BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 515 (Eggman) - Income taxes: credits: food bank donations.
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|Version: August 17, 2015 |Policy Vote: GOV. & F. 7 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 17, 2015 |Consultant: Robert Ingenito |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 515 would (1) expand the scope and size of existing
tax credit program for contributions of qualified donation items
to a food bank, and (2) extend the program until January 1,
2021.
Fiscal
Impact:
The Franchise Tax Board (FTB) estimates that this bill
would result in a General Fund revenue loss of $400,000 in
2015-16, $1.0 million in 2016-17, and $1.4 million in
2017-18.
FTB would incur minor costs to administer changes to
AB 515 (Eggman) Page 1 of
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systems and procedures.
Costs to the Department of Social Services (DSS) would
be unchanged. DSS costs are reimbursed with federal funds
received under the program.
Background: Current law allows various income tax credits, deductions, and
sales and use tax exemptions to provide incentives to compensate
taxpayers that incur certain expenses, such as child adoption,
or to influence behavior, including business practices and
decisions, such as research and development credits. The
Legislature typically enacts such provisions to incentivize
taxpayers to do something they would not do on the natural.
In 2011, AB 152 (Fuentes) established a 10 percent tax credit
for the donation of fresh fruits or fresh vegetables to food
banks located in California. This bill would expand this
existing credit by increasing (1) the credit percentage, and (2)
the food items eligible for the credit.
Proposed Law:
This bill would, among other things, do the following:
Expand the universe of qualified taxpayers who may claim
a donation credit to include persons responsible for
growing or raising a donated item, or harvesting, packing,
or processing a donated item.
Expand the qualifying items to include, in addition to
fresh fruits and vegetables, specified raw or processed
nuts, poultry, eggs, fish, certain dairy products, rice,
beans, vegetable oils, soup, pasta, pasta sauce, salsa,
infant formula, bread, and other canned meats and seafood.
Increase the allowed credit from 10 percent to 15
percent, and specify how the credit value is calculated.
Require donors to provide item value and information
AB 515 (Eggman) Page 2 of
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regarding where the items were grown and processed to food
banks, requires the food banks to issue certificates with
respect to donated items, and authorize FTB to request
copies of any certificates.
Require FTB to include in its annual report to the
Legislature on the utilization of the credit the estimated
value and origin of the donated items, and the month in
which the donations were made.
Staff
Comments: The FTB revenue estimate relies on food bank donation
data and the Department of Finance's economic forecast, and
assumes that qualified taxpayers would make $9 million of food
donations in 2016. Additionally, the estimate assumes that the
expanded credit would increase donations by 10 percent, bringing
total donations to $10 million in 2016. Applying the credit rate
of 15 percent results in estimated credits generated of $1.5
million. Using the current tax return data from the Fruits and
Vegetables Credit, FTB estimates that 75 percent of the credit
would be used in the year generated and the remaining 25 percent
would be used over the next five years. Because the bill would
disallow a deduction for qualified donations used to generate
the credit, an offsetting gain is applied to account for the
decrease in reported deductions. Lastly, the estimate is
adjusted to eliminate the loss attributable to the current
Fruits and Vegetable Credit, resulting in a net $700 thousand
loss for taxable year 2016.
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