BILL ANALYSIS �
AB 2606
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Date of Hearing: May 21, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2606 (Dababneh) - As Amended: May 15, 2014
Policy Committee: Revenue &
Taxation Vote: 8-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill allows a tax credit, for taxable years beginning on or
after January 1, 2015, and before January 1, 2020, equal to $500
multiplied by the number of applicable individuals for whom the
taxpayer is an eligible caregiver during the taxable year. In
summary, this bill:
1)Defines an "applicable individual" as an individual who has
been certified within a 39-month period prior to the due date
for filing the return by a physician as being an individual
with long-term care needs for a period of time that is at
least 180 consecutive days and a portion of that time occurs
within the taxable year.
2)Defines "an individual with long-term care needs" as an
individual who meets any of the following criteria:
a) The individual is at least six years of age and meets
either of the following requirements:
i) The individual is unable to perform at least three
activities of daily living (as defined in the Internal
Revenue Code (IRC)) without substantial assistance from
another individual due to a loss of functional capacity;
or
ii) The individual requires substantial supervision to
protect that individual from threats to health and safety
due to severe cognitive impairment, and is unable to
perform at least one activity of daily living (as defined
in the IRC), or the individual is unable to engage in age
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appropriate activities, to the extent provided by the
Franchise Tax Board (FTB) in consultation with the
Secretary of the California Health and Human Services
Agency (HHS Secretary).
b) The individual is at least two years of age but less
than six years of age and is unable to perform without
substantial assistance from another individual due to a
loss of functional capacity at least two of the following
activities: eating, transferring, or mobility.
c) The individual is under two years of age and requires
specific durable medical equipment by reason of a severe
health condition or requires a skilled health care
practitioner trained to address the individual's condition
to be available if the individual's parents or guardians
are absent.
3)Provides that only one taxpayer shall be treated as an
eligible caregiver for an applicable individual. If more than
one taxpayer qualifies as an eligible caregiver for an
applicable individual for taxable years ending with or within
the same calendar year, the taxpayer who will not claim the
applicable individual shall file a written declaration, in the
form prescribed by the FTB, stating that he or she will not
claim the applicable individual for the credit.
4)Provides that a credit shall not be allowed unless the
taxpayer includes the name and taxpayer identification number
of the eligible individual, along with the identification
number or national provider identifier of the certifying
physician, on the tax return for the taxable year.
5)Provides that a credit shall not be allowed for any eligible
caregiver whose adjusted gross income for the taxable year is
$100,000 or more in the case of a married couple filing
jointly, and $50,000 in the case of all other individuals.
FISCAL EFFECT
1)Potentially substantial GF costs to FTB to administer the
changes to forms and systems, and to verify the validity of
credits claimed in consultation with the HHS Secretary.
2)Estimated GF revenue decreases of $1.4 million, $2.7 million,
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and $3.1 million in FY 2014-15, FY 2015-16, and FY 2016-17,
respectively.
COMMENTS
1) Purpose. According to the author, providing long-term care
for family members, especially children and the elderly, is a
significant challenge for many families. Recent cuts to
in-home support services and the implementation of the
Coordinated Care Initiative have increased demands on families
with members in need. The author contends this $500 tax
credit, while modest, will help offset some of the burden on
these vulnerable families.
2) Caregiver Credits. Reviews of previous caregiver credits,
including a review by the Legislative Analyst's Office (LAO)
of caregiver credit data from 2003, cast doubt over whether
the credit provided any meaningful incentive to provide care.
The LAO concluded in that report that the credit operated more
as a reward than an incentive to induce people to engage in
caregiving.
3) Cohabitation Reward. The credit in this bill is not tied to
any expenditures or activity undertaken on behalf of the
persons in need, but is instead based primarily on
cohabitation with persons in need. As a result, credits could
theoretically be given to taxpayers who provided no actual
care to persons in need, or be given to taxpayers themselves.
The Committee may wish to consider whether increased funding
to existing programs, such as in-home support services, would
be a more efficient approach to achieving the goals of this
bill.
Analysis Prepared by : Joel Tashjian / APPR. / (916) 319-2081