BILL ANALYSIS �
AB 2638
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CONCURRENCE IN SENATE AMENDMENTS
AB 2638 (Eng)
As Amended August 16, 2012
Majority vote
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|ASSEMBLY: |50-27|(May 29, 2012) |SENATE: |23-15|(August 21, |
| | | | | |2012) |
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Original Committee Reference: REV. & TAX.
SUMMARY : Requires the Department of Finance (DOF) to include
additional information in its annual tax expenditure report and
to provide the Legislature with certain specified information.
Requires the Franchise Tax Board (FTB) and the State Board of
Equalization (BOE) to submit to the DOF and the Legislature, on
or before December 1 of each calendar year, a report on the
fiscal and tax effect of specified tax expenditures.
The Senate amendments :
1)Identify the factors to be used by the DOF in adjusting the
original estimated revenue loss, if available, of a tax
expenditure that is included in the DOF's annual tax
expenditure report.
2)Revise the timeline for the submission of the BOE and FTB
reports relating to the fiscal and tax effect of certain
specified tax expenditures.
3)Eliminate the requirement for the BOE and FTB to include in
their reports the citations of academic studies pertaining to
tax expenditures.
4)Clarify that the BOE report shall identify the sales and use
tax (SUT) expenditures revenue loss for the most recent fiscal
year (FY), for which full year data is available, instead of
the most recent tax year.
AS PASSED BY THE ASSEMBLY , this bill:
1)Required the DOF to do both of the following:
a) Include in its annual tax expenditure report:
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i) The year of enactment for each credit, deduction,
exclusion, exemption, or any tax benefit exceeding $5
million in annual cost.
ii) Anticipated revenue loss, if available, pursuant to
the final fiscal committee analysis of the act that
established the tax expenditure, adjusted for inflation.
b) Provide to the Legislature, at the time of the submission
of the Governor's Budget, an estimate of the revenue loss in
the upcoming FY for each tax expenditure exceeding $5
million in annual cost. Defines "tax expenditure" as a
credit, deduction, exclusion, exemption, or any other tax
benefit provided by the state.
2)Required the FTB and the BOE, at the time of the submission of
the Governor's Budget to the Legislature, to report to the DOF
and the Legislature on the fiscal and tax effect of tax
expenditures from SUT, personal income tax (PIT), and
corporation tax.
3)Stated that the BOE and FTB reports shall be limited to tax
expenditures with an annual revenue loss of at least $5 million
and shall include all of the following information:
a) The most recent data to characterize the economic, tax,
and demographic profile of claimants, including an estimate
for the state and local revenue loss for the current FY and
the two subsequent FYs.
b) Anticipated revenue loss, if available, pursuant to the
final fiscal committee analysis of the act that established
the tax expenditure, adjusted for inflation.
c) Citation of academic studies pertaining to the tax
expenditure or similar tax expenditures, where deemed
appropriate by the BOE or FTB, whichever is applicable.
d) Usage data, where available, for the same or similar tax
expenditures adopted by other states with similar economics,
business entity types, and tax laws, or the federal
government, if appropriate.
e) Any other distinguishing tax characteristic, including
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other tax expenditures claimed.
4)Provided that, for SUT expenditures, the BOE report shall also
include:
a) At a minimum, the revenue loss for each expenditure for
the most recent tax year for which full year data is
available and estimated revenue loss for the current FY and
subsequent FY by industry code.
b) For the most recent taxable year for which a full year of
data is available, average, median, highest, and lowest
amounts claimed by taxpayer liability and the amounts
claimed and, as of the time report is prepared, amounts
disallowed.
5)Required that, for PIT and corporate income and franchise tax
expenditures, the FTB report identify all of the following
information:
a) At a minimum, the revenue loss for each expenditure for
the most recent taxable year for which a full year of data
is available, the current FY, and the budget year, in the
following categories by:
i) Adjusted gross income of the claimants.
ii) Tax liability of the taxpayer.
iii) Region.
iv) Industry code.
b) For the most recent taxable year for which a full year of
data is available, average, median, highest, and lowest
amounts claimed by taxpayer bracket, and amounts claimed
and, as of the time the report is prepared, amounts
disallowed.
6)Specified that the BOE and FTB shall provide sufficient data to
support a subsequent analysis of the revenue loss of the tax
expenditure.
7)Defined "tax expenditure" as a credit, deduction, exclusion,
exemption, or any other tax benefit provided by the state.
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FISCAL EFFECT : According to the Senate Appropriations Committee,
pursuant to Senate Rule 28.8, negligible state costs.
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098
FN: 0005161