Amended in Senate March 28, 2016

Senate BillNo. 1183


Introduced by Senator Bates

February 18, 2016


An actbegin insert to amend Section 205.5 of the Revenue and Taxation Code,end insert relating tobegin delete taxation.end deletebegin insert taxation, to take effect immediately, tax levy.end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 1183, as amended, Bates. begin deleteIncome taxes: rates. end deletebegin insertProperty taxation: exemptions: disabled veterans.end insert

begin insert

Existing property tax law provides, pursuant to the authorization of the California Constitution, a disabled veterans’ property tax exemption for the principal place of residence of a veteran or a veteran’s spouse, including an unmarried surviving spouse, if the veteran, because of injury incurred in military service, is blind in both eyes, has lost the use of 2 or more limbs, or is totally disabled, as those terms are defined, or if the veteran has, as a result of a service-connected injury or disease, died while on active duty in military service. Existing law exempts that part of the full value of the residence that does not exceed $100,000, or $150,000, if the veteran’s household income does not exceed $40,000, adjusted for inflation, as specified.

end insert
begin insert

This bill would instead exempt the full value of the principal place of residence of a veteran or veteran’s spouse. The bill would also define the term “blind in both eyes” to mean that the veteran is a blind person, as defined in a specific statute. The bill would also specify that a “totally disabled” veteran includes a veteran so severely disabled as to be unable to move without the aid of an assistive device. The bill would make other technical and conforming changes to the disabled veterans’ property tax exemption.

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By changing the manner in which local tax officials administer the disabled veterans’ property tax exemption, this bill would impose a state-mandated local program.

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Section 2229 of the Revenue and Taxation Code requires the Legislature to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.

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This bill would provide that, notwithstanding Section 2229 of the Revenue and Taxation Code, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.

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The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

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This bill would take effect immediately as a tax levy.

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The Personal Income Tax Law imposes taxes upon taxable income at specified rates. Proposition 30, known as the Schools and Local Public Safety Protection Act of 2012, which was approved by the voters at the November 6, 2012, statewide general election, provides the tax rates applicable to specified amounts of taxable income that is over $250,000 for taxable years beginning on or after January 1, 2012, and before January 1, 2019.

end delete
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This bill would state the intent of the Legislature, for taxable years beginning on or after January 1, 2019, to modify the tax rates applicable to taxable income under the Personal Income Tax Law.

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Vote: majority. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: begin deleteno end deletebegin insertyesend insert.

The people of the State of California do enact as follows:

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 205.5 of the end insertbegin insertRevenue and Taxation Codeend insert
2
begin insert is amended to read:end insert

3

205.5.  

(a) Property that constitutes the principal place of
4residence of a veteran, that is owned by the veteran, the veteran’s
5spouse, or the veteran and the veteran’s spouse jointly, is exempted
P3    1from taxationbegin delete on that part of the full value of the residence that
2does not exceed one hundred thousand dollars ($100,000), as
3adjusted for the relevant assessment year as provided in subdivision
4(h),end delete
if the veteran is blind in both eyes, has lost the use of two or
5more limbs, or if the veteran is totally disabled as a result of injury
6or disease incurred in military service.begin delete The one hundred thousand
7dollar ($100,000) exemption shall be one hundred fifty thousand
8dollars ($150,000), as adjusted for the relevant assessment year as
9provided in subdivision (h), in the case of an eligible veteran whose
10household income does not exceed the amount of forty thousand
11dollars ($40,000), as adjusted for the relevant assessment year as
12provided in subdivision (g).end delete

13(b) (1) For purposes of this section, “veteran” means either of
14the following:

15(A) A veteran as specified in subdivision (o) of Section 3 of
16Article XIII of the Californiabegin delete Constitution without regard to anyend delete
17begin insert Constitution, except for theend insert limitationbegin delete contained thereinend delete on the
18value of property owned by the veteran or the veteran’s spouse.

19(B) begin deleteAny end deletebegin insertA end insertperson who would qualify as a veteran pursuant to
20paragraph (1) except that he or she has, as a result of a
21service-connected injury or disease,begin insert as determined by the United
22States Department of Veterans Affairs,end insert
died while on active duty
23in military service.begin delete The United States Department of Veterans
24Affairs shall determine whether an injury or disease is service
25connected.end delete

26(2) For purposes of this section, property is deemed to be the
27principal place of residence of a veteran, disabled as described in
28subdivision (a), who is confined to a hospital or other care facility,
29if that property would be that veteran’s principal place of residence
30were it not for his or her confinement to a hospital or other care
31facility, provided that the residence is not rented or leased to a
32third party.begin delete Aend deletebegin insert For the purposes of this paragraph, aend insert family member
33that resides at the residence is notbegin delete considered to beend delete a third party.

34(c) (1) Property that is owned by, and that constitutes the
35principal place of residence of, the unmarried surviving spouse of
36a deceased veteran is exempt from taxation begin delete on that part of the full
37value of the residence that does not exceed one hundred thousand
38dollars ($100,000), as adjusted for the relevant assessment year as
39provided in subdivision (h), in the case of aend delete
begin insert if the deceasedend insert veteran
40begin delete whoend delete was blind in both eyes, had lost the use of two or more limbs,
P4    1or was totallybegin delete disabledend deletebegin insert disabled,end insert provided that either of the
2following conditions is met:

3(A) The deceased veteran during his or her lifetime qualified
4begin delete in all respectsend delete for the exemptionbegin insert pursuant to subdivision (a),end insert or
5would have qualified for the exemption under the laws effective
6on January 1, 1977, except that the veteran died prior to January
71, 1977.

8(B) The veteran died from a disease that wasbegin delete service connectedend delete
9begin insert service-connected,end insert as determined by the United States Department
10of Veterans Affairs.

begin delete

11The one hundred thousand dollar ($100,000) exemption shall
12be one hundred fifty thousand dollars ($150,000), as adjusted for
13the relevant assessment year as provided in subdivision (h), in the
14case of an eligible unmarried surviving spouse whose household
15income does not exceed the amount of forty thousand dollars
16($40,000), as adjusted for the relevant assessment year as provided
17in subdivision (g).

end delete

18(2) begin deleteCommencing with the 1994-95 fiscal year, property end deletebegin insertProperty end insert
19that is owned by, and that constitutes the principal place of
20residence of, the unmarried surviving spouse of a veteranbegin delete asend delete
21 described in subparagraph (B) of paragraph (1) of subdivision (b)
22is exempt from begin delete taxation on that part of the full value of the
23residence that does not exceed one hundred thousand dollars
24($100,000), as adjusted for the relevant assessment year as provided
25in subdivision (h). The one hundred thousand dollar ($100,000)
26exemption shall be one hundred fifty thousand dollars ($150,000),
27as adjusted for the relevant assessment year as provided in
28subdivision (h), in the case of an eligible unmarried surviving
29spouse whose household income does not exceed the amount of
30forty thousand dollars ($40,000), as adjusted for the relevant
31assessment year as provided in subdivision (g).end delete
begin insert taxation.end insert

32(3) begin deleteBeginning with the 2012-13 fiscal year and for each fiscal
33year thereafter, property end delete
begin insertProperty end insertis deemed to be the principal
34place of residence of the unmarried surviving spouse of a deceased
35veteran, who is confined to a hospital or other care facility, if that
36property would be the unmarried surviving spouse’s principal place
37of residence were it not for his or her confinement to a hospital or
38other care facility, provided that the residence is not rented or
39leased to a third party. For purposes of this paragraph, a family
P5    1member who resides at the residence is notbegin delete considered to beend delete a third
2party.

3(d) As used in this section, “property that is owned by a veteran”
4or “property that is owned by the veteran’s unmarried surviving
5spouse” includes all of the following:

6(1) Property owned by the veteran with the veteran’s spouse as
7a joint tenancy, tenancy in common, or as community property.

8(2) Property owned by the veteran or the veteran’s spouse as
9separate property.

10(3) Property owned with one or more other persons to the extent
11of the interest owned by the veteran, the veteran’s spouse, or both
12the veteran and the veteran’s spouse.

13(4) Property owned by the veteran’s unmarried surviving spouse
14with one or more other persons to the extent of the interest owned
15by the veteran’s unmarried surviving spouse.

16(5) begin deleteSo much of the end deletebegin insertThat portion of the end insertproperty of a corporation
17begin delete asend deletebegin insert thatend insert constitutes the principal place of residence of a veteran or
18a veteran’s unmarried surviving spouse when the veteran,begin delete orend delete the
19veteran’s spouse, or the veteran’s unmarried surviving spouse is
20a shareholder of the corporation and the rights of shareholding
21entitle one to the possession of property, legal title to which is
22owned by the corporation. The exemption provided by this
23paragraph shall be shown on the local roll and shall reduce the full
24value of the corporate property. Notwithstanding anybegin delete provision ofend delete
25 law or articles of incorporation or bylaws of a corporation described
26in this paragraph, any reduction of property taxes paid by the
27corporation shall reflect an equal reduction in any charges by the
28corporation to the person who, by reason of qualifying for the
29exemption, made possible the reduction for the corporation.

30(e) For purposes of this section,begin delete beingend deletebegin insert the following definitions
31shall apply:end insert

32begin insert(1)end insertbegin insertend insertbegin insert“Beingend insert blind in both begin delete eyes means having a visual acuity of
335/200 or less, or concentric contraction of the visual field to 5
34degrees or less; losingend delete
begin insert eyes” means that the veteran is a blind
35person, as that term is defined in Section 19153 of the Welfare and
36Institutions Code as that section read on January 1, 2016.end insert

37begin insert(2)end insertbegin insertend insertbegin insert“Lostend insert the use ofbegin delete a limbend deletebegin insert two or more limbs”end insert means that the
38limb has been amputated or its use has been lost by reason of
39ankylosis, progressive muscular dystrophies, orbegin delete paralysis; and
40being totally disabledend delete
begin insert paralysis.end insert

P6    1begin insert(3)end insertbegin insertend insertbegin insert“Totally disabled”end insert means thatbegin insert the veteran has a disability
2whichend insert
the United States Department of Veterans Affairs or the
3military service from which the veteran was discharged has rated
4begin delete the disabilityend delete at 100begin delete percent orend deletebegin insert percent, the veteran is so severely
5disabled as to be unable to move without the aid of an assistive
6device, or the veteranend insert
has rated the disability compensation at 100
7percent by reason of being unable to secure or follow a
8substantially gainful occupation.

9(f) An exemption granted to a claimantbegin delete in accordance with the
10provisions ofend delete
begin insert pursuant toend insert this section shall be in lieu of the
11veteran’s exemption provided by subdivisions (o), (p), (q), and (r)
12of Section 3 of Article XIII of the California Constitution and any
13other real property tax exemption to which the claimant may be
14entitled. No other real property tax exemption may be granted to
15any other person with respect to the same residence for which an
16exemption has been grantedbegin delete under the provisions ofend deletebegin insert pursuant toend insert
17 this section; provided, that if two or more veterans qualified
18pursuant to this section coown a property in which they reside,
19each is entitled to the exemption to the extent of his or her interest.

begin delete

20(g) Commencing on January 1, 2002, and for each assessment
21year thereafter, the household income limit shall be compounded
22annually by an inflation factor that is the annual percentage change,
23measured from February to February of the two previous
24assessment years, rounded to the nearest one-thousandth of 1
25percent, in the California Consumer Price Index for all items, as
26determined by the California Department of Industrial Relations.

end delete
begin delete

27(h) Commencing on January 1, 2006, and for each assessment
28year thereafter, the exemption amounts set forth in subdivisions
29(a) and (c) shall be compounded annually by an inflation factor
30that is the annual percentage change, measured from February to
31February of the two previous assessment years, rounded to the
32nearest one-thousandth of 1 percent, in the California Consumer
33Price Index for all items, as determined by the California
34Department of Industrial Relations.

end delete
begin insert

35
(g) The amendments made to this section by the act adding this
36subdivision shall apply for property tax lien dates for the 2017-18
37fiscal year and for each fiscal year thereafter.

end insert
38begin insert

begin insertSEC. 2.end insert  

end insert
begin insert

Notwithstanding Section 2229 of the Revenue and
39Taxation Code, no appropriation is made by this act and the state
P7    1shall not reimburse any local agency for any property tax revenues
2lost by it pursuant to this act.

end insert
3begin insert

begin insertSEC. 3.end insert  

end insert
begin insert

If the Commission on State Mandates determines that
4this act contains costs mandated by the state, reimbursement to
5local agencies and school districts for those costs shall be made
6pursuant to Part 7 (commencing with Section 17500) of Division
74 of Title 2 of the Government Code.

end insert
8begin insert

begin insertSEC. 4.end insert  

end insert
begin insert

This act provides for a tax levy within the meaning of
9Article IV of the Constitution and shall go into immediate effect.

end insert
begin delete
10

SECTION 1.  

It is the intent of the Legislature, for taxable years
11beginning on or after January 1, 2019, to modify the tax rates
12applicable to taxable income under the Personal Income Tax Law.

end delete


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