BILL NUMBER: AB 1963	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 23, 2012
	PASSED THE ASSEMBLY  AUGUST 30, 2012
	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 Section 38 of the Revenue and Taxation Code,
relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1963, Huber. Income taxes: sales and use taxes: Legislative
Analyst's Office: report.
   Existing law imposes taxes based upon taxable income, at specified
rates, and imposes state sales and use taxes on retailers and on the
storage, use, or other consumption of tangible personal property 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.


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repealed.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.  (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.