BILL ANALYSIS �
AB 1286
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Date of Hearing: May 6, 2013
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
AB 1286 (Skinner) - As Introduced: February 22, 2013
Majority vote.
SUBJECT : Personal income tax: contributions: California
Breast Cancer Research Fund.
SUMMARY : Specifies that for calendar years 2014 to 2017, the
California Breast Cancer Research Fund's (Fund's) minimum
contribution amount shall equal the minimum contribution amount
for the 2013 calendar year.
EXISTING LAW :
1)Allows taxpayers to contribute their own funds (and not tax
liability) to any of the 18 voluntary contribution funds
(VCFs) listed on the 2012 state personal income tax (PIT)
return. One such VCF is this Fund.
2)Provides that this Fund shall remain on the state PIT return
until it sunsets or until the Franchise Tax Board (FTB)
projects the Fund will fail to meet its minimum annual
contribution amount. The Fund's current sunset date is
January 1, 2018, and the minimum contribution amount for the
2013 calendar year is $371,724. The minimum contribution
amount adjusts annually for inflation, based on the percentage
change in the California Consumer Price Index.
COMMITTEE RULES require that VCF bills comply with this
Committee's VCF (Income Tax Checkoff) Policy (VCF Policy). This
Committee's VCF Policy, in turn, requires all existing checkoffs
to meet an inflation-adjusted $250,000 minimum contribution
threshold.
FISCAL EFFECT : The FTB estimates that this bill would not
significantly impact the agency's costs or impact the state's
income tax revenues.
COMMENTS :
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1)The author has provided the following statement in support of
this bill:
In light of the improved economic forecast, freezing the
minimum contribution will allow the [California Breast
Cancer Research Program] to regain its momentum in
contributions while simultaneous[ly] alleviating concerns
about reaching the minimum contribution amount. This
critical program should not be jeopardized by a temporary
economic downturn.
2)Proponents state:
While the annual minimum contribution amount set by the
Franchise Tax Board has increased steadily during the past
decade, tax-deductible contributions towards breast cancer
research [have] declined significantly. In 2002, the
amount contributed was $724,965; meanwhile, in 2012 that
figure dropped to $440,711. The decrease in contributions
places CBCRP at risk of not obtaining the minimum
contribution and losing critical funding for innovative
research.
3)Committee Staff Comments:
a) A Questionable Precedent : As noted above, this
Committee's VCF Policy requires that all existing checkoffs
meet an inflation-adjusted $250,000 minimum contribution
requirement. This bill would freeze inflation adjustments
for 2014 to 2017 for the Fund, in violation of this
Committee's Rules. The Committee's VCF Policy was
originally adopted in response to the proliferation of VCF
legislation, and in recognition of the fact that space on
the return is limited. Were this Committee to make an
exception for the Fund, it would open the door to the
supporters of every other checkoff advocating for a
suspension of inflation adjustments or for lower minimum
contribution thresholds. To give the Fund special
dispensation would also be unfair to the many other VCFs
whose public support has diminished in recent years.
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b) A Real Danger? : Even without this bill, there may not
be a significant danger that the Fund will fall off the
state PIT return in the near future. The Fund raised
$440,771 in 2012. The Fund's minimum contribution
threshold in 2013 is $371,724. Even assuming the minimum
contribution amount for 2014 reflected an ($440,771 /
$371,724) - 1 = 18.57% inflation adjustment and assuming
the Fund raised as much as it did in 2012, it would still
meet its minimum contribution threshold in 2014, even
without this bill. An 18.57% or greater increase in
year-to-year inflation is highly unlikely. Since the
creation of the California Consumer Price Index, the Index
has never increased at least 18.57% in a single year.<1>
c) So Many Causes, So Little Space : There are countless
worthy causes that would benefit from the inclusion of a
VCF on the state's income tax returns. At the same time,
space on the returns is limited. The Fund's purpose is
inarguably laudable. So too, however, are the purposes
advanced by the 17 other VCFs on the return. If
California's taxpayers decide, for whatever reason, not to
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<1> At its worst, the California Consumer Price Index
increased 17.3% between June 1979 and June 1980. Cal. Dept. of
Industrial Relations, Consumer Price Index Historical Data
Series (2013). Data for the California Consumer Price Index go
as far back as 1955.
The San Francisco and Los Angeles Consumer Price Indices data
go as far back as 1913. Over the course of a century, each only
increased at least 18.57% once. They did so the same year.
Between June 1919 and June 1920, the San Francisco Consumer
Price Index increased 19% and the Los Angeles Consumer Price
Index increased 24.4%. Id. How closely the San Francisco and
Los Angeles Consumer Price Indices would have mirrored the
California Consumer Price Index had it existed as early as 1913
is unknown.
This analysis refers only to year-to-year increases for June.
It does so because minimum contribution thresholds are
calculated based upon June year-to-year changes in the
California Consumer Price Index. See Cal. Rev. & Tax. Code ��
17041(h)(1), 18796(c)(1), (2).
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support a particular fund, it opens space on the return for
other VCFs and other worthy causes.
d) Amendments Proposed by Author :
i) Shorten the years during which inflation adjustments
will freeze to just two calendar years, 2014 and 2015.
ii) Adjust the minimum contribution amount in 2016 and
every year thereafter in accordance with inflation, as if
the minimum contribution amount in 2015 had naturally
been $371,724.<2>
REGISTERED SUPPORT / OPPOSITION :
Support
American Association of University Women
American Cancer Society Cancer Action Network
American Congress of Obstericians and Gynecologists
Breast Cancer Fund
University of California
Opposition
None on file
Analysis Prepared by : Edward Beeby & M. David Ruff / REV. &
TAX. / (916) 319-2098
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<2> This means that in 2016, the minimum contribution amount
does not jump to what it would have been without this bill.
Rather, the minimum contribution amount will increase based upon
the difference in the purchasing power of $371,724 between June
2014 and June 2015, a period of a single year. It will not
increase based upon the difference in the purchasing power of
$371,724 between June 2012 and June 2015, a period of three
years.
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