deposited, after clearance of remittances, in the
State Treasury and credited to the Personal Income Tax Fund.
  SEC. 6.  Section 19602.6 is added to the Revenue and Taxation Code,
to read:
   19602.6.  (a) Notwithstanding Section 13340 of the Government
Code, the revenues received by the Franchise Tax Board from
additional taxes imposed under Sections 17044.1, 17044.2, and 17044.3
shall be deposited in the Health Insurance Fund, and shall be
continuously appropriated, without regard to fiscal years, to the
California Health Insurance Agency for purposes of administering
health care benefits under the California Health Insurance System, as
defined in Division 112 (commencing with Section 131000) of the
Health and Safety Code.
   (b) Based on the procedures set forth in Section 19602.5, the
Franchise Tax Board, in consultation with the Legislative Analyst
 and the   Department of Finance,  shall, by
November 15, 2008, establish by regulation a transfer rate and a
mechanism for adjustment that permits estimated revenues from the
additional taxes imposed by Sections 17044.1, 17044.2, and 17044.3 to
be transferred by the Controller to the Health Insurance Fund on a
monthly basis, subject to an adjustment based on the procedures set
forth in Section 19602.5 to account for any difference between
estimated revenues and actual revenues.
  SEC. 7.  Division 11 (commencing with Section 18200) is added to
the Unemployment Insurance Code, to read:

      DIVISION 11.  WITHHOLDING OF HEALTH CARE COVERAGE PREMIUM


      CHAPTER 1.  GENERAL PROVISIONS


   18200.  The department shall have the powers and duties necessary
to administer the reporting, collection, refunding to the employer,
and enforcement of taxes required to be withheld by employers
pursuant to Section 18203, except as otherwise provided by this
division.
   18201.  The following provisions of this code shall apply to any
amount required to be deducted, reported, and paid to the department
under this division:
   (a) Sections 301, 305, 306, 310, 311, 312, 317, and 318, relating
to general administrative powers of the department.
   (b) Sections 403 to 413, inclusive, Section 1336, and Chapter 8
(commencing with Section 1951) of Part 1 of Division 1, relating to
appeals and hearing procedures.
   (c) Article 8 (commencing with Section 1126) of Chapter 4 of Part
1 of Division 1, relating to assessments.
   (d) Article 9 (commencing with Section 1176), except Section 1176,
of Chapter 4 of Part 1 of Division 1, relating to refunds and
overpayments.
   (e) Article 10 (commencing with Section 1206) of Chapter 4 of Part
1 of Division 1, relating to notice.
   (f) Article 11 (commencing with Section 1221) of Chapter 4 of Part
1 of Division 1, relating to administrative appellate review.
   (g) Article 12 (commencing with Section 1241) of Chapter 4 of Part
1 of Division 1, relating to judicial review.
   (h) Chapter 7 (commencing with Section 1701) of Part 1 of Division
1, relating to collections.
   (i) Chapter 10 (commencing with Section 2101) of Part 1 of
Division 1, relating to violations.
   18202.  Except where the context otherwise requires, the
definitions set forth in Division 6 of this code and Part 10
(commencing with Section 17001), Part 10.1 (commencing with Section
18352) and Part 10.2 (commencing with Section 18401) of Division 2 of
the Revenue and Taxation Code apply to this division.
      CHAPTER 2.  WITHHOLDING AND PAYMENT OF PREMIUM


   18203.  (a) Every employer who pays wages to a resident employee
for services performed either within or without this state, or to a
nonresident employee for services performed in this state, shall
deduct and withhold from those wages, except as otherwise provided in
this division, for each payroll period, the amount of taxes
reasonably estimated to be due under Chapter 2 (commencing with
Section 18354) of Part 10.1 of Division 2 of the Revenue and Taxation
Code. The method of determining the amount to be withheld shall be
prescribed by the Franchise Tax Board.
   (b) The department upon request may permit the use of accounting
machines to calculate the proper amount to be deducted and withheld
from wages, if the calculation produces an amount substantially
equivalent to the amount of tax required to be withheld under
subdivision (a).
   18204.  Every employer required to withhold any tax under Section
18203 shall for each calendar quarter, whether or not wages or
payments are paid in the quarter, file a withholding report and a
report of wages in a form prescribed by the department, and pay over
the taxes so required to be withheld. The report of wages shall
include individual amounts required to be withheld under Section
18203. Except as otherwise provided, the employer shall file a
withholding report and remit the total amount of the taxes withheld
during the calendar quarter on or before the last day of the month
following the close of the calendar quarter.
   18205.  The department shall promulgate rules and regulations to
implement the provisions of this division.