Tax Threats Pending as State Lawmakers Return From Summer Recess
The Legislature will reconvene Monday after its one-month summer recess, and several tax threats remain active as lawmakers enter the home stretch of the first year of the 2019-20 legislative session.
Major tax threats include:
- ACA 1 (Aguiar-Curry), a CalTax-opposed measure pending on the Assembly floor that would lower the vote threshold from two-thirds to 55 percent for local taxes that fund “infrastructure” and affordable housing. The legislation broadly defines infrastructure to include such things as sewers, water quality, sea level rise and Internet access. If approved by two-thirds of both houses, the bill would be placed before voters on a 2020 ballot.
- AB 1270 (Stone), a CalTax-opposed bill applying the False Claims Act to claims, records or statements under the Revenue and Taxation Code, beginning January 1, 2020, if certain criteria are met. CalTax is a part of a broad coalition working to defeat the legislation, which faces its next test in the Senate Appropriations Committee.
In a letter of opposition, CalTax noted that the bill would expose individuals and businesses with legitimate tax claims to significant litigation costs and potential treble damages and force taxpayers to defend their tax position against private parties acting as qui tam plaintiffs, even if government agencies do not bring suit.
- SB 468 (Jackson), which seeks to create the California Tax Expenditure Review Board as an advisory board comprised of five state officials who would assess major “tax expenditures” (credits, deductions, exclusions, etc.) and possibly recommend repealing various tax incentives. The bill would task the University of California with preparing an analysis to be used by the new board. The UC would fulfill the task “through a new or existing research center,” and would make recommendations on the efficacy of “tax expenditures” following certain criteria including the economic, social and other benefits, total general fund “revenue loss,” potential environmental impact, beneficiaries of the credit and job data.
CalTax leads a broad coalition to defeat the bill, noting that several state agencies already perform analyses of tax expenditures and put out annual reports regarding their efficacy.
The first year of the two-year session is scheduled to adjourn September 13, after which the Assembly and Senate will remain in recess until January 6.
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