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,
AB 1944 (Jones) Page 1 of
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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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