Amended in Assembly June 30, 2014

Amended in Senate April 2, 2014

Senate Bill No. 1335

Introduced by Senator Leno

February 21, 2014

An act to add Section 41 to the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

SB 1335, as amended, Leno. Income and corporation taxes: credits: information.

Existing law imposes various taxes and allows specified credits, deductions, exclusions, and exemptions in computing those taxes. begin insert Existing law limits the collection and use of taxpayer information and provides that any unauthorized use of this information is punishable as a misdemeanor. end insert

This bill would require any bill, introduced on or after January 1, 2015, that would authorize a personal income or corporation tax credit to contain, among other provisions, specified goals, purposes, and objectives that the tax credit will achieve and detailed performance indicators begin insert , including data collection requirements, end insert to measure whether the tax credit is meeting those goals, purposes, and objectives. begin insert This bill would provide that taxpayer information collected pursuant to these new requirements is subject to the limitation on the collection and use of that information. end insert

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By expanding the scope of a crime, this bill would impose a state-mandated local program.

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The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that no reimbursement is required by this act for a specified reason.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature finds and declares the following:

(a) Government should demonstrate transparency and
accountability when investing public dollars in economic
incentives.

(b) Government enacts tax preferences to promote social and
economic goals and provides direct benefits to taxpayers without
incurring direct expenditures.

(c) Tax preferences represent a major exercise of government
power, but face less oversight than many activities on the spending
side of the budget.

(d) National and state public finance experts recommend that
tax preferences be evaluated alongside direct spending programs,
as both are public initiatives meant to accomplish specified goals.

(e) Revenue losses attributable to federal tax preferences exceed
any other category of federal spending, including defense, Medicaid
and Medicare, social security, debt service, or discretionary
spending.

(f) California now forgoes more than $47 billion in revenue
from tax preferences, according to the Department of Finance.

(g) Many current tax preferences do not contain goals and
objectives to measure the performance of the tax preference.

(h) Many current tax preferences neither require taxpayers to
submit data demonstrating the tax preference’s effectiveness, nor
for state agencies to collect and send data to the Legislature to
evaluate the tax preference.

(i) The Legislature should apply the same level of review and
performance measure that it applies to spending programs to tax
preference programs, including tax credits.

SEC. 2.  

Section 41 is added to the Revenue and Taxation Code,
to read:

41.  

Notwithstanding any other law, any bill, introduced on or
after January 1, 2015, that would authorize a new credit against
the “net tax,” as defined in Section 17039, or against the “tax,” as
defined in Section 23036, or both, shall contain all of the following:

(a) Specific goals, purposes, and objectives that the tax credit
will achieve.

(b) Detailed performance indicators for the Legislature to use
when measuring whether the tax credit meets the goals, purposes,
and objectives stated in the bill.

(c) Data collection requirements to enable the Legislature to
determine whether the tax credit is meeting, failing to meet, or
exceeding those specific goals, purposes, and objectives. The
requirements shall include the specific data and baseline
measurements to be collected and remitted in each year the credit
is in effect, in order for the Legislature to measure the change in
performance indicators, and the specific taxpayers, state agencies,
or other entities required to collect and remit data.

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(d) Taxpayer information collected pursuant to this section is
subject to Section 19542.

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begin insert SEC. 3. end insert   

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No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

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