BILL ANALYSIS
AB 2148
Page 1
Date of Hearing: May 28, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2148 (Tran) - As Amended: May 18, 2010
Policy Committee: Revenue and
Taxation Vote: 9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill provides, for tax years 2011 through 2015, a personal
income tax deduction to physicians that provide free medical
services in clinic or hospital settings. Specifically, the
bill:
1)Allows an income tax deduction equal to the value of qualified
medical services (determined based on the usual, reasonable,
and customary standards described in the California Code of
Regulations), up to a maximum of $1,500 per year.
2)Specifies that the deduction would be allowed in computing
adjusted gross income. This means that it would be available
to both those itemizing deductions and those taking the
standard deduction, and it would not be phased out at higher
income levels (as are most itemized deductions.)
3)Defines "qualified medical services" to mean medical services
provided free of charge at a local community clinic, and
emergency medical services provided free of charge in a
emergency department of a general acute care hospital.
FISCAL EFFECT
The bill will result in General Fund revenue losses of about $1
million in 2011-12, and $800,000 the subsequent three years.
COMMENTS :
1)Purpose . According to the author, the bill is intended to
provide incentives for doctors to bring their knowledge and
AB 2148
Page 2
expertise to meet the needs of underserved populations in
California communities.
2)Background . Existing personal income tax law provides for
various itemized deductions from adjusted gross income in
computing taxable income. These include a deduction for
charitable contributions made by a taxpayer. Allowable
deductions consist of donations of cash and tangible property,
as well as certain expenses incurred in rendering charitable
services. However, the value of services provided for
charitable causes is not deductible.
3)Issue . Assuming a physician is in the 9.55% marginal tax
rate, the $1,500 maximum deduction will be worth about $143 in
state tax savings - and net savings of $93 when the offsetting
increase in federal liabilities is included. While a nice
gesture to physicians providing free medical services, the
small amount will provide an extremely limited financial
incentive for doctors to contribute additional hours. Instead
it will result in modest tax savings to those who would have
contributed the services anyway - but collectively at a
significant cost to the state.
A nalysis Prepared by : Brad Williams / APPR. / (916) 319-2081