BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1944 (Jones) - Personal Income Tax Law:  gross income  
          exclusion:  Olympic and Paralympic Games
          
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          |Version: June 13, 2016          |Policy Vote: GOV. & F. 5 - 0    |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 1, 2016    |Consultant: Robert Ingenito     |
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          This bill meets the criteria for referral to the Suspense File.


          


          Bill  
          Summary: AB 1944 would, for taxable years 2016 through 2020,  
          exclude from income the value of any prize or award won in the  
          Olympic Games or Paralympic Games.


          Fiscal  
          Impact: Based on historical athlete performance, the Franchise  
          Tax Board (FTB) estimates that the bill would result in revenue  
          losses (General Fund) of $100,000 in 2016-17, $6,000 in 2017-18,  
          and $4,000 in 2018-19. The bill would not significantly impact  
          FTB's administrative costs.


          Background: The United States Olympic Committee (USOC) pays out a $25,000  
          bonus per gold medal, $15,000 for silver and $10,000 for bronze  
          (and for the Paralympics, $5,000, $3,500 and $2,500,  







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          respectively). The money does not come from the United States  
          government; instead, the USOC gets it money from the sale of  
          broadcast rights, licensing and trademark income, and corporate  
          sponsorships. As a point of comparison, Kazakhstan pays its  
          athletes the equivalent of $250,000 per gold medal. Under  
          current law, the Olympic-related bonuses are considered taxable  
          income, which includes all gifts and prizes unless specifically  
          excluded (such as employee achievement awards, and any gift or  
          prize donated to charity).  Current state law excludes from  
          income some items that are includible as income in federal tax,  
          such as lottery winnings, unemployment insurance, and a portion  
          of social security benefits.


          Proposed Law:  
          This bill would, for taxable years 2016 through 2020, exclude  
          from income the value of any medal given by the International  
          Olympic Committee and any prize money or honoraria received from  
          the United States Olympic Committee in athletic competition in  
          the Olympic Games or the Paralympic Games.

          Related  
          Legislation: AB 2323 (Gorell, 2014) would have excluded from  
          gross income any prize or award won by an individual in athletic  
          competition at the Olympics Games. The bill was held under  
          submission on the Suspense File of this Committee. 


          Staff  
          Comments: The revenue loss from this bill depends entirely on  
          the number of Californians that will medal at each Olympic and  
          Paralympic Games, which is unknown. The 2012 Summer Olympic  
          Games featured 26 sports and 302 events. The 2016 Summer Olympic  
          Games will include 28 sports and a total of 306 events.  
          Likewise, the number of Winter Olympic events in 2018 could rise  
          from the 98 that were included in the 2014 Games. FTB's revenue  
          estimate assumes that California athletes will receive medals,  
          prize money and honoraria valued at approximately $1.3 million  
          during the Summer Olympics/Paralympic games that will be held in  
          2016, and approximately $120,000 during the Winter  
          Olympics/Paralympic games that will be held during 2018. 
          The estimate assumes future Summer and Winter Olympic/Paralympic  
          performances for California athletes will be comparable to past  
          performances.








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          Staff notes that, in June 2016, the International Association of  
          Athletics Federations, the governing body for track and field,  
          announced that Russia's track and field team is barred from  
          competing in the 2016 Olympic Games. Additionally, it is  
          possible that Russian athletes in other sports will be precluded  
          from competing as well. To the extent that their absence leads  
          to more Californians winning medals than historical performance  
          would predict, FTB's revenue loss could be understated. The  
          magnitude is unknown, but probably minor.  


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