TAX ADMINISTRATION:
The movement to abolish the Franchise Tax Board and consolidate its functions under an elected commission could be gaining steam.
Such a conclusion could be based on the number (at least five) of legislative efforts that have been introduced in the early weeks of the 2005-06 session of the Legislature. At the least, the issue could be primed for extensive discussion in tax policy committees.
Consolidating tax functions under an elected board or commission was among the government reorganization concepts put forth by the governor's California Performance Review. It was not among the initial round of formal proposals, however, and Governor Arnold Schwarzenegger has since pulled back the plan to abolish 88 boards or commissions, saying the proposal needs more work. When the tax agencies consolidation was not included in the governor's initial reorganization proposal, a top aide to the governor said it was still alive as a possible component of a second wave of reorganization proposals.
Following are bills or constitutional amendments introduced thus far, with both sides of the political aisle represented in authorship:
Assembly Revenue and Taxation Committee Chair Johan Klehs (Democrat) has introduced AB 1615, which would abolish the FTB as of January 2007 and transfer its powers and duties to the State Board of Equalization. Payroll tax administration of the Employment Development Department and Department of Insurance would also be transferred to the BOE.
Assemblyman Chuck DeVore (Republican) has introduced ACA 14, which would go before voters to amend the Constitution to convert the BOE, a constitutional body, into the California Tax Commission. This measure is sponsored by State BOE Member Bill Leonard, a former legislator. The CTC would take over duties of both the FTB and BOE and be governed by seven commissioners elected from as many districts in the state, plus the state controller and an appointee of the governor.
Assemblyman Jerome Horton (Democrat) has introduced AB 1026, a spot bill declaring legislative intent to streamline and consolidate state tax collection agencies, increasing fairness in the collection of taxes.
On the Senate side, SCA 9, by Senator Denise Ducheny (Democrat), would change the name of the BOE to the California Tax Commission with nine voting members. Besides performing existing BOE duties of administering the sales and other taxes, it would administer income and payroll taxes and conduct administrative review of state tax matter determinations.
Senator Bob Dutton (Republican) has introduced SB 216 to abolish the FTB as of January 1, 2007, transferring duties to the BOE.
Cal-Tax is on record in support of an elected tax commission.
Caltaxletter March 11, 2005
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