BILL ANALYSIS Ó
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