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AB-2795 Personal income taxes: credits: New Americans Incentive Tax Credit.(2019-2020)

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Date Published: 04/28/2020 09:00 PM
AB2795:v98#DOCUMENT

Amended  IN  Assembly  May 04, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 2795


Introduced by Assembly Member Gipson

February 20, 2020


An act to amend Section 6008 of add and repeal Section 17054.8 of the Revenue and Taxation Code, relating to taxation. taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 2795, as amended, Gipson. Sales and use taxes. Personal income taxes: credits: New Americans Incentive Tax Credit.
The Personal Income Tax Law allows various credits against the taxes imposed by that law.
This bill would allow a credit against the taxes imposed by the Personal Income Tax Law for each taxable year beginning on or after January 1, 2021, and before January 1, 2025, in an amount equal to $725 for each taxpayer, spouse of the taxpayer, and each qualifying child of the taxpayer, that is an eligible member, which is defined to mean an individual who was naturalized as a citizen of the United States within the 12-month period preceding the start of the taxable year. The bill would specify that this credit be known, and may be cited to, as the “New Americans Incentive Tax Credit.”
Existing law requires any bill authorizing a new tax expenditure, including a tax credit, to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill would state the intent of the Legislature to enact legislation to comply with those new tax expenditure requirements.
This bill would take effect immediately as a tax levy.

Existing sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law defines “storage” for the purposes of those taxes as including any keeping or retention in this state for any purpose except sale in the regular course of business or subsequent use solely outside this state of tangible personal property purchased from a retailer.

This bill would make nonsubstantive changes to that definition.

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

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) The United States Constitution refers to citizenship as “privileges and immunities.” However, it is deeper; it is a connection between individuals and their country including a sense of belonging responsibilities. Individuals are citizens of the United States by birth, derived from their parents, or by naturalization. In order for immigrants to be eligible to apply for citizenship they must be legal permanent residents (LPRs) for three to five years, have good moral character, pass criminal background checks, read and write basic English, and understand the basics of United States history and government.
(b) The attainment of citizenship for individuals brings a permanent protection from deportation, increases economic and professional opportunities, provides a chance to petition for qualified family members to legalize or immigrate to the United States, and bestows the opportunity to vote. The potential economic benefits to local and state governments is calculated to be between $21,000,000,000 to $45,000,000,000 in income, spending, and new tax revenues. Furthermore, naturalization increases homeownership and decreases the unemployment rate among this population.
(c) One of the main barriers that prevents eligible LPRs from naturalizing is the cost for legal representation. As a result of federal regulatory changes, the process of applying for United States citizenship is more arduous and costly. In December of 2019, the United States Citizenship and Immigration Services (USCIS) announced that starting December 2, 2019, it will no longer consider use of certain public benefits in determining whether an immigrant is eligible for a fee waiver, which means that fewer immigrants will be able to afford to pay the hefty fees for citizenship, which is typically $725. Furthermore, USCIS is proposing a new rule to raise immigration application fees—including an 83 percent hike, an increase from $725 to $1,170, in order to apply for United States citizenship.
(d) The Golden State is home to approximately 2,200,000 LPRs who are eligible to naturalize, the largest population of LPRs in the nation, which is estimated to be 8,500,000 and represents 7.5 percent of the state’s entire population. Approximately 54 percent of the state’s total LPRs eligible population resides in five counties: Los Angeles, Orange, San Diego, Riverside, Santa Clara, and San Bernardino.
(e) It is estimated that if the state increases naturalization over five years, the state would have potential earning gains of nearly $18,000,000,000 over 10 years. The attainment of citizenship transforms the lives of immigrants as their income increases between 8 percent to 11 percent.
(f) A recent study by the University of Southern California indicates that out of the population eligible to naturalize in California that only 19 percent have a high probability of naturalization, in comparison to 47 percent who have a low probability of naturalization. According to this analysis, a LPR who is eligible to naturalize is more likely to naturalize if the person resides in Alabama, Georgia, Florida, or Ohio, which are all states that are governed by Republican governors.

SEC. 2.

 Section 17054.8 is added to the Revenue and Taxation Code, to read:

17054.8.
 (a) (1) For each taxable year beginning on or after January 1, 2021, and before January 1, 2025, there shall be allowed against the “net tax,” as defined by Section 17039, a credit to a taxpayer in an amount as determined under paragraph (2).
(2) (A) In the case of an individual or a spouse filing a separate return, the credit amount allowed shall be seven hundred twenty-five dollars ($725) if the taxpayer is an eligible member.
(B) In the case of spouses filing a joint return, the credit amount allowed shall be one thousand four hundred fifty dollars ($1,450) if both spouses are eligible members, and the credit amount allowed shall be seven hundred twenty-five dollars ($725) if only one spouse is an eligible member.
(C) An additional credit amount of seven hundred twenty-five dollars ($725) shall be allowed for each qualifying child of the taxpayer if that qualifying child is an eligible member. The credit shall only be claimed on one return.
(b) For purposes of this section, all of the following definitions shall apply:
(1) “Eligible member” means an individual who was naturalized as a citizen of the United States within the 12-month period preceding the start of the taxable year.
(2) “Qualifying child” shall have the same meaning as under Section 32 of the Internal Revenue Code, as amended by Public Law 115-97, except that the child shall be younger than 19 years old as of the last day of the taxable year.
(c) (1) The Franchise Tax Board may issue any regulations necessary or appropriate to implement 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 shall not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board.
(d) The credit allowed by this section shall be known, and may be cited, as the “New Americans Incentive Tax Credit.”
(e) This section shall remain in effect only until December 1, 2025, and as of that date is repealed.

SEC. 3.

 It is the intent of the Legislature to enact legislation to comply with the requirements of Section 41 of the Revenue and Taxation Code.

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 6008 of the Revenue and Taxation Code is amended to read:
6008.

“Storage” includes any keeping or retention in this state for any purpose except sale in the regular course of business or subsequent use solely outside this state of tangible personal property purchased from a retailer.