BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 246
Author: Wieckowski (D)
Amended: 2/13/12 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
SUBJECT : Income taxes: credit: hiring
SOURCE : Author
DIGEST : This bill ends the current New Jobs Credit
structure under the Personal Income Tax Law and Corporation
Tax Law after the 2012 taxable year, and enacts a
substitute credit beginning in the 2012 tax year, as
specified.
Senate Floor Amendments of 2/13/12 delete the prior version
of the bill dealing with water quality enforcement and
inserts the current language relative to income tax credit.
ANALYSIS : Existing law allows a credit against the
Personal Income Tax or Corporation Tax for taxable years
beginning on or after January 1, 2009, for a qualified
employer in the amount of $3,000 for the net increase in
qualified full-time employees hired in the taxable year,
determined on an annual full-time equivalent basis, known
as the New Jobs Credit (AB 15 X3 ÝKrekorian], Chapter 10,
Statutes of 2009-10 Third Extraordinary Session and SB 15
X3 ÝCalderon], Chapter 17, Statutes of 2009-10 Third
CONTINUED
AB 246
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Extraordinary Session). Only taxpayers employing 20 or
less employees may claim the credit.
A full-time equivalent is equal to the total number of
hours worked for the taxpayer by the employee (not to
exceed 2,000 hours per employee) divided by 2,000.
Franchise Tax Board allocates the credit, which ends after
taxpayers claim credits equal to $400 million. Taxpayers
have claimed only $76.1 million in credits as of December
31, 2011.
This bill ends the current New Jobs Credit structure after
the 2012 taxable year, and enact a substitute credit
beginning in the 2012 tax year of:
$4,500 for each net increase paid qualified wages of $16
per hour or less, and
$9,100 for each net increase paid qualified wages of $16
or more.
This bill provides that when the amount of the increase
full-time equivalents calculated using the previous measure
exceeds the sum of the increase using the new categories,
the amount of credit shall be to the net increase
multiplied by the amount in whichever category has the
increase.
This bill ends the current requirement that taxpayers
employ 20 or fewer employees to be eligible for the credit
after the 2012 tax year. Instead, only a disabled veteran
business enterprise, disadvantaged business enterprise,
microbusiness, or small business, as defined, can claim the
credit beginning in the 2012 tax year.
This bill additionally reduces the denominator in the
full-time equivalent calculation from 2,000 to 1,820.
This bill changes the sections for the New Jobs Credit in
both the Personal Income Tax and the Corporation Tax, and
make conforming changes to each section.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
AB 246
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Local: No
AGB:do 2/16/12 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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