BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 2768


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          Date of Hearing:  May 25, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2768 (Thurmond) - As Amended May 16, 2016


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill creates a tax credit under the Personal Income Tax  
          (PIT) Law and the Corporation Tax (CT) Law for donations of  
          qualified food of a taxpayer's trade or business to a nonprofit.  
          Specifically, this bill:








                                                                    AB 2768


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          1)Allows a tax credit between January 1, 2017, and January 1,  
            2023 worth 10% of the fair market value of the contribution  
            under the PIT Law, or 10% of the fair market value of the  
            contribution under the CT Law.



          2)Defines qualified food as prepackaged food, as specified, or  
            food prepared for immediate human consumption, including  
            unspoiled fruits and vegetables.
          FISCAL EFFECT:


          1)Significant but unknown costs to the Franchise Tax Board (FTB)  
            to implement this credit. 





          2)Annual GF revenue loss of up to $40 million, $100 million, and  
            $130 million in FY 2016-17, FY 2017-18, and FY 2018-19,  
            respectively. 
          COMMENTS:


          1)Purpose. AB 2678 aims to incentivize and support the costs  
            related to donating prepared food to food pantries. The bill,  
            by offering a credit equal to 10% of the fair market value of  
            the donated food, aims to reduce hunger among low-income  
            families. 
          2)Food insecurity and the debate over nutritional options. Food  
            insecurity remains a critical issue for California families.  
            Over four million California households struggled with food  
            insecurity in 2014, meaning that they could not consistently  
            afford enough food to eat.









                                                                    AB 2768


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            AB 2768 has a broad definition of qualified food, including  
            junk food and candy. While this has raised concerns that this  
            bill will end up harming low-income families in the long run  
            by increasing access to unhealthy foods, supporters of the  
            bill argue that any food is better than going hungry and that  
            the crisis of food insecurity calls for giving families access  
            to whatever meals can be made available.


          3)Is the bill needed? Supporters of this bill argue that one  
            positive impact of this bill will be to reduce the amount of  
            food that is thrown away. They cite the costs of packaging the  
            donated food and organizing donation timing to ensure that  
            fresh products are delivered. Moreover, they point out that  
            the credit is going to smaller business owners, such as  
            franchisees of a fast food chain, rather than corporate  
            headquarters. However, many restaurants already take it upon  
            themselves to donate food instead of throwing it away.  
            According to the National Restaurant Association, 73% of  
            restaurants currently make food donations and are actively  
            involved in addressing the challenge of hunger.  
          Analysis Prepared by:Luke Reidenbach / APPR. / (916)  
          319-2081