BILL ANALYSIS
AB 17 X4
Page 1
(Without Reference to File)
CONCURRENCE IN SENATE AMENDMENTS
AB 17 X4 (Budget Committee)
As Amended July 23, 2009
Majority vote
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|ASSEMBLY: | |(July 9, 2009) |SENATE: | |(July 23, |
| | | | | |2009) |
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(vote not relevant) (vote not
available)
Original Committee Reference: RLS.
SUMMARY: Contains two provisions aimed at accelerating revenues
to the General Fund (GF).
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Implement the Governor's May Revise proposals which:
a) Increase tax withholding schedules by 10%. Currently,
many taxpayers owe tax in excess of that withheld by their
employer, and for these taxpayers, the increase would
result in withholding more closely matching their final tax
liabilities. The final tax owed by the taxpayer is
unchanged, and, as under existing law, taxpayers may modify
their withholding to reflect their individual circumstances
if they wish; and,
b) Require individual and corporate taxpayers to accelerate
estimated payments by remitting 30% of their estimated
annual income or corporate tax liabilities in April, 40% in
June (compared to existing law requirements of 30% each and
April and June.
FISCAL EFFECT : As shown in the accompanying table, the revenue
acceleration measures would raise GF collections by $2.3 billion
in 2009-10 and $193 million in 2010-11.
Revenue Impact of Compliance and Acceleration Provisions
(In millions)
AB 17 X4
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-----------------------------------------
| |2009-1|2010-1|
| |0 |1 |
|---------------------------+------+------|
|Governor's proposal - |$1,700| $98|
|withholding | | |
|---------------------------+------+------|
|Governor's proposal - | 610| 95|
|estimated pmts. | | |
|---------------------------+------+------|
|Total: |$2,310|$193 |
| | | |
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AS PASSED BY THE ASSEMBLY , this was a vehicle for the budget
trailer bill.
COMMENTS:
1)Increased withholding . Existing law requires that employers
withhold a portion of employees' wages and remit them to the
Employment Development Department (EDD). The amounts withheld
are based on tables provided by the FTB to EDD. By law, these
tables are designed so that withholding of wage payment cover
the taxpayer's full liability arising from the wage payments.
However, in many instances, taxpayers with significant income
from non-wage sources, or with wage income from a spouse, owe
significant taxes on their final returns. This measure raises
the required amount of withholding by 10%, and makes
conforming changes for payments related to stock options and
bonuses. Taxpayers are permitted to modify their withholding
if they wish.
2)Accelerated estimated taxes. Individuals with non-wage income
and corporations are required to remit quarterly estimated tax
payments toward their annual liabilities. Through last year,
the majority of taxpayers - those using the regular
installment method - were required to remit four quarterly
payments, each worth 25% of their estimated full-year tax
liability. SB 28 X1 (Budget and Fiscal Review Committee),
Chapter 1, Statutes of 2007-08 First Extraordinary Session,
AB 17 X4
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accelerated the payment schedule beginning January 1, 2009, so
that the April and June payments are now equal to 30% of
estimated liabilities, and September and December are each
equal to 20% of estimated liabilities. This measure further
accelerates the schedules - requiring payments equal to 30% of
estimated liabilities in April, 40% in June, zero in
September, and 30% in December. It also makes conforming
changes for taxpayers using the annualized income installment
method and those making payments beginning after the first
quarter of the year.
Analysis Prepared by : Adam Dondro / BUDGET / (916) 319-2081
FN: 0002088