BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 1103 (Cannella) - Personal income taxes: renters' credit
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|Version: April 27, 2016 |Policy Vote: GOV. & F. 6 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 16, 2016 |Consultant: Robert Ingenito |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 1103 would increase the "renters' credit" from $60
to $100 for single filers, and from $120 to $200 for joint
filers.
Fiscal
Impact: The Franchise Tax Board (FTB) estimates that the bill
would result in General Fund revenue losses of $60 million in
2016-17, $60 million in 2017-18, and $65 million in 2018-19. FTB
would not incur additional costs to administer the bill.
Background: The term "tax expenditure programs" (TEPs) refers to various
special tax provisions (credits, deductions and exemptions) that
SB 1103 (Cannella) Page 1 of
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reduce the amount of revenues the "basic" tax system would
otherwise generate in order to provide (1) benefits to certain
groups of taxpayers, and/or (2) incentives to encourage certain
types of behavior and activities. The Legislature typically
enacts such tax incentives to encourage taxpayers to do
something that, absent the tax credit, they would not do. The
Department of Finance (DOF) is required to annually publish a
list of TEPs; DOF estimates that the 2015-16 revenue loss from
all TEPs exceeds $57 billion.
State law allows a nonrefundable credit for qualified renters in
the following amounts:
$60 for filers that are single, married or registered
domestic partners filing separately with an adjusted gross
income (AGI) of $38,259 or less, and
$120 for filers that are head of household, married or
registered domestic partners filing jointly, or a qualified
widow/widower with an AGI of $76,518 or less.
State law requires the renters' credit AGI limitations to be
adjusted annually for inflation. The California Constitution
requires the Legislature to provide increases in benefits to
qualified renters that are comparable to the average increase in
benefits provided to homeowners under the homeowners' property
tax exemption. However, if the Legislature increases the
renters' credit, no increase in the amount of benefits to
homeowners' property tax exemption is required.
Proposed Law:
This bill would increase the "renters' credit" from $60 to $100
for filers that are single or married filing separately with an
adjusted gross income (AGI) of $38,259 or less, and from $120 to
$200 for filers that are head of household, married filing
jointly, or a qualified widow/widower with an AGI of $76,518 or
SB 1103 (Cannella) Page 2 of
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less.
Related
Legislation: AB 476 (Chang, 2015) would have increased both the
homeowners' property tax exemption and the renter's credit. AB
476 failed to pass the Assembly Revenue and Taxation Committee.
Staff
Comments: FTB developed the revenue estimate for this bill using
its own renter's credit data. Specifically, it substituted the
proposed renters' credit levels in place of those in current
law, and then calculated what the revenue change would be. FTB
estimated that the result was a $60 million revenue loss in
2016.
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