Bill Text

PDF |Add To My Favorites |Track Bill | print page

AB-2351 Higher Education Assistance Fund: personal income taxes: additional tax. (2017-2018)

SHARE THIS:share this bill in Facebookshare this bill in Twitter
Date Published: 03/19/2018 09:00 PM
AB2351:v98#DOCUMENT

Amended  IN  Assembly  March 19, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 2351


Introduced by Assembly Member Eggman

February 13, 2018


An act to amend Section 99000 of the Education Code, relating to postsecondary education. add Article 4.5 (commencing with Section 69575) to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code, and to add Sections 17043.5 and 19602.6 to the Revenue and Taxation Code, relating to public education, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


AB 2351, as amended, Eggman. Western Regional Education Compact. Higher Education Assistance Fund: personal income taxes: additional tax.
The Personal Income Tax Law imposes taxes based upon taxable income at specified rates.
This bill would, for taxable years beginning on or after January 1, 2020, impose an additional tax of 1% on income that exceeds $1,000,000, as provided. The bill would deposit the revenues derived from this tax into the Higher Education Assistance Fund, a continuously appropriated fund established by this bill, for the purposes of funding student financial assistance for specified students enrolled at the University of California, the California State University, and the California Community Colleges.
This bill would become operative only if ACA 13 of the 2017–18 Regular Session is approved by the voters and becomes operative.

Existing law authorizes and directs the Governor to execute a compact on behalf of the state with each or all of the 11 western states and the States of Alaska and Hawaii for the purpose of cooperating with those states in the formation of a Western Interstate Commission for Higher Education. Existing law requires that notice of intention to withdraw from the compact be executed and transmitted by the Governor.

This bill would make nonsubstantive changes to those provisions.

Vote: MAJORITY2/3   Appropriation: NOYES   Fiscal Committee: NOYES   Local Program: NO  

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


SECTION 1.

 Article 4.5 (commencing with Section 69575) is added to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code, to read:
Article  4.5. Higher Education Assistance Fund

69575.
 (a) The Higher Education Assistance Fund is hereby created in the State Treasury to receive all revenues, net of refunds, derived from the tax imposed under Section 17043.5 of the Revenue and Taxation Code. Notwithstanding Section 13340 of the Government Code, moneys in the fund are hereby continuously appropriated to the Student Aid Commission without regard to fiscal years for allocation for the funding of student financial assistance for in-state undergraduate students enrolled at the University of California, the California State University, and the California Community Colleges and who are not subject to nonresident tuition and fees.
(b) Nothing in the establishment of this fund shall be construed to modify the obligation of public postsecondary institutions to provide student financial assistance.
(c) Nothing in this section shall be construed to modify or reduce the existing authority or responsibility of the Office of the Chancellor of the California Community Colleges or the Student Aid Commission.
(d) The funding established pursuant to this section shall be utilized to expand the availability of student financial assistance to eligible students attending public postsecondary educational institutions in the state. These funds shall supplement, and not supplant, existing state, federal, or private funds currently utilized to provide student financial assistance.

SEC. 2.

 Section 17043.5 is added to the Revenue and Taxation Code, to read:

17043.5.
 (a) For each taxable year beginning on or after January 1, 2020, in addition to any other taxes imposed by this part, a tax shall be imposed at the rate of 1 percent on that portion of a taxpayer’s taxable income in excess of one million dollars ($1,000,000).
(b) For purposes of applying Part 10.2 (commencing with Section 18401), the tax imposed under this section shall be treated as if imposed under Section 17041.
(c) The following shall not apply to the tax imposed by this section:
(1) The provisions of Section 17039, relating to the allowance of credits.
(2) The provisions of Section 17041, relating to filing status and recomputation of the income tax brackets.
(3) The provisions of Section 17045, relating to joint returns.

SEC. 3.

 Section 19602.6 is added to the Revenue and Taxation Code, to read:

19602.6.
 (a) The estimated revenue from the additional tax imposed under Section 17043.5 for the applicable fiscal year, as determined under subparagraph (B) of paragraph (3) of subdivision (c), shall be deposited to the Higher Education Assistance Fund (HEA Fund) on a monthly basis, subject to an annual adjustment as described in this section.
(b) (1) Beginning with the 2020–21 fiscal year and for each fiscal year thereafter, the Controller shall deposit on a monthly basis in the HEA Fund an amount equal to the applicable percentage of net personal income tax receipts as defined in paragraph (4).
(2) (A) Except as provided in subparagraph (B), the applicable percentage referred to in paragraph (1) shall be 1.76 percent.
(B) For the 2020–21 fiscal year, the applicable percentage shall be 0.70 percent.
(3) Beginning with the 2020–21 fiscal year, monthly deposits to the HEA Fund pursuant to this subdivision are subject to suspension pursuant to subdivision (f).
(4) For purposes of this subdivision, “net personal income tax receipts” refers to amounts received by the Franchise Tax Board and the Employment Development Department under the Personal Income Tax Law, as reported by the Franchise Tax Board to the Department of Finance pursuant to law, regulation, procedure, and practice (commonly referred to as the “102 Report”) in effect on the effective date of the act establishing this section.
(c) No later than March 1, 2022, and each March 1 thereafter, the Department of Finance, in consultation with the Franchise Tax Board, shall determine the annual adjustment amount for the following fiscal year.
(1) The “annual adjustment amount” for any fiscal year shall be an amount equal to the amount determined by subtracting the “revenue adjustment amount” for the applicable revenue adjustment fiscal year, as determined by the Franchise Tax Board under paragraph (3), from the “tax liability adjustment amount” for the applicable tax liability adjustment tax year, as determined by the Franchise Tax Board under paragraph (2).
(2) (A)   (i)   The “tax liability adjustment amount” for a tax year is equal to the amount determined by subtracting the estimated tax liability increase from the additional tax imposed under Section 17043.5 for the applicable year under subparagraph (B) from the amount of the actual tax liability increase from the additional tax imposed under Section 17043.5 for the applicable tax year, based on the returns filed for that tax year.
(ii) For purposes of the determinations required under this paragraph, actual tax liability increase from the additional tax means the increase in tax liability resulting from the tax of 1 percent imposed under Section 17043.5, as reflected on the original returns filed by October 15 of the year after the close of the applicable tax year.
(iii) The applicable tax year referred to in this paragraph means the 12-calendar month taxable year beginning on January 1 of the year that is two years before the beginning of the fiscal year for which an annual adjustment amount is calculated.
(B) (i)   The estimated tax liability increase from the additional tax for the following tax years is:
Tax YearEstimated Tax Liability Increase From The Additional Tax
2021$____
2022$____
2023$____
2024$____
(ii) The “estimated tax liability increase from the additional tax” for the tax year beginning in 2025 and each tax year thereafter shall be determined by applying an annual growth rate of 7 percent to the “estimated tax liability increase from additional tax” of the immediately preceding tax year.
(3) (A)   The “revenue adjustment amount” is equal to the amount determined by subtracting the “estimated revenue from the additional tax” for the applicable fiscal year, as determined under subparagraph (B), from the actual amount transferred for the applicable fiscal year.
(B) (i)   The “estimated revenue from the additional tax” for the following applicable fiscal years is:
Applicable Fiscal
Year
Estimated Revenue From Additional Tax
2020–21$____
2021–22$____
2022–23$____
2023–24$____
(ii) The “estimated revenue from the additional tax” for the applicable 2023–24 fiscal year and each applicable fiscal year thereafter shall be determined by applying an annual growth rate of 7 percent to the “estimated revenue from the additional tax” of the immediately preceding applicable fiscal year.
(iii) The applicable fiscal year referred to in this paragraph means the fiscal year that is two years before the fiscal year for which an annual adjustment amount is calculated.
(d) The Department of Finance shall notify the Legislature and the Controller of the results of the determinations required under subdivision (c) no later than 10 business days after the determinations are final.
(e) If the annual adjustment amount for a fiscal year is a positive number, the Controller shall transfer that amount from the General Fund to the HEA Fund on July 1 of that fiscal year.
(f) If the annual adjustment amount for a fiscal year is a negative number, the Controller shall suspend monthly transfers to the HEA Fund for that fiscal year, as otherwise required by paragraph (1) of subdivision (b), until the total amount of suspended deposits for that fiscal year equals the amount of the negative annual adjustment amount for that fiscal year.

SEC. 4.

 The provisions of this act shall only become operative if Assembly Constitutional Amendment 13 of the 2017–18 Regular Session is approved by the voters and becomes operative.
SECTION 1.Section 99000 of the Education Code is amended to read:
99000.

The Governor is hereby authorized and directed to execute a compact on behalf of the state with each or all of the 11 western states and the States of Alaska and Hawaii for the purpose of cooperating with those states in the formation of a Western Interstate Commission for Higher Education. Notice of intention to withdraw from the compact shall be executed and transmitted by the Governor.