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AB-24 Personal income taxes: Targeted Child Tax Credit.(2019-2020)



Current Version: 05/01/19 - Amended Assembly        


AB24:v96#DOCUMENT

Amended  IN  Assembly  May 01, 2019
Amended  IN  Assembly  April 22, 2019
Amended  IN  Assembly  March 26, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill No. 24


Introduced by Assembly Member Burke

December 03, 2018


An act to add and repeal Section 17053.75 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 24, as amended, Burke. Personal income taxes: Targeted Child Tax Credit.
The Personal Income Tax Law allows various credits against taxes imposed by that law.
This bill, under the Personal Income Tax Law, for taxable years beginning on or after January 1, 2019, and before January 1, 2024, would allow a qualified taxpayer, as defined, a Targeted Child Tax Credit (TCTC), in an amount equal to the difference between the qualified taxpayer’s net resources, as defined, and a specified percentage of the poverty threshold, as provided, using the California Poverty Measure, as defined. The bill would require the credit amount in excess of the qualified taxpayer’s liability to be paid to the taxpayer upon appropriation by the Legislature, as provided. The bill would require state departments and agencies that serve those who qualify for the TCTC to provide the Franchise Tax Board with information, in the form and manner as requested by the Franchise Tax Board, to assist the Franchise Tax Board in determining the qualified taxpayer’s gross resources, as defined, and would authorize the Franchise Tax Board, with the assistance of those state departments and agencies, to develop estimates of adjustments to resources, as defined, and specified income and in-kind benefits used to determine gross resources. The bill would make findings and declarations in this regard.
This bill would take effect immediately as a tax levy.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   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) Despite California’s safety net, about 450,000 children live in deep poverty. These are children whose families have income under 50 percent of the poverty threshold as determined by the California Poverty Measure, a well-validated measure that adjusts for differences in cost-of-living and necessary expenses.
(b) These children live in families that face the most severe of challenges. Most live in areas with the highest housing costs, and face unstable housing situations. Many families are faced with a parent or child with a disability, mental or physical health problems, lack of education, and other systemic factors that make steady work difficult.
(c) The first prong of science-based poverty policy, embodied in the Earned Income Tax Credit, CalWORKs, and subsidized childcare, rests on research showing that work incentives and other forms of support reduce poverty by increasing work participation.
(d) The second prong of science-based poverty policy, the child-based prong, rests on research showing that children are permanently compromised when they are raised in extreme deprivation.
(e) The Targeted Child Tax Credit (TCTC) addresses this crucial second prong, by ensuring that no child in California will be subjected to such deprivation. When fully implemented and fully claimed, the TCTC will end deep child poverty in California. It will also help prevent a new generation of children from entering the welfare system permanently as adults.

SEC. 2.

 Section 17053.75 is added to the Revenue and Taxation Code, to read:

17053.75.
 (a) For each taxable year beginning on or after January 1, 2019, and before January 1, 2024, there shall be allowed to a qualified taxpayer as a credit against the “net tax,” as defined in Section 17039, a Targeted Child Tax Credit (TCTC) in an amount equal to an amount determined in accordance with subdivision (c).
(b) For purposes of this section, all of the following definitions shall apply:
(1) “Adjustments to resources” means the sum of all of the following amounts paid or incurred by the qualified taxpayer during the taxable year:
(A) Medical expenses.
(B) Childcare expenses.
(C) Commuting and other nondiscretionary work-related expenses.
(2) “California Poverty Measure” means the poverty index produced jointly by the Public Policy Institute of California and the Stanford Center on Poverty and Inequality.
(3) “Childcare subsidies” includes payments or vouchers for childcare under the CalWORKs Child Care program or alternative payment childcare systems and the value of a contract paid on behalf of the qualified taxpayer to providers, including subsidies provided for general child care, state preschool, care for children with severe disabilities, and migrant childcare.
(4) “Commuting expenses” means expenses for commuting to and from a place of employment.
(5) “Energy assistance” means assistance provided through the Low-Income Home Energy Assistance Program.
(6) “Gross resources” means the sum of all income derived by the qualified taxpayer during the taxable year from all of the following sources:
(A) Seventy-five percent of income from wages and salaries.
(B) Seventy-five percent of income from self-employment.
(C) Interest and dividends.
(D) Social security.
(E) Unemployment insurance.
(F) Pensions.
(G) Alimony.
(H) Veterans’ benefits.
(I) Child support payments.
(J) CalWORKs cash benefits.
(K) SSI/SSP payments.
(L) General assistance payments made pursuant to Part 5 (commencing with Section 17000) of Division 9 of the Welfare and Institutions Code.
(M) Benefits under CalFresh, the federal Supplemental Nutrition Assistance Program (Chapter 51 (commencing with Section 2011) of Title 7 of the United States Code), or the California Food Assistance Program (Chapter 10.1 (commencing with Section 18930) of Part 6 of Division 9 of the Welfare and Institutions Code).
(N) School meal subsidies.
(O) Housing subsidies.
(P) Energy assistance.
(Q) Childcare subsidies.
(7) “Housing subsidies” means assistance under Section 8 of the United States Housing Act of 1937.
(8) “Medical expenses” means those expenses allowed as deductions under Section 213 of the Internal Revenue Code.
(9) “Net resources” means an amount that is equal to the difference between both of the following:
(A) Gross resources.
(B) Adjustments to resources.
(10) “Qualified taxpayer” means a taxpayer who satisfies both of the following:
(A) Has at least one dependent who satisfies all of the following:
(i) For the taxable year beginning on or after January 1, 2019, and before January 1, 2020, a dependent who is under three years of age.
(ii) For the taxable year beginning on or after January 1, 2020, and before January 1, 2021, a dependent who is under six years of age.
(iii) For the taxable year beginning on or after January 1, 2021, and before January 1, 2022, a dependent who is under 12 years of age.
(iv) For taxable years beginning on or after January 1, 2022, and before January 1, 2024, a dependent who is under 18 years of age.
(B) Has applied for all state and federally funded benefits to which the taxpayer is entitled to.
(11) “School meal subsidies” means assistance under the federally funded National School Lunch Program and the School Breakfast Program.
(c) The amount of the TCTC shall be equal to the difference between the qualified taxpayer’s net resources and 50 percent of the poverty threshold for an identical size household in the county in which the qualified taxpayer resides using the California Poverty Measure.
(d) The state departments and agencies that serve those who qualify for the TCTC shall provide the Franchise Tax Board with information, in the form and manner as requested by the Franchise Tax Board, to assist the Franchise Tax Board in determining the qualified taxpayer’s gross resources.
(e) (1) The Franchise Tax Board, with the assistance of the state departments and agencies that serve those who qualify for the TCTC, may develop estimates for both of the following:
(A) Adjustments to resources.
(B) The income and in-kind benefits derived from the following sources:
(i) General assistance payments specified in subparagraph (L) of paragraph (6) of subdivision (b).
(ii) CalFresh benefits specified in subparagraph (M) of paragraph (6) of subdivision (b).
(iii) School meal subsidies specified in subparagraph (N) of paragraph (6) of subdivision (b).
(iv) Housing subsidies specified in subparagraph (O) of paragraph (6) of subdivision (b).
(v) Energy assistance specified in subparagraph (P) of paragraph (6) of subdivision (b).
(vi) Childcare subsidies specified in subparagraph (Q) of paragraph (6) of subdivision (b).
(2) The estimates authorized to be developed pursuant to paragraph (1) may be based on, including, but not limited to, the following:
(A) Median estimates for families in deep poverty based on a review of United States Census, United States Current Population Survey, the American Community Survey, or related governmental sources.
(B) Information from the qualified taxpayer’s tax return as to earned income, family size, number of children, age of children, and other relevant factors, upon which estimates may be calculated or derived.
(f) (1) If the amount allowable as a credit under this section exceeds the tax liability computed under this part for the taxable year, the excess shall be credited against other amounts due, if any, and the balance, if any, shall be paid upon appropriation by the Legislature to the qualified taxpayer.
(2) Payments shall be made to the taxpayer in 12 monthly installments. The Franchise Tax Board shall administer the monthly payments in the form and manner as determined by the Franchise Tax Board.
(g) For purposes of complying with Section 41, the Legislature finds and declares all of the following:
(1) The purpose of the Targeted Child Tax Credit is to reduce poverty by providing a refundable tax credit to California’s poorest families with children.
(2) To measure whether the credit achieves its intended purpose, the Franchise Tax Board shall annually prepare a written report on the following:
(A) The number of tax returns claiming the credit.
(B) The number of individuals represented on tax returns claiming the credit.
(C) The average credit amount on tax returns claiming the credit.
(D) The distribution of credits by number of dependents and income ranges.
(E) Using data from tax returns claiming the credit, an estimate of the number of families who are lifted out of deep poverty by the credit. For the purposes of this subparagraph, a family is in “deep poverty” if the income of the family is less than 50 percent of the California Poverty Measure.
(3) (A) The Franchise Tax Board shall provide the written report to the Senate Committee on Budget and Fiscal Review, the Assembly Committee on Budget, the Senate and Assembly Committees on Appropriations, the Senate Committee on Governance and Finance, the Assembly Committee on Revenue and Taxation, and the Senate and Assembly Committees on Human Services.
(B) A report submitted pursuant this paragraph shall be submitted in compliance with Section 9795 of the Government Code.
(h) This section shall remain in effect only until December 1, 2024, and as of that date is repealed.

SEC. 3.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.