BILL ANALYSIS Ó
AB 931
Page 1
Date of Hearing: May 27, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
931 (Irwin) - As Amended May 20, 2015
-----------------------------------------------------------------
|Policy |Revenue and Taxation |Vote:|9 - 0 |
|Committee: | | | |
| | | | |
| | | | |
-----------------------------------------------------------------
Urgency: Yes State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill revises the definition of "qualified full-time
employee" under the personal income and corporate tax laws to
include a veteran who separated from service in the armed forces
within the 36 months, and was unemployed for the 6 months,
immediately preceding commencement of employment with the
qualified taxpayer. As a result, certain employers will be able
to claim a new employment credit for hiring certain unemployed
veterans separated within 36 months in addition to the current
allowance for veterans separated within 12 months.
FISCAL EFFECT:
AB 931
Page 2
1)Insignificant costs to Franchise Tax Board (FTB) to administer
the changes to procedures and systems.
2)Estimated GF revenue decreases of $12,000, $70,000, and
$100,000 in FY 2015-16, FY 2016-17, and FY 2017-18,
respectively.
COMMENTS:
1)Purpose. According to the author, California is home to 1.8
million veterans, and with two overseas operations likely
concluding in the coming years, employment needs for veterans
in the state are likely to increase. This bill is designed to
lengthen the time veterans who have separated from active duty
remain eligible for a hiring tax credit, making them more
attractive to potential employers, and increase the number of
veterans who qualify.
Although there is not yet sufficient data on the effectiveness
of the new employment credit because it has only been in
operation since January 1, 2014, the author believes initial
indications are the tax credit is underutilized, with fewer
than 50 employers in the state having applied for an eligible
veterans hiring credit. Veterans hired under the credit are
ensured a job for at least 35 hours a week that pays at least
150% of the minimum wage.
2)Incentive vs Reward. Hiring tax credits are often proposed as
a means of enhancing economic growth. A recent academic study
focusing on 20 years of state hiring credits found the credits
were responsible for a slight increase in employment, about
0.12%, but were otherwise a blunt tool for stimulating job
AB 931
Page 3
growth. In most cases, it appears the credit is more of a
reward than an incentive. With unemployment currently falling
in California, additional hiring credits may result in
windfalls to businesses that would have otherwise hired
instead of stimulating new hiring.
Analysis Prepared by:Joel Tashjian / APPR. / (916)
319-2081