BILL NUMBER: AB 43 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 20, 2015
AMENDED IN ASSEMBLY FEBRUARY 12, 2015
AMENDED IN ASSEMBLY FEBRUARY 4, 2015
INTRODUCED BY Assembly Members Mark Stone, Eggman, Levine, McCarty,
and Thurmond
(Principal coauthors: Assembly Members Alejo, Bonilla, Bonta,
Chiu, Dodd, and Lopez)
(Coauthors: Assembly Members Bloom, Chau, Cristina Garcia,
Gonzalez, Roger Hernández, Mullin, O'Donnell, and Rendon)
( Coauthors: Senators Hill
and Wieckowski )
DECEMBER 1, 2014
An act to add and repeal Section 17052.1 to
of the Revenue and Taxation Code, relating to
taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 43, as amended, Mark Stone. Personal income taxes: credit:
earned income.
The Personal Income Tax Law allows various credits against the
taxes imposed by that law, including certain credits that are allowed
in modified conformity to credits allowed by federal income tax
laws. Federal income tax laws allow a refundable earned income tax
credit for certain low-income individuals who have earned income and
who meet certain other requirements.
This bill, for taxable years beginning on or after January 1,
2016, and before January 1, 2021, in modified conformity
with federal income tax laws, would allow an earned income credit to
an eligible individual that is equal to specified percentages of the
earned income tax credit allowed by federal law. The bill would
provide that in those years in which an appropriation is made by the
Legislature, the credit would be refundable. The bill would also make
findings and declarations.
This bill would take effect immediately as a tax levy.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) In its Supplemental Poverty Measure report for the year 2013,
released in October 2014, the United States Census Bureau reported
California's rate of poverty to be 23.4 percent. This rate is the
highest among all 50 states.
(b) Using census data released in September 2014, the California
Budget Project (CBP) reported that the economic recovery from the
Great Recession has largely bypassed low- and middle-income
Californians, with the bottom three-fifths of the income distribution
experiencing stagnating income gains. This is contrasted with the
top one-fifth of the income distribution experiencing gains of 52.4
percent.
(c) A briefing on poverty released by the CBP in August 2014
reports that 67 percent of families living in poverty were supported
by one or more workers in 2012. Given that the majority of families
living in poverty are working families in California, it is evident
that poverty largely reflects low-paying jobs, not the absence of
employment.
(d) In California, the Public Policy Institute of California
(PPIC), in collaboration with the Stanford Center on Poverty and
Inequality, has developed the California Poverty Measure (CPM), which
underscores the role of California's social safety net, amount which
includes the CalFresh Program, CalWORKs, and the federal Earned
Income Tax Credit (EITC), in mitigating poverty.
(e) Using data from 2011, a PPIC report on the CPM released in
October 2013, reveals that 22 percent of Californians, 8.1 million
people, lived in poverty. A comparison of CPM rates by county show
that the three most populous counties, Los Angeles County, San Diego
County, and Orange County, all had rates above the statewide CPM at
26.9 percent, 22.7 percent, and 24.3 percent, respectively.
(f) The CPM rate for children statewide for children, those under
the age of 18, was 25.1 percent, the highest rate of any age group.
This amounts to 2.3 million of California's children living in
poverty.
(g) Without need-based safety net programs and resources, over 30
percent of Californians would be living in poverty. According to the
CPM, the absence of the safety net would increase the poverty rate
among California's children to 39 percent.
percent.
(h) Refundable tax credits, including the federal EITC, reduced
the poverty rate in California by 3.2 percent overall. Among
children, the poverty rate reduction was 6 percent. This means that
560,000 fewer children and 600,000 fewer working-age adults, 1.16
million people fewer in total, are living in poverty when refundable
tax credits are accounted for in the CPM.
(i) According to the National Conference of State Legislatures, 25
states in the country and the District of Columbia, provide an EITC
in addition to the federal EITC. California does not currently have a
state EITC.
(j) A Brookings Institution report issued in January 2003, shows
that in addition to boosting the family incomes of families in
poverty, state EITC refunds served as an important economic stimulus
for the communities and regions of the families by magnifying the
impact of the federal EITC overall.
SEC. 2. Section 17052.1 is added to the Revenue and Taxation Code,
to read:
17052.1. For each taxable year beginning on or after January 1,
2016, and before January 1, 2021, there shall be allowed a
credit against the "net tax," as defined by Section 17039, for the
taxable year, an amount determined in accordance with Section 32 of
the Internal Revenue Code, as amended by Section 1002(a) of Public
Law 111-5, as amended by Section 219(a)(2) of Public Law 111-226, as
amended by Section 103(c) of Public Law 111-312, and as amended by
Section 103(c) of Public Law 112-240, as amended by Section 206(a) of
Public Law 113-295, relating to earned income, except as follows:
(a) (1) For an eligible individual who has at least one qualifying
child under five years of age, the credit amount shall be equal to
the federal earned income credit amount multiplied by 35 percent.
(2) For an eligible individual who does not have a qualifying
child, the credit amount shall be equal to the federal earned income
credit amount multiplied by 60 percent.
(3) For any other eligible individual who does not meet the
requirements of paragraph (1) or (2), the credit amount shall be
equal to the federal earned income credit amount multiplied by 15
percent.
(b) If the amount allowable as a credit under this section exceeds
the tax liability computed under this part for the taxable year, the
excess shall be credited against other amounts due, if any, and the
balance, if any, shall, upon appropriation by the Legislature, be
refunded to the qualified taxpayer.
(c) Any amounts refunded to a taxpayer pursuant to this section
shall not be included in income subject to tax under this part.
(d) Notwithstanding any other law, amounts refunded pursuant to
this section shall be treated in the same manner as the federal
earned income refund for the purpose of determining eligibility to
receive benefits under Division 9 (commencing with Section 10000) of
the Welfare and Institutions Code or amounts of those benefits.
(e) This section is notwithstanding Section 41.
(f) This section shall remain in effect only until December 1,
2021, and as of that date is repealed.
SEC. 3. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.