BILL ANALYSIS �
AB 2427
Page 1
Date of Hearing: May 21, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2427 (Jones-Sawyer) - As Introduced: February 21, 2014
Policy Committee: Revenue &
Taxation Vote: 7-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill allows qualified teachers to claim a personal income
tax credit, not to exceed $250, for instructional materials and
classroom supplies beginning on or after January 1, 2014 and
before January 1, 2019. Specifically, this bill
1)Defines a "qualified teacher" as a teacher that meets the
following requirements, among others:
a) The teacher worked at least 900 hours in the school year
in a school, offering instruction in grades K-12, in
California at a public, charter, or private school that has
a current private school affidavit on file with the State
Department of Education in a school year.
b) The teacher is not employed as a tutor, teaching
assistant, instructional aide, student teacher, day care
provider, vocational instructor, or in a similar position.
2)Defines "instructional materials and classroom supplies" as
books, supplies, computer equipment, including related
software and services and other equipment, and supplementary
materials used in the classroom, including supplies for
courses in health and physical education, the amount paid or
incurred for which is otherwise deductible under Internal
Revenue Code Section 162 and not reimbursed.
3)Provides that the credit is only allowed for qualified
teachers based on the years of employment as a qualified
teacher as follows:
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a) For taxable years beginning on or after January 1, 2014
and before January 1, 2015, no more than one year of
employment as a qualified teacher.
b) For taxable years beginning on or after January 1, 2015
and before January 1, 2016, no more than two consecutive
years of employment as a qualified teacher.
c) For taxable years beginning on or after January 1, 2016
and before January 1, 2019, no more than three consecutive
years of employment as a qualified teacher.
4)Allows a taxpayer to carry forward any unused tax credit for
up to five years to offset future tax liability.
FISCAL EFFECT
1)Potentially significant GF costs to Franchise Tax Board (FTB)
to administer the changes to forms and systems.
2)Estimated GF revenue decreases of $2.5 million, $4.9 million,
and $7.1 million in FY 2014-15, FY 2015-16, and FY 2016-17,
respectively.
COMMENTS
1) Purpose. According to the author, this bill adds a state
credit to an existing federal deduction to further support new
teachers as they begin their careers. AB 2427 enables new
teachers, in their first three years of service, to claim
individual tax credits of up to $250 for expenses relating to
instructional materials and classroom supplies. The author
contends such expenses are a particular hardship for new
teachers who earn lower salaries and are often still repaying
college loans. New educators are also often teaching in
California's most challenging districts and schools.
2) Tax Incentive vs Investment in Education. Opponents,
including the California Teachers Association (CTA), argue
K-12 education has endured budget cuts of $20 billion over the
last few years, and that additional revenues should be spent
on restoring those budgets instead of being used for tax
incentives. CTA asserts schools should be adequately funded
so that teachers do not have to spend personal income to
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purchase classroom materials. While this tax credit would be
used for activities benefitting California's public schools,
the effect would be diminished by reducing Proposition 98
funding. The Committee may wish to consider whether increased
school funding would be a more efficient approach to achieving
these goals.
3) Implementation Considerations. It is currently unclear how
the FTB would verify whether a teacher meets the eligibility
requirements specified in this bill. As such, the FTB has
suggested potential amendments requiring the appropriate local
agency to certify teacher eligibility. Teachers could retain
those certifications and, upon request, provide them to the
FTB for verification. Such a requirement would ease the FTB's
administration of this credit and reduce administrative costs.
However, requiring local agencies to verify eligibility and
produce certifications would likely add state mandated local
costs, especially in light of the relatively modest per
teacher credit involved.
Analysis Prepared by : Joel Tashjian / APPR. / (916) 319-2081