BILL NUMBER: ABX1 18 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 9, 2011
AMENDED IN SENATE JUNE 8, 2011
INTRODUCED BY Assembly Member Blumenfield
MAY 19, 2011
An act to add Chapter 33 (commencing with Section 7599) to
Division 7 of Title 1 of the Government Code, and to amend Sections
6051.7, 6201.7, 10752, 10752.1, 17041, 17054, and 7062
17062 of, and to add Sections 7101.4, 10752.2,
11001.6, and 19136.14 and 11001.6 to,
the Revenue and Taxation Code, relating to local government finance,
making an appropriation therefor, and declaring the urgency thereof,
to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 18, as amended, Blumenfield. The Schools and Local Public
Safety Protection Act of 2011.
(1) Existing law, until July 1, 2011, imposes a state sales and
use tax on retailers and on the storage, use, or other consumption of
tangible personal property in this state at the rate of 71/4% of the
gross receipts from the retail sale of tangible personal property in
this state and of the sales price of tangible personal property
purchased from any retailer for storage, use, or other consumption in
this state. Existing law reduces the state sales and use tax rate by
1% on July 1, 2011.
The Vehicle License Fee Law establishes, until July 1, 2011, in
lieu of any ad valorem property tax upon vehicles, an annual license
fee for any vehicle subject to registration in this state in the
amount of 1.15% of the market value of that vehicle, as provided.
Existing law, on and after July 1, 2011, reduces that rate to 0.65%.
This bill would extend the existing sales and use tax rate and
vehicle license fees until July 1, 2012, and would deposit the
revenues derived from that extension into the Local Revenue Fund
2011, established by this bill, to be appropriated by the Legislature
to fund the provision of public safety services, as described. This
bill would require local county officials to create a County Local
Revenue Fund 2011, and would require the money in the
County Local Revenue Fund 2011 to be used exclusively to fund the
provision of public safety services by local agencies pursuant to the
2011 Realignment Legislation, as defined.
By imposing new duties upon local county officials with respect to
the creation of the County Local Revenue Fund 2011, this
bill would impose a state-mandated local program.
This bill would additionally require, when the rates in the
above-described taxes cease to be operative, the state to annually
provide moneys in at least an equivalent amount to fund the provision
of public safety services, and would make an appropriation for this
purpose from the General Fund if the Legislature does not appropriate
sufficient funds for this purpose and transfer the moneys, as
specified.
(2) The Personal Income Tax Law imposes taxes based upon taxable
income. That law also allows credits for personal exemptions, and
imposes an alternative minimum tax, as specified. Existing law, for
taxable years beginning on or after January 1, 2009, and before
January 1, 2011, decreased the amount allowable as a credit for
personal exemption for dependents, increased the tax rate applicable
to taxable income, and increased the alternative minimum tax rate, as
provided.
This bill would continue the decrease in the amount allowable as a
credit for personal exemption for dependents for taxable years
beginning on or after January 1, 2011, and before January 1, 2013,
and would increase the tax rate applicable to taxable income and the
alternative minimum tax rate for taxable years beginning on or after
January 1, 2012, and before January 1, 2013. This bill would require
the additional revenue received from the imposition of these tax
rates and from the continuation of the credit amounts to be used
exclusively for the support of school districts and community college
districts.
(3) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
(4) The California Constitution authorizes the Governor to declare
a fiscal emergency and to call the Legislature into special session
for that purpose. Governor Schwarzenegger issued a proclamation
declaring a fiscal emergency, and calling a special session for this
purpose, on December 6, 2010. Governor Brown issued a proclamation on
January 20, 2011, declaring and reaffirming that a fiscal emergency
exists and stating that his proclamation supersedes the earlier
proclamation for purposes of that constitutional provision.
This bill would state that it addresses the fiscal emergency
declared and reaffirmed by the Governor by proclamation issued on
January 20, 2011, pursuant to the California Constitution.
(5) This bill would declare that it is to take effect immediately
as an urgency statute.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. This act shall be known and may be cited as "The
Schools and Local Public Safety Protection Act of 2011."
SEC. 2. The people find and declare the following:
(a) The chief purpose of this act is to protect schools and local
public safety by maintaining the level of certain taxes as they
existed in 2010. These taxes shall be placed in dedicated special
funds and be required to be used exclusively for schools and local
public safety.
(b) This act is part of a broader state budget plan that makes
billions of dollars in permanent cuts to state spending.
(c) This act guarantees solid, reliable funding for schools,
community colleges, and public safety.
(d) This act keeps sales and use taxes and vehicle license fees at
the same rates that were in effect in 2010, and requires that these
tax rates automatically drop to 2008 levels in one year, and this act
increases income taxes for one year beginning on or after January 1,
2012, to the same rates that were in effect in 2010. However, the
extension of these tax increases may be retained for a longer period
if a constitutional amendment extending these taxes is approved by
the voters.
(e) This act also promotes transparency and supports improved
outcomes in the delivery of public safety services.
(f) All revenues from this act are subject to audit by the
independent Controller to ensure that they will be used only for
schools and local public safety.
(g) This act guarantees that local governments will continue to
receive funding for public safety services even after the tax rates
drop to their 2008 levels.
SEC. 3. Chapter 33 (commencing with Section 7599) is added to
Division 7 of Title 1 of the Government Code, to read:
CHAPTER 33. THE SCHOOLS AND LOCAL PUBLIC SAFETY PROTECTION ACT
OF 2011
Article 1. Definitions
7599. For the purposes of this chapter:
(a) "Public Safety Services" includes the following:
(1) Employing and training public safety officials, including law
enforcement personnel, attorneys assigned to criminal proceedings,
and court security staff.
(2) Managing local jails and providing housing, treatment, and
services for, and supervision of, juvenile and adult offenders.
(3) Preventing child abuse, neglect, or exploitation; providing
services to children who are abused, neglected, or exploited, or who
are at risk of abuse, neglect, or exploitation, and the families of
those children; providing adoption services, providing transitional
housing and other services to emancipated youth, and providing adult
protective services.
(4) Providing mental health services to children and adults to
reduce failure in school, harm to self or others, homelessness, and
preventable incarceration or institutionalization.
(5) Preventing, treating, and providing recovery services for
substance abuse.
(b) "2011 Realignment Legislation" means legislation enacted on or
before October 9, 2011, to implement the state budget plan, that is
entitled 2011 Realignment and provides for the assignment of Public
Safety Services responsibilities to local agencies, including related
reporting responsibilities. The legislation shall provide local
agencies with maximum flexibility and control over the design,
administration, and delivery of Public Safety Services consistent
with federal law and funding requirements.
Article 2. Local Revenue Fund 2011
7599.1. The Local Revenue Fund 2011 is hereby created in the
State Treasury. Notwithstanding Section 13340 of the Government Code,
funds deposited in the Local Revenue Fund 2011, less costs of
administering the fund, are continuously appropriated without regard
to fiscal year exclusively to fund the provision of Public Safety
Services by local agencies and, pending full implementation of the
2011 Realignment Legislation, to reimburse the state for costs
incurred in providing Public Safety Services on behalf of local
agencies. The manner of allocating funds to local agencies and
reimbursing state costs shall be specified in the 2011 Realignment
Legislation.
7599.2. The county treasurer, city and county treasurer, or other
appropriate official shall create a County Local Revenue Fund 2011
within the treasury of each county or city and county. The money in
each County Local Revenue Fund 2011 shall be used exclusively to fund
the provision of Public Safety Services by local agencies as
specified by the 2011 Realignment Legislation.
7599.3. The funds deposited into a County Local Revenue Fund 2011
shall be spent in a manner designed to maintain the state's
eligibility for federal matching funds, and to ensure compliance by
the state with applicable federal standards governing the state's
provision of Public Safety Services.
7599.4. The funds deposited into a County Local Revenue Fund 2011
shall not be used by local agencies to supplant other funding for
Public Safety Services.
7599.5. (a) When the taxes described in Sections 6051.7, 6201.7,
10752, and 10752.1 of the Revenue and Taxation Code, as amended by
the act adding this section, and in Section 10752.2 of the Revenue
and Taxation Code, as added by the act adding this section, cease to
be operative, the state shall annually provide moneys to the Local
Revenue Fund 2011 in an amount equal to or greater than the aggregate
amount that otherwise would have been provided by the
above-described taxes. The method for determining that amount shall
be described in the 2011 Realignment Legislation, and the state shall
be obligated to provide that amount for so long as the local
agencies are required to perform the Public Safety Services
responsibilities assigned by the 2011 Realignment Legislation.
(b) If the Legislature fails to annually appropriate the minimum
amount required by subdivision (a) to the Local Revenue Fund 2011,
any shortfall, or the entire amount if no appropriation is made by
the Legislature, is hereby appropriated from the General Fund, and
the Controller shall transfer that amount from the General Fund in
pro rata monthly shares to the Local Revenue Fund 2011. Thereafter,
the Controller shall disburse these amounts to local agencies in the
manner directed by the 2011 Realignment Legislation. The state
obligations under this subdivision shall have a lower priority claim
to General Fund money than the first priority for money to be set
apart under Section 8 of Article XVI and the second priority to pay
voter-approved debts and liabilities described in Section 1 of
Article XVI.
7599.6. (a) Legislation enacted after October 9, 2011, that has
an overall effect of increasing the costs already borne by a local
agency for programs or levels of service mandated by the 2011
Realignment Legislation shall apply to local agencies only to the
extent that the state provides annual funding for the cost increase.
Local agencies shall not be obligated to provide programs or levels
of service required by legislation, described in this article, above
the level for which funding has been provided.
(b) Regulations, executive orders, or administrative directives,
implemented after October 9, 2011, that are not necessary to
implement the 2011 Realignment Legislation, and that have an overall
effect of increasing the costs already borne by a local agency for
programs or levels of service mandated by the 2011 Realignment
Legislation, shall apply to local agencies only to the extent that
the state provides annual funding for the cost increase. Local
agencies shall not be obligated to provide programs or levels of
service pursuant to new regulations, executive orders, or
administrative directives, described in this subparagraph, above the
level for which funding has been provided.
(c) The state shall not submit to the federal government any plans
or waivers, or amendments to those plans or waivers, that have an
overall effect of increasing the cost borne by a local agency for
programs or levels of service mandated by the 2011 Realignment
Legislation, except to the extent that the plans, waivers, or
amendments are required by federal law, or the state provides annual
funding for the cost increase.
7599.7. (a) For programs described in paragraphs (3) to (5),
inclusive, of subdivision (a) of Section 7599 and included in the
2011 Realignment Legislation, if there are subsequent changes in
federal statutes or regulations that alter the conditions under which
federal matching funds as described in the 2011 Realignment
Legislation are obtained, and have the overall effect of increasing
the costs incurred by a local agency, the Legislature shall annually
appropriate an amount equal to at least 50 percent of the nonfederal
share of those costs as determined by the state from sources other
than the 2011 Local Revenue Fund, the Education Protection
Fund, ad valorem property taxes, or the Social Services
Subaccount of the Sales Tax Account of the Local Revenue Fund for
allocation to local agencies.
(b) When the state is a party to any complaint brought in a
federal judicial or administrative proceeding that involves one or
more of the programs described in paragraphs (3) to (5), inclusive,
of subdivision (a) of Section 7599 and included in the 2011
Realignment Legislation, and there is a settlement or judicial or
administrative order that imposes a cost in the form of a monetary
penalty or has the overall effect of increasing the costs already
borne by a local agency for programs or levels of service mandated by
the 2011 Realignment Legislation, the Legislature shall appropriate
for allocation to local agencies an amount equal to at least 50
percent of the nonfederal share of those costs as determined by the
state. Payment by the state is not required if the state determines
that the settlement or order relates to one or more local agencies
failing to perform a ministerial duty, failing to perform a legal
obligation in good faith, or acting in a negligent or reckless
manner.
7599.8. If the state or a local agency fails to perform a duty or
obligation under this chapter or under the 2011 Realignment
Legislation, an appropriate party may seek judicial relief. These
proceedings shall have priority over all other civil matters.
Article 3. Education Funding
7599.9. The additional revenue received from the imposition of
the tax rates and from the continuation of the credit amounts allowed
pursuant to Sections 17041, 17054, and 17062 of the Revenue and
Taxation Code shall be used exclusively for the support of school
districts and community college districts.
Article 4. Audits
7599.10. The Controller, pursuant to his or her statutory
authority, may perform audits of expenditures from the Local Revenue
Fund 2011 and any County Local Revenue Fund 2011 to ensure that those
funds are used and accounted for in a manner consistent with this
chapter.
SEC. 4. Section 6051.7 of the Revenue and Taxation Code is amended
to read:
6051.7. (a) In addition to the taxes imposed by Section 6051 and
any other provision of this part, for the privilege of selling
tangible personal property at retail, a tax is hereby imposed upon
all retailers at the rate of 1 percent of the gross receipts of any
retailer from the sale of all tangible personal property sold at
retail in this state, on and after April 1, 2009.
(b) This section shall cease to be operative on July 1, 2012.
SEC. 5. Section 6201.7 of the Revenue and Taxation Code is amended
to read:
6201.7. (a) In addition to the taxes imposed by Section 6201 and
any other provision of this part, an excise tax is hereby imposed on
the storage, use, or other consumption in this state of tangible
personal property purchased from any retailer for storage, use, or
other consumption in this state, at the rate of 1 percent of the
sales price of the property, on and after April 1, 2009.
(b) This section shall cease to be operative on July 1, 2012.
SEC. 6. Section 7101.4 is added to the Revenue and Taxation Code,
to read:
7101.4. Notwithstanding Section 7101, on and after July 1, 2011,
all revenues, less refunds and costs of collection and deposit,
derived from the taxes imposed by Sections 6051.7 and 6201.7 shall be
deposited in the State Treasury to the credit of the Local Revenue
Fund 2011, as established pursuant to Section 7599.1 of the
Government Code.
SEC. 7. Section 10752 of the Revenue and Taxation Code, as amended
by Section 4 of Chapter 18 of the Third Extraordinary Session of the
Statutes of 2009, is amended to read:
10752. (a) The annual amount of the license fee for any vehicle,
other than a trailer or semitrailer, as described in subdivision (a)
of Section 5014.1 of the Vehicle Code or a commercial motor vehicle
described in Section 9400.1 of the Vehicle Code, or a trailer coach
that is required to be moved under permit as authorized in Section
35790 of the Vehicle Code, shall be a sum equal to the following
percentage of the market value of the vehicle as determined by the
department:
(1) Sixty-five hundredths of 1 percent on and after January 1,
2005, and before May 19, 2009.
(2) One percent on and after May 19, 2009.
(b) The annual amount of the license fee for any commercial
vehicle as described in Section 9400.1 of the Vehicle Code, shall be
a sum equal to 0.65 percent of the market value of the vehicle as
determined by the department.
(c) Notwithstanding Chapter 5 (commencing with Section 11001) or
any other law to the contrary, all revenues (including penalties),
less refunds, attributable to that portion of the rate imposed
pursuant to this section in excess of 0.65 percent shall be deposited
into the General Fund.
(d) This section shall cease to be operative on July 1, 2012.
SEC. 8. Section 10752 of the Revenue and Taxation Code, as added
by Section 5 of Chapter 18 of the Third Extraordinary Session of the
Statutes of 2009, is amended to read:
10752. (a) The annual amount of the license fee for any vehicle,
other than a trailer or semitrailer, as described in subdivision (a)
of Section 5014.1 of the Vehicle Code, or a trailer coach that is
required to be moved under permit as authorized in Section 35790 of
the Vehicle Code, shall be a sum equal to 0.65 percent of the market
value of the vehicle as determined by the department.
(b) This section shall become operative on July 1, 2012.
SEC. 9. Section 10752.1 of the Revenue and Taxation Code, as
amended by Section 6 of Chapter 18 of the Third Extraordinary Session
of the Statutes of 2009, is amended to read:
10752.1. (a) The annual amount of the license fee for a trailer
coach which is required to be moved under permit as authorized in
Section 35790 of the Vehicle Code shall be a sum equal to the
following percentage of the market value of the vehicle as determined
by the department:
(1) Sixty-five hundredths of 1 percent on and after January 1,
2005, and before May 19, 2009.
(2) One percent on and after May 19, 2009.
(b) Notwithstanding Chapter 5 (commencing with Section 11001) or
any other law to the contrary, all revenues (including penalties),
less refunds, attributable to that portion of the rate imposed
pursuant to this section in excess of 0.65 percent shall be deposited
in the General Fund.
(c) This section shall cease to be operative on July 1, 2012.
SEC. 10. Section 10752.1 of the Revenue and Taxation Code, as
added by Section 7 of Chapter 18 of the Third Extraordinary Session
of the Statutes of 2009, is amended to read:
10752.1. (a) The annual amount of the license fee for a trailer
coach which is required to be moved under permit as authorized in
Section 35790 of the Vehicle Code shall be a sum equal to 0.65
percent of the market value of the vehicle as determined by the
department.
(b) This section shall become operative on July 1, 2012.
SEC. 11. Section 10752.2 is added to the Revenue and Taxation
Code, to read:
10752.2. (a) On and after July 1, 2011, in addition to the annual
license fee for a vehicle, other than a commercial motor vehicle
described in Section 9400.1 of the Vehicle Code, imposed pursuant to
Sections 10752 and 10752.1, a sum equal to 0.15 percent of the market
value of the vehicle as determined by the department, shall be added
to that annual fee.
(b) This section shall cease to be operative on July 1, 2012.
SEC. 12. Section 11001.6 is added to the Revenue and Taxation
Code, to read:
11001.6. Notwithstanding Section 11001, on and after July 1,
2011, all revenues, including penalties, less refunds and
costs of collection and deposit, derived from thirty-five hundredths
of 1 percent of the license fees imposed by Sections 10752 and
10752.1, and from the license fee imposed by Section 10752.2, shall
be 2011, 35 percent of the revenues, including
penalties, less refunds and costs of collection and deposit, from the
license fee imposed by Sections 10752 and 10752.1, and all revenues,
including penalties, less refunds and costs of collection and
deposit from the license fee imposed by Section 10752.2, shall be
deposited as follows:
(a) Eighty percent to the Local Revenue Fund 2011.
(b) Twenty percent to the General Fund to be used
exclusively for the support of school districts and community college
districts. .
SEC. 13. Section 17041 of the Revenue and Taxation Code is amended
to read:
17041. (a) (1) There shall be imposed for each taxable year upon
the entire taxable income of every resident of this state who is not
a part-year resident, except the head of a household as defined in
Section 17042, taxes in the following amounts and at the following
rates upon the amount of taxable income computed for the taxable year
as if the resident were a resident of this state for the entire
taxable year and for all prior taxable years for any carryover items,
deferred income, suspended losses, or suspended deductions:
If the taxable income The tax is:
is:
Not over $3,650........ 1% of the taxable income
Over $3,650 but $36.50 plus 2% of the
not excess
over $8,650............ over $3,650
Over $8,650 but $136.50 plus 4% of the
not excess
over $13,650........... over $8,650
Over $13,650 but $336.50 plus 6% of the
not excess
over $18,950........... over $13,650
Over $18,950 but $654.50 plus 8% of
not the
over $23,950........... excess
over $18,950
$1,054.50 plus 9.3% of
Over $23,950........... the
excess
over $23,950
(2) For taxable years beginning on or after January 1, 2009, and
before January 1, 2011, the percentages specified in the table in
paragraph (1) shall be increased by adding 0.25 percent to each
percentage.
(3) For taxable years beginning on or after January 1, 2012, and
before January 1, 2013, the percentages specified in the table in
paragraph (1) shall be increased by adding 0.25 percent to each
percentage.
(b) (1) There shall be imposed for each taxable year upon the
taxable income of every nonresident or part-year resident, except the
head of a household as defined in Section 17042, a tax as calculated
in paragraph (2).
(2) The tax imposed under paragraph (1) shall be calculated by
multiplying the "taxable income of a nonresident or part-year
resident," as defined in subdivision (i), by a rate (expressed as a
percentage) equal to the tax computed under subdivision (a) on the
entire taxable income of the nonresident or part-year resident as if
the nonresident or part-year resident were a resident of this state
for the taxable year and as if the nonresident or part-year resident
were a resident of this state for all prior taxable years for any
carryover items, deferred income, suspended losses, or suspended
deductions, divided by the amount of that income.
(c) (1) There shall be imposed for each taxable year upon the
entire taxable income of every resident of this state who is not a
part-year resident for that taxable year, when the resident is the
head of a household, as defined in Section 17042, taxes in the
following amounts and at the following rates upon the amount of
taxable income computed for the taxable year as if the resident were
a resident of the state for the entire taxable year and for all prior
taxable years for carryover items, deferred income, suspended
losses, or suspended deductions:
If the taxable income The tax is:
is:
Not over $7,300......... 1% of the taxable income
Over $7,300 but $73 plus 2% of the
not excess
over $17,300............ over $7,300
Over $17,300 but $273 plus 4% of the
not excess
over $22,300............ over $17,300
Over $22,300 but $473 plus 6% of the
not excess
over $27,600............ over $22,300
Over $27,600 but $791 plus 8% of the
not excess
over $32,600............ over $27,600
$1,191 plus 9.3% of the
Over $32,600............ excess
over $32,600
(2) For taxable years beginning on or after January 1, 2009, and
before January 1, 2011, the percentages specified in the table in
paragraph (1) shall be increased by adding 0.25 percent to each
percentage.
(3) For taxable years beginning on or after January 1, 2012, and
before January 1, 2013, the percentages specified in the table in
paragraph (1) shall be increased by adding 0.25 percent to each
percentage.
(d) (1) There shall be imposed for each taxable year upon the
taxable income of every nonresident or part-year resident when the
nonresident or part-year resident is the head of a household, as
defined in Section 17042, a tax as calculated in paragraph (2).
(2) The tax imposed under paragraph (1) shall be calculated by
multiplying the "taxable income of a nonresident or part-year
resident," as defined in subdivision (i), by a rate (expressed as a
percentage) equal to the tax computed under subdivision (c) on the
entire taxable income of the nonresident or part-year resident as if
the nonresident or part-year resident were a resident of this state
for the taxable year and as if the nonresident or part-year resident
were a resident of this state for all prior taxable years for any
carryover items, deferred income, suspended losses, or suspended
deductions, divided by the amount of that income.
(e) There shall be imposed for each taxable year upon the taxable
income of every estate, trust, or common trust fund taxes equal to
the amount computed under subdivision (a) for an individual having
the same amount of taxable income.
(f) The tax imposed by this part is not a surtax.
(g) (1) Section 1(g) of the Internal Revenue Code, relating to
certain unearned income of children taxed as if parent's income,
shall apply, except as otherwise provided.
(2) Section 1(g)(7)(B)(ii)(II) of the Internal Revenue Code is
modified, for purposes of this part, by substituting "1 percent" for
"10 percent."
(h) For each taxable year beginning on or after January 1, 1988,
the Franchise Tax Board shall recompute the income tax brackets
prescribed in subdivisions (a) and (c). That computation shall be
made as follows:
(1) The California Department of Industrial Relations shall
transmit annually to the Franchise Tax Board the percentage change in
the California Consumer Price Index for all items from June of the
prior calendar year to June of the current calendar year, no later
than August 1 of the current calendar year.
(2) The Franchise Tax Board shall do both of the following:
(A) Compute an inflation adjustment factor by adding 100 percent
to the percentage change figure that is furnished pursuant to
paragraph (1) and dividing the result by 100.
(B) Multiply the preceding taxable year income tax brackets by the
inflation adjustment factor determined in subparagraph (A) and round
off the resulting products to the nearest one dollar ($1).
(i) (1) For purposes of this part, the term "taxable income of a
nonresident or part-year resident" includes each of the following:
(A) For any part of the taxable year during which the taxpayer was
a resident of this state (as defined by Section 17014), all items of
gross income and all deductions, regardless of source.
(B) For any part of the taxable year during which the taxpayer was
not a resident of this state, gross income and deductions derived
from sources within this state, determined in accordance with Article
9 of Chapter 3 (commencing with Section 17301) and Chapter 11
(commencing with Section 17951).
(2) For purposes of computing "taxable income of a nonresident or
part-year resident" under paragraph (1), the amount of any net
operating loss sustained in any taxable year during any part of which
the taxpayer was not a resident of this state shall be limited to
the sum of the following:
(A) The amount of the loss attributable to the part of the taxable
year in which the taxpayer was a resident.
(B) The amount of the loss which, during the part of the taxable
year the taxpayer is not a resident, is attributable to California
source income and deductions allowable in arriving at taxable income
of a nonresident or part-year resident.
(3) For purposes of computing "taxable income of a nonresident or
part-year resident" under paragraph (1), any carryover items,
deferred income, suspended losses, or suspended deductions shall only
be includable or allowable to the extent that the carryover item,
deferred income, suspended loss, or suspended deduction was derived
from sources within this state, calculated as if the nonresident or
part-year resident, for the portion of the year he or she was a
nonresident, had been a nonresident for all prior years.
SEC. 14. Section 17054 of the Revenue and Taxation Code is amended
to read:
17054. In the case of individuals, the following credits for
personal exemption may be deducted from the tax imposed under Section
17041 or 17048, less any increases imposed under paragraph (1) of
subdivision (d) or paragraph (1) of subdivision (e), or both, of
Section 17560.
(a) In the case of a single individual, a head of household, or a
married individual making a separate return, a credit of fifty-two
dollars ($52).
(b) In the case of a surviving spouse (as defined in Section
17046), or a husband and wife making a joint return, a credit of one
hundred four dollars ($104). If one spouse was a resident for the
entire taxable year and the other spouse was a nonresident for all or
any portion of the taxable year, the personal exemption shall
be divided equally.
(c) In addition to any other credit provided in this section, in
the case of an individual who is 65 years of age or over by the end
of the taxable year, a credit of fifty-two dollars ($52).
(d) (1) A credit of two hundred twenty-seven dollars ($227) for
each dependent (as defined in Section 17056) for whom an exemption is
allowable under Section 151(c) of the Internal Revenue Code,
relating to additional exemption for dependents. The credit allowed
under this subdivision for taxable years beginning on or after
January 1, 1999, shall not be adjusted pursuant to subdivision (i)
for any taxable year beginning before January 1, 2000.
(2) The credit allowed under paragraph (1) may not be denied on
the basis that the identification number of the dependent, as defined
in Section 17056, for whom an exemption is allowable under Section
151(c) of the Internal Revenue Code, relating to additional exemption
for dependents, is not included on the return claiming the credit.
(3) (A) For taxable years beginning on or after January 1, 2009,
the credit allowed under paragraph (1) for each dependent shall be
equal to the credit allowed under subdivision (a). This subparagraph
shall cease to be operative for taxable years beginning on or after
January 1, 2013.
(B) For taxable years that subparagraph (A) ceases to be
operative, the credit allowed under paragraph (1) for each dependent
shall be equal to the amount that would be allowed if subparagraph
(A) had never been operative.
(e) A credit for personal exemption of fifty-two dollars ($52) for
the taxpayer if he or she is blind at the end of his or her taxable
year.
(f) A credit for personal exemption of fifty-two dollars ($52) for
the spouse of the taxpayer if a separate return is made by the
taxpayer, and if the spouse is blind and, for the calendar year in
which the taxable year of the taxpayer begins, has no gross income
and is not the dependent of another taxpayer.
(g) For the purposes of this section, an individual is blind only
if either (1) his or her central visual acuity does not exceed 20/200
in the better eye with correcting lenses, or (2) his or her visual
acuity is greater than 20/200 but is accompanied by a limitation in
the fields of vision such that the widest diameter of the visual
field subtends an angle no greater than 20 degrees.
(h) In the case of an individual with respect to whom a credit
under this section is allowable to another taxpayer for a taxable
year beginning in the calendar year in which the individual's taxable
year begins, the credit amount applicable to that individual for
that individual's taxable year is zero.
(i) For each taxable year beginning on or after January 1, 1989,
the Franchise Tax Board shall compute the credits prescribed in this
section. That computation shall be made as follows:
(1) The California Department of Industrial Relations shall
transmit annually to the Franchise Tax Board the percentage change in
the California Consumer Price Index for all items from June of the
prior calendar year to June of the current calendar year, no later
than August 1 of the current calendar year.
(2) The Franchise Tax Board shall add 100 percent to the
percentage change figure which is furnished to them pursuant to
paragraph (1), and divide the result by 100.
(3) The Franchise Tax Board shall multiply the immediately
preceding taxable year credits by the inflation adjustment factor
determined in paragraph (2), and round off the resulting products to
the nearest one dollar ($1).
(4) In computing the credits pursuant to this subdivision, the
credit provided in subdivision (b) shall be twice the credit provided
in subdivision (a).
SEC. 15. Section 17062 of the Revenue and Taxation Code is amended
to read:
17062. (a) In addition to the other taxes imposed by this part,
there is hereby imposed for each taxable year, a tax equal to the
excess, if any, of--
(1) The tentative minimum tax for the taxable year, over.
(2) The regular tax for the taxable year.
(b) For purposes of this chapter, each of the following shall
apply:
(1) The tentative minimum tax shall be computed in accordance with
Sections 55 to 59, inclusive, of the Internal Revenue Code, except
as otherwise provided in this part.
(2) The regular tax shall be the amount of tax imposed by Section
17041 or 17048, before reduction for any credits against the tax,
less any amount imposed under paragraph (1) of subdivision (d) and
paragraph (1) of subdivision (e) of Section 17560.
(3) (A) The provisions of Section 55(b)(1) of the Internal Revenue
Code shall be modified to provide that the tentative minimum tax for
the taxable year shall be equal to the following percent of so much
of the alternative minimum taxable income for the taxable year as
exceeds the exemption amount, before reduction for any credits
against the tax:
(i) For any taxable year beginning on or after January 1, 1991,
and before January 1, 1996, 8.5 percent.
(ii) For any taxable year beginning on or after January 1, 1996,
and before January 1, 2009, 7 percent.
(iii) For taxable years beginning on and after January 1, 2009,
and before January 1, 2011, 7.25 percent.
(iv) For any taxable year beginning on and after January 1, 2011,
and before January 1, 2012, 7 percent.
(v) For any taxable year beginning on and after January 1, 2012,
and before January 1, 2013, 7.25 percent.
(vi) For any taxable year beginning on or after January 1, 2013, 7
percent.
(B) In the case of a nonresident or part-year resident, the
tentative minimum tax shall be computed by multiplying the
alternative minimum taxable income of the nonresident or part-year
resident, as defined in subparagraph (C), by a rate (expressed as a
percentage) equal to the tax computed under subdivision (b) on the
alternative minimum taxable income of the nonresident or part-year
resident as if the nonresident or part-year resident were a resident
of this state for the taxable year and as if the nonresident or
part-year resident were a resident of this state for all prior
taxable years for any carryover items, deferred income, suspended
losses, or suspended deductions, divided by the amount of that
income.
(C) For purposes of this section, the term "alternative minimum
taxable income of a nonresident or part-year resident" includes each
of the following:
(i) For any period during which the taxpayer was a resident of
this state (as defined by Section 17014), all items of alternative
minimum taxable income (as modified for purposes of this chapter),
regardless of source.
(ii) For any period during which the taxpayer was not a resident
of this state, alternative minimum taxable income (as modified for
purposes of this chapter) which were derived from sources within this
state, determined in accordance with Article 9 of Chapter 3
(commencing with Section 17301) and Chapter 11 (commencing with
Section 17951).
(iii) For purposes of computing "alternative minimum taxable
income of a nonresident or part-year resident," any carryover items,
deferred income, suspended losses, or suspended deductions shall only
be allowable to the extent that the carryover item, suspended loss,
or suspended deduction was derived from sources within this state.
(4) The provisions of Section 55(b)(2) of the Internal Revenue
Code, relating to alternative minimum taxable income, shall be
modified to provide that alternative minimum taxable income shall not
include the income, adjustments, and items of tax preference
attributable to any trade or business of a qualified taxpayer.
(A) For purposes of this paragraph, "qualified taxpayer" means a
taxpayer who meets both of the following:
(i) Is the owner of, or has an ownership interest in, a trade or
business.
(ii) Has aggregate gross receipts, less returns and allowances, of
less than one million dollars ($1,000,000) during the taxable year
from all trades or businesses of which the taxpayer is the owner or
has an ownership interest, in the amount of that taxpayer's
proportionate interest in each trade or business.
(B) For purposes of this paragraph, "aggregate gross receipts,
less returns and allowances" means the sum of the gross receipts of
the trades or businesses that the taxpayer owns and the proportionate
interest of the gross receipts of the trades or businesses that the
taxpayer owns and of pass-through entities in which the taxpayer
holds an interest.
(C) For purposes of this paragraph, "gross receipts, less returns
and allowances" means the sum of the gross receipts from the
production of business income, as defined in subdivision (a) of
Section 25120, and the gross receipts from the production of
nonbusiness income, as defined in subdivision (d) of Section 25120.
(D) For purposes of this paragraph, "proportionate interest"
means:
(i) In the case of a pass-through entity that reports a profit for
the taxable year, the taxpayer's profit interest in the entity at
the end of the taxpayer's taxable year.
(ii) In the case of a pass-through entity that reports a loss for
the taxable year, the taxpayer's loss interest in the entity at the
end of the taxpayer's taxable year.
(iii) In the case of a pass-through entity that is sold or
liquidates during the taxable year, the taxpayer's capital account
interest in the entity at the time of the sale or liquidation.
(E) (i) For purposes of this paragraph, "proportionate interest"
includes an interest in a pass-through entity.
(ii) For purposes of this paragraph, "pass-through entity" means
any of the following:
(I) A partnership, as defined by Section 17008.
(II) An "S" corporation, as provided in Chapter 4.5 (commencing
with Section 23800) of Part 11.
(III) A regulated investment company, as provided in Section
24871.
(IV) A real estate investment trust, as provided in Section 24872.
(V) A real estate mortgage investment conduit, as provided in
Section 24874.
(5) For taxable years beginning on or after January 1, 1998,
Section 55(d)(1) of the Internal Revenue Code, relating to exemption
amount for taxpayers other than corporations is modified, for
purposes of this part, to provide the following exemption amounts in
lieu of those contained therein:
(A) Fifty-seven thousand two hundred sixty dollars ($57,260) in
the case of either of the following:
(i) A joint return.
(ii) A surviving spouse.
(B) Forty-two thousand nine hundred forty-five dollars ($42,945)
in the case of an individual who is both of the following:
(i) Not a married individual.
(ii) Not a surviving spouse.
(C) Twenty-eight thousand six hundred thirty dollars ($28,630) in
the case of either of the following:
(i) A married individual who files a separate return.
(ii) An estate or trust.
(6) For taxable years beginning on or after January 1, 1998,
Section 55(d)(3) of the Internal Revenue Code, relating to phaseout
of exemption amount, is modified, for purposes of this part, to
provide the following phaseout of exemption amounts in lieu of those
contained therein:
(A) Two hundred fourteen thousand seven hundred twenty-five
dollars ($214,725) in the case of a taxpayer described in
subparagraph (A) of paragraph (5).
(B) One hundred sixty-one thousand forty-four dollars ($161,044)
in the case of a taxpayer described in subparagraph (B) of paragraph
(5).
(C) One hundred seven thousand three hundred sixty-two dollars
($107,362) in the case of a taxpayer described in subparagraph (C) of
paragraph (5).
(7) For each taxable year beginning on or after January 1, 1999,
the Franchise Tax Board shall recompute the exemption amounts
prescribed in paragraph (5) and the phaseout of exemption amounts
prescribed in paragraph (6). Those computations shall be made as
follows:
(A) The California Department of Industrial Relations shall
transmit annually to the Franchise Tax Board the percentage change in
the California Consumer Price Index for all items from June of the
prior calendar year to June of the current calendar year, no later
than August 1 of the current calendar year.
(B) The Franchise Tax Board shall do both of the following:
(i) Compute an inflation adjustment factor by adding 100 percent
to the percentage change figure that is furnished pursuant to
subparagraph (A) and dividing the result by 100.
(ii) Multiply the preceding taxable year exemption amounts and the
phaseout of exemption amounts by the inflation adjustment factor
determined in clause (i) and round off the resulting products to the
nearest one dollar ($1).
(c) (1) (A) Section 56(a)(6) of the Internal Revenue Code as in
effect on January 1, 1997, relating to installment sales of certain
property, shall not apply to payments received in taxable years
beginning on or after January 1, 1997, with respect to dispositions
occurring in taxable years beginning after December 31, 1987.
(B) This paragraph shall not apply to taxable years beginning on
or after January 1, 1998.
(2) Section 56(b)(1)(E) of the Internal Revenue Code, relating to
standard deduction and deduction for personal exemptions not allowed,
is modified, for purposes of this part, to deny the standard
deduction allowed by Section 17073.5.
(3) Section 56(b)(3) of the Internal Revenue Code, relating to
treatment of incentive stock options, shall be modified to
additionally provide the following:
(A) Section 421 of the Internal Revenue Code shall not apply to
the transfer of stock acquired pursuant to the exercise of a
California qualified stock option under Section 17502.
(B) Section 422(c)(2) of the Internal Revenue Code shall apply in
any case where the disposition and inclusion of a California
qualified stock option for purposes of this chapter are within the
same taxable year and that section shall not apply in any other case.
(C) The adjusted basis of any stock acquired by the exercise of a
California qualified stock option shall be determined on the basis of
the treatment prescribed by this paragraph.
(d) The provisions of Section 57(a)(5) of the Internal Revenue
Code, relating to tax-exempt interest shall not apply.
(e) Section 57(a) of the Internal Revenue Code is modified to
include as an item of tax preference an amount equal to one-half of
the amount excluded from gross income for the taxable year under
Section 18152.5.
(f) The provisions of Section 59(a) of the Internal Revenue Code,
relating to the alternative minimum tax foreign tax credit, shall not
apply.
(g) The provisions of Section 56(d)(3), relating to net operating
loss attributable to federally declared disasters, shall not apply.
SEC. 16. Section 19136.14 is added to the
Revenue and Taxation Code, to read:
19136.14. An addition to tax shall not be imposed pursuant to
Section 19136, with respect to any underpayment of a tax for a
taxable year beginning before January 1, 2013, to the extent that the
underpayment was created or increased by any provision of the act
adding this section.
SEC. 17. SEC. 16. If the Commission
on State Mandates determines that this act contains costs mandated by
the state, reimbursement to local agencies and school districts for
those costs shall be made pursuant to Part 7 (commencing with Section
17500) of Division 4 of Title 2 of the Government Code.
SEC. 18. SEC. 17. This act addresses
the fiscal emergency declared and reaffirmed by the Governor by
proclamation on January 20, 2011, pursuant to subdivision (f) of
Section 10 of Article IV of the California Constitution.
SEC. 19. SEC. 18. This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to properly address the current fiscal emergency, it is
necessary that this act go into immediate effect.