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ACA-22 Middle Class Fiscal Relief Act.(2017-2018)

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CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Constitutional Amendment
No. 22

Introduced by Assembly Members McCarty and Ting

January 18, 2018

A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by adding Section 15 to Article XIII B thereof, and by adding Article XXXIV A thereto, relating to fiscal relief.


LEGISLATIVE COUNSEL'S DIGEST


ACA 22, as introduced, McCarty. Middle Class Fiscal Relief Act.
Existing law imposes various taxes upon, or measured by, taxable income or net income, where applicable.
This measure, for taxable years beginning on or after January 1, 2018, would impose a surcharge of 10% on the net income of all corporations that is over $1,000,000. The measure would authorize the Legislature to increase or decrease the surcharge by a 2/3 vote of each house, as provided. The measure would require the deposit of those revenues, less refunds, into the Middle Class Fiscal Relief Fund, which would be created by the measure. Revenues in the fund would be allocated, upon appropriation by the Legislature, for specified purposes, including providing fiscal benefits to lower and middle-income Californians.
The California Constitution prohibits the total annual appropriations subject to limitation of the state and each local government from exceeding the appropriations limit of the entity of government for the prior year, as adjusted.
This measure would exclude appropriations of revenues derived from the Middle Class Fiscal Relief Act from the appropriations subject to constitutional limitation.
Vote: 2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  
Resolved by the Assembly, the Senate concurring, That the Legislature of the State of California at its 2017–18 Regular Session commencing on the fifth day of December 2016, two-thirds of the membership of each house concurring, hereby proposes to the people of the State of California, that the Constitution of the State be amended as follows:

First—

 That Section 15 is added to Article XIII B thereof, to read:

SEC. 15.
 For purposes of this article, “appropriations subject to limitation” of the State shall not include appropriations of revenue derived from the Middle Class Fiscal Relief Act.

Second—

 That Article XXXIV A is added thereto, to read:
Article  XXXIV A MIDDLE CLASS FISCAL RELIEF ACT

SECTION 1.
 The purpose of this article is to share with ordinary California taxpayers the economic gains provided by federal income tax cuts for corporations with over one million dollars ($1,000,000) in net income.

SEC. 2.
 (a) For taxable years beginning on or after January 1, 2018, a surcharge of 10 percent is hereby imposed upon, or according to or measured by, the net income of a qualified taxpayer over one million dollars ($1,000,000).
(b) For purposes of this section, a “qualified taxpayer” means a corporation subject to taxation pursuant to Part 11 (commencing with Section 23001) of Division 2 of the Revenue and Taxation Code and, notwithstanding the rate limitation under Section 23802 of the Revenue and Taxation Code, includes an “S” corporation subject to taxation pursuant to Chapter 4.5 (commencing with Section 23800) of Part 11 of Division 2 of the Revenue and Taxation Code.
(c) The Legislature may increase or decrease the surcharge imposed by this section, two-thirds of the membership of each house concurring, in furtherance of the purposes of this act.
(d) All revenues, less refunds, derived from the imposition of the surcharge imposed by this section shall be deposited into the Middle Class Fiscal Relief Fund.

SEC. 3.
 (a) The Middle Class Fiscal Relief Fund is hereby created as a special fund to receive and disburse the moneys derived from the imposition of the surcharge imposed by this article.
(b) Beginning in the 2019–20 fiscal year, the annual Budget Act shall include an estimate of revenues in the Middle Class Fiscal Relief Fund that includes anticipated revenues for the fiscal year, adjusted for the carry-over balance due to any remaining revenues from prior fiscal years.
(c) Revenues in the Middle Class Fiscal Relief Fund, upon appropriation by the Legislature, shall be allocated as follows:
(1) Forty percent for the support of the public school system and public institutions of higher education, as described in subdivision (a) of Section 8 of Article XVI.
(2) Sixty percent for purposes determined by the Legislature to provide fiscal benefits to lower and middle-income Californians, including, but not limited to, expanding the Earned Income Tax Credit allowed by Section 17052 of the Revenue and Taxation Code, providing a tax rebate, or providing other tax relief; expanding access to child care and early education; providing for affordable health care; and expanding higher education financial aid.
(d) The Legislature may provide for loans for cash flow purposes between state funds or accounts and the Middle Class Fiscal Relief Fund, or its successor, within the same fiscal year.

SEC. 4.
 (a) The Franchise Tax Board may adopt regulations necessary or appropriate to carry out the purposes of this article.
(b) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this article.