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AB-1071 Income and corporation taxes: credit: employment: aerospace.(2017-2018)



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AB1071:v98#DOCUMENT

Amended  IN  Assembly  March 29, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill
No. 1071


Introduced by Assembly Member Brough

February 16, 2017


An act to amend Section 23037 of the Revenue and Taxation Code, relating to taxation. add Sections 17053.49 and 23649 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 1071, as amended, Brough. Corporation Tax Law. Income and corporation taxes: credit: employment: aerospace.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. Existing law requires any bill authorizing a new tax credit to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements.
This bill, for each taxable year beginning on and after January 1, 2018, would allow a credit against the taxes imposed under both laws to a qualified taxpayer, defined as an aerospace entity, in an amount equal to 17.5% of qualified wages paid or incurred during the taxable year to a qualified employee, not to exceed $25,000,000 per taxpayer per taxable year. The bill would limit the credit to the first 5 years after a qualified taxpayer first qualifies to receive the credit. The bill also would include that additional information required for any bill authorizing a new income tax credit.
This bill would take effect immediately as a tax levy.

The Corporation Tax Law defines a taxpayer as any person that is subject to the corporation franchise tax, alternative minimum tax, or corporation income tax.

This bill would make a nonsubstantive change to that provision.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

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


SECTION 1.

 Section 17053.49 is added to the Revenue and Taxation Code, to read:

17053.49.
 (a) For each taxable year beginning on or after January 1, 2018, there shall be allowed as a credit against the “net tax,” as defined in Section 17039, to a qualified taxpayer, an amount equal to 17.5 percent of qualified wages paid or incurred during the taxable year with respect to a qualified employee, not to exceed twenty-five million dollars ($25,000,000) per taxpayer per taxable year.
(b) For purposed of this section:
(1) “Qualified employee” means a full-time employee.
(2) (A) “Qualified taxpayer” means a person that is engaged in a trade or business and meets both of the following conditions:
(i) Is either not engaged in business in this state before January 1, 2018, or is engaged in business in this state before January 1, 2018, and has a net increase in full-time qualified employees on or after January 1, 2018.
(ii) Is an aerospace entity.
(B) A qualified taxpayer shall not include a person that is located within a 25-mile radius of any other person in engaged in a business or trade of like kind.
(3) “Qualified wages” means wages subject to withholding under Division 6 (commencing with Section 13000) of the Unemployment Insurance Code.
(c) This credit shall only be allowed to a qualified taxpayer for five consecutive taxable years, beginning on the date that the qualified taxpayer that meets either condition of clause (i) of subparagraph (A) of paragraph (2) of subdivision (b) is either first engaged in a trade or business in this state or first has a net increase in full-time employees.
(d) In the case where the credit allowed by this section exceeds the “net tax,” the credit may be carried over to reduce the “net tax” in the following taxable year, and the succeeding five years if necessary, until the credit is exhausted.
(e) A deduction otherwise allowed under this part for any amount paid or incurred by the qualified taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed by this section.
(f) (1) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section.
(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this section.

SEC. 2.

 Section 23649 is added to the Revenue and Taxation Code, to read:

23649.
 (a) For each taxable year beginning on or after January 1, 2018, there shall be allowed as a credit against the “tax,” as defined in Section 23036, to a qualified taxpayer, an amount equal to 17.5 percent of qualified wages paid or incurred during the taxable year with respect to a qualified employee, not to exceed twenty-five million dollars ($25,000,000) per taxpayer per taxable year.
(b) For purposed of this section:
(1) “Qualified employee” means a full-time employee.
(2) (A) “Qualified taxpayer” means a person that is engaged in a trade or business and meets both of the following conditions:
(i) Is either not engaged in business in this state before January 1, 2018, or is engaged in business in this state before January 1, 2018, and has a net increase in full-time qualified employees on or after January 1, 2018.
(ii) Is an aerospace entity.
(B) A qualified taxpayer shall not include a person that is located within a 25-mile radius of any other person in engaged in a business or trade of like kind.
(3) “Qualified wages” means wages subject to withholding under Division 6 (commencing with Section 13000) of the Unemployment Insurance Code.
(c) This credit shall only be allowed to a qualified taxpayer for five consecutive taxable years, beginning on the date that the qualified taxpayer that meets either condition of clause (i) of subparagraph (A) of paragraph (2) of subdivision (b) is either first engaged in a trade or business in this state or first has a net increase in full-time employees.
(d) In the case where the credit allowed by this section exceeds the “tax,” the credit may be carried over to reduce the “tax” in the following taxable year, and the succeeding five years if necessary, until the credit is exhausted.
(e) A deduction otherwise allowed under this part for any amount paid or incurred by the qualified taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed by this section.
(f) (1) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section.
(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this section.

SEC. 3.

 For the purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Sections 17053.49 and 23649 of the Revenue and Taxation Code as added by this act the Legislature finds and declares as follows:
(a) Specific goals, purposes, and objectives:
(1) Increase the number of businesses located in California.
(2) Increase state revenue.
(3) Increase the number of jobs available for Californians.
(4) Decrease statewide unemployment.
(b) Performance indicators:
(1) The number of businesses that locate to California and receive the credit.
(2) A decrease in the unemployment rate.
(3) The number of jobs created by businesses that receive the credit.
(c) Data collection requirements and baseline measurements:
(1) The baseline measures include:
(A) State level of unemployment at the time the credits become available.
(B) The average number of business that located to California in the five years prior to the credit being available.
(2) Data to collect includes:
(A) The number of businesses that qualify for the credit.
(B) How many jobs qualified taxpayers create.
(C) The total amount of salaries paid that qualify for the credit.
(D) How long a qualified taxpayer remains in California.
(E) The total amount of qualified wages paid and the income generated to the state from those wages.

SEC. 4.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
SECTION 1.Section 23037 of the Revenue and Taxation Code is amended to read:
23037.

“Taxpayer” means a person subject to the tax imposed under Chapter 2 (commencing with Section 23101), Chapter 2.5 (commencing with Section 23400), or Chapter 3 (commencing with Section 23501).