BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 976


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          Date of Hearing:  May 27, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          976 (Steinorth) - As Amended May 7, 2015


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          |Policy       |Revenue and Taxation           |Vote:|7 - 2        |
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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill allows, for tax years beginning on or after January 1,  
          2016, and before January 1, 2021, a deduction, not to exceed  
          $100, from personal income tax for costs incurred adopting  
          either (i) a pet over the age of 4, or (ii) a cat from a public  
          animal control agency or shelter, humane society shelter, or  
          rescue group.


          FISCAL EFFECT:


          Estimated annual GF revenue decrease of approximately $100,000.








                                                                     AB 976


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          COMMENTS:


          1)Purpose.  According to the author, local animal shelters in  
            California serve approximately 800,000 pets a year, and many  
            suffer from overcrowding.  The author contends the easiest way  
            to alleviate overcrowding pressure is to increase adoption  
            rates, and this bill is intended to be a modest investment  
            toward that goal.  The author believes discounted prices for  
            adoption have been effective in increasing adoption rates, so  
            by inference, a tax incentive ought to have a similarly  
            positive effect.


            Supporters, led by the Humane Society, believe a tax deduction  
            sends an effective message about the importance of compassion  
            for homeless pets, arguing even a small increase in the number  
            of pet adoptions will demonstrate the investment value of the  
            deduction.


          2)Modest incentive.  This bill is intended to encourage the  
            adoption of pets from qualified animal rescue organizations  
            with a maximum deduction of $100, and only for those taxpayers  
            who itemize their deductions.  Even at the top marginal income  
            tax rate of 12.3%, the deduction results in a total tax  
            savings of less than $13, and for most families, the tax  
            savings would be less than $10.  In opposition, the California  
            Tax Reform Association argues promoting animal adoption  
            through a tax deduction is poor public policy, arguing pet  
            adoption is properly motivated through compassion and not  
            financial incentives.


          3)More actual adoptions?  Tax incentives are usually intended to  
            incentivize socially beneficial behavior that would not occur  
            without the incentive.  While pet adoption is certainly a  








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            laudable goal, for the vast majority of taxpayers, the maximum  
            incentive will be less than $10.  The Committee may wish to  
            consider whether that is a sufficient incentive to encourage  
            anyone who would not otherwise have considered adopting a  
            rescued animal to do so, and if so, whether that incentive  
            created justifies the cost to the state.


          Analysis Prepared by:Joel Tashjian / APPR. / (916)  
          319-2081