BILL NUMBER: AB 1963	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 7, 2012
	AMENDED IN ASSEMBLY  MAY 29, 2012
	AMENDED IN ASSEMBLY  APRIL 25, 2012

INTRODUCED BY   Assembly Member Huber

                        FEBRUARY 23, 2012

   An act to repeal  and add  Section 38  to
  of  the Revenue and Taxation Code, relating to
taxation.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1963, as amended, Huber.  Personal income tax: Sales
and use tax:  Income taxes: sales and use taxes: 
Legislative Analyst's Office: report. 
   The Personal Income Tax Law 
    Existing law  imposes taxes based upon taxable income,
at specified rates, and  allows a taxpayer to elect to take a
standard deduction, as provided. Existing law  imposes
state sales and use taxes on retailers and on the storage, use, or
other consumption of tangible personal property in this state
 at the rate of 6   1/4   %
of the gross receipts from the retail sale of tangible personal
property in this state and of the sales price of tangible personal
property purchased from any retailer for storage, use, or other
consumption in this state  .
   This bill would require the Legislative Analyst's Office to assess
potential changes to the laws described above in order to reduce
revenue volatility and to provide a report including these
assessments to the Legislature on or before July 1, 2013.  This
bill also would repeal obsolete provisions requiring a report by the
Legislative Analyst to the Legislature in 2004. 
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 38 of the Revenue and Taxation Code is
repealed. 
  SEC. 2.    Section 38 is added to the Revenue and
Taxation Code, to read:
   38.   
   SEC. 2.   (a) It is the intent of the Legislature to
reduce General Fund revenue volatility, as identified in the January
2005 report by the Legislative Analyst's Office. To achieve this
objective, the Legislature must have an analysis of the methods by
which a reduction in revenue volatility may be achieved without a
reduction or increase in the total available revenue.
   (b) On or before July 1, 2013, the Legislative Analyst's Office
shall submit a report to the Legislature assessing potential changes
to the state income and sales and use tax laws in order to reduce
revenue volatility, diversify revenue sources, and improve California'
s economic climate. The report shall include, but is not limited to,
the following:
   (1) A review of California's current and historical revenue
volatility, including, but not limited to, the percentage of the
gross state product that is made up by the General Fund budget over a
period of 10 years.
   (2) Proposals for tax reforms that would end California's revenue
volatility, are sum revenue neutral, and do not require amendments
to, or revisions of, the California Constitution. To the extent
possible, the Legislative Analyst shall use dynamic revenue modeling
in determining viable proposals in order to provide an accurate
picture of the impact any proposed tax reforms would have on state
revenues.
   (3) An explanation of the calculations needed to determine revenue
neutrality.
   (4) An analysis of the effect a reduction of taxation on
individual income would have upon state revenues and revenue
volatility.
   (5) An analysis of the effect of imposing a tax on the sale or use
of services, concurrent with a reduction of the sales and use tax
rate, would have upon state revenues and revenue volatility. This
analysis shall include whether a credit or exemption to the services
tax should apply to the sale of services between businesses. This
analysis shall also include the positive or negative revenue impact
of excluding the following services from a tax on services:
   (A) Necessary or licensed medical services.
   (B) Services related to education.
   (C) Automotive repair services.
   (D) Accounting, auditing, and other services provided by licensed
accountants or licensed accounting firms.
   (E) Legal services provided by licensed attorneys.
   (F) Services related to agriculture and livestock.
   (G) Services related to housing, real estate, and construction.
   (H) Services related to banking.
   (I) Securities and investment management services.