BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 670|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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THIRD READING
Bill No: SB 670
Author: Jackson (D)
Amended: 6/1/15
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 6-0, 5/6/15
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach
NO VOTE RECORDED: Pavley
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: Income taxes: credit: dependent care: child care
SOURCE: Author
DIGEST: This bill reestablishes two employer tax credits
related to providing childcare.
ANALYSIS:
Existing law allows taxpayers to claim tax credits designed as
incentives for taxpayers to incur certain expenses, such as
child adoption, or to influence behavior, including business
practices and decisions.
This bill:
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1)Allows a credit of 30% of the costs paid for the startup
expenses of establishing a child care program or constructing
a child care facility in California, that will primarily be
used by the children of the taxpayer's employees, tenants
leasing commercial or office space in the taxpayer's building,
or for contributions to California child care information and
referral services, capped at $50,000 per taxable year.
2)Allows a credit of 30% of the costs paid for contributions to
a qualified care plan made on behalf of any qualified
dependent, not to exceed $360 for each qualified dependent.
Contributions must be direct payments to child care providers
and not pursuant to a salary reduction agreement.
3)Allows any credits in excess of tax liability may be carried
over for use in succeeding years, though the amount of the
credit that may be claimed by any taxpayer in any one year
cannot exceed $50,000. This credit is available through the
2021 tax year, although unused credits may be carried forward
beyond the sunset date.
4)Takes effect immediately, and applies to taxable years
beginning on or after January 1, 2016 and before January 1,
2021.
Background
Prior to 2012, state law allowed two tax credit programs for
employers providing child care for employees:
1)30% of the costs paid for the startup expenses of establishing
a child care program or constructing a child care facility in
California that will primarily be used by the children of the
taxpayer's employees, tenants leasing commercial or office
space in the taxpayer's building, or for contributions to
California child care information and referral services,
capped at $50,000 per taxable year.
2)30% of the costs paid for contributions to a qualified care
plan made on behalf of any qualified dependent, not to exceed
$360 for each qualified dependent. Contributions must be
direct payments to child care providers, and not pursuant to a
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Page 3
salary reduction agreement.
Both credits could be carried over until exhausted.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee, The Franchise
Tax Board (FTB) estimates that the bill's three changes to tax
law would result in an aggregate General Fund revenue loss of
$0.5 million in 2015-16, $4.3 million in 2016-17, and $4.8
million in 2017-18. FTB indicates that the bill's impact on
department operations would be minor. This estimate was made
prior to the amendment made on 5/13/15
SUPPORT: (Verified5/29/15)
Bay Area Council
OPPOSITION: (Verified5/29/15)
None received
ARGUMENTS IN SUPPORT: According to the author, "Access to
affordable and quality child care has long been a challenge for
working families, where demand has consistently outpaced supply.
In California, the numbers are stark. 57 percent of women are
in the workforce, 64 percent have children under the age of six.
Many working single mothers also spend nearly half of their
income (44%) on child care. Yet, the state only has the
licensed child care capacity to serve 16 percent of children
under the age of 12, this creates dire situations for working
families, where oftentimes it is the mother who is forced to
choose between remaining at home to care for her child or
leaving her child unattended or with a caretaker with whom she
may or may not be familiar so that she can work.
When the Employer Child Care Tax Credit expired, we lost a tool
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that not only helped to alleviate the challenges working
families face when trying to balance family and work, but also,
the ability of California companies and businesses to provide
supported child care programs. By re-establishing the ECTC, we
can uphold the state's commitment to provide a supportive
business environment while also helping to provide working
mothers access to child care so that they can continue to pursue
their careers and strengthen California's economy."
Prepared by:Myriam Bouaziz / GOV. & F. / (916) 651-4119
6/1/15 18:22:38
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