Bill Text: CA AB1864 | 2021-2022 | Regular Session | Amended

California Assembly Bill 1864 (Prior Session Legislation)

Bill Title: Income taxation: credits: small business employers.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Introduced - Dead) 2022-05-02 - In committee: Hearing for testimony only. [AB1864 Detail]

Download: California-2021-AB1864-Amended.html

Amended IN Assembly April 18, 2022

Amended IN Assembly March 24, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill

No. 1864

Introduced by Assembly Member Gipson

February 08, 2022

An act to add and repeal Sections 17053.82 and 23682 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL'S DIGEST

AB 1864, as amended, Gipson. Income taxation: credits: small business employers.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.

This bill, under both laws, for taxable years beginning on or after January 1, 2023, and before January 1, 2028, would allow a credit against those taxes to qualified small business employers in an ~~unspecified~~ amount equal to $434 for each newly hired employee, as specified, whose permanent place of residence is within a 5-mile radius of the employee’s primary worksite.

Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill would include additional information required for any bill authorizing a new tax expenditure.

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.

(a) The Legislature finds and declares as follows:

(1) Industries hit hardest by COVID-19, which include small businesses with less than 50 employees, have higher rates of Asian, Latino, and women ownership. In particular, one-third in this heavily affected sector are Asian-owned businesses. Women also own 26 percent of very small businesses in these industries. Another 20 percent are jointly owned by men and women.

(2) Ninety-five percent of businesses are very small businesses with less than 50 employees, and these businesses employ one-third of California’s workers.

(3) Small business tends to employ the most diverse populations, including people of color and women, and are a part of the American fabric that provide an access point for individuals and working families opportunities toward entrepreneurship and the onlook in building generational wealth.

(4) Small businesses are more likely to be owned by women and nonwhite Californians than larger businesses. Latinos own 11 percent of these businesses but only 2 percent of larger businesses. Similarly, Asians own 23 percent of very small businesses versus roughly 10 percent of larger businesses. In California, women run 22 percent of those businesses, compared to 7 percent of larger businesses.

(5) The positive impact of small business activity toward local governments, with the contribution of local tax dollars, provides long-term benefits for a variety of populations.

(6) Historically, our state’s most disadvantaged communities disproportionately struggle with job scarcity due to limited employment opportunities. As a result, members of these communities live in commuter regions with high transportation costs, and those individuals experience a reduced quality of life and further economic issues.

(7) High commuter regions additionally exacerbate environmental concerns at a time when the state must innovate its approach toward meeting its mitigation goals.

(b) It is the intent of the Legislature to further support small businesses and local governments by incentivizing local hire, which would also retain critical revenue to assist our communities through the pandemic and onward.

SEC. 2.

Section 17053.82 is added to the Revenue and Taxation Code, to read:

17053.82.

(a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed a credit against the “net tax,” as defined in Section 17039, to a qualified small business employer in an amount equal to ~~____~~ four hundred thirty-four dollars ~~($____)~~ ($434) per qualified employee.

(b) For purposes of this section:

(1) “Public employer” means:

(A) The state and every state entity, including, but not limited to, the Legislature, the judicial branch, the University of California, and the California State University.

(B) A political subdivision of the state, or agency or instrumentality of the state or subdivision of the state, including, but not limited to, a city, county, city and county, charter city, charter county, school district, community college district, joint powers authority, joint powers agency, and any public agency, authority, board, commission, or district.

(2) “Qualified employee” means an employee of the qualified small business employer who is performing services for the employer in this state and who meets all of the following requirements:

(A) The employee is full-time, as designated by the employer.

(B) The employee’s permanent place of residence is within a five-mile radius of the employee’s primary worksite.

(C) The employee has worked for the employer for at least 6 months but less than 18 months at the time the credit is claimed.

(3) (A) “Qualified small business employer” means an employer that employs fewer than 49 employees on average at any time during the taxable year.

(B) “Qualified small business employer” shall not include a public employer.

(c) The credit allowed in subdivision (a) shall only be allowed to a qualified small business employer once per qualified employee regardless of whether an employee is rehired.

(d) If the credit allowed by this section exceeds the “net tax,” the excess may be carried over to reduce the “net tax” in the following year, and succeeding years if necessary, until the credit has been exhausted.

(e) This section shall remain in effect only until December 1, 2028, and as of that date is repealed.

SEC. 3.

Section 23682 is added to the Revenue and Taxation Code, to read:

23682.

(a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed a credit against the “tax,” as defined in Section 23036, to a qualified small business employer in an amount equal to ~~____~~ four hundred thirty-four dollars ~~($____)~~ ($434) per qualified employee.

(b) For purposes of this section:

(1) “Public employer” means:

(A) The state and every state entity, including, but not limited to, the Legislature, the judicial branch, the University of California, and the California State University.

(2) “Qualified employee” means an employee of the qualified small business employer who is performing services for the employer in this state and who meets all of the following requirements:

(A) The employee is full-time, as designated by the employer.

(B) The employee’s permanent place of residence is within a five-mile radius of the employee’s primary worksite.

(C) The employee has worked for the employer for at least 6 months but less than 18 months at the time the credit is claimed.

(3) (A) “Qualified small business employer” means an employer that employs fewer than 49 employees on average at any time during the taxable year.

(B) “Qualified small business employer” shall not include a public employer.

(c) The credit allowed in subdivision (a) shall only be allowed to a qualified small business employer once per qualified employee, regardless of whether an employee is rehired.

(d) If the credit allowed by this section exceeds the “tax,” the excess may be carried over to reduce the “tax” in the following year, and succeeding years if necessary, until the credit has been exhausted.

(e) This section shall remain in effect only until December 1, 2028, and as of that date is repealed.

SEC. 4.

For the purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Sections 17053.82 and 23682 of the Revenue and Taxation Code, as added by this act, the Legislature finds and declares all of the following:

(a) The specific goal, purpose, and objective that the credits will achieve is to provide support to small businesses by incentivizing local hire.

(b) Detailed performance indicators for the Legislature to use in determining whether the credits meet the goal, purpose, and objective described in subdivision (a) include the number of small business employers who utilized the credits, the number of qualified employees hired, and the total dollar amount of credits claimed.

(c) (1) The Franchise Tax Board shall analyze the performance indicators in subdivision (b) for each taxable year and shall report its findings, on or before January 1, 2027, and in compliance with Section 9795 of the Government Code, to the Legislature.

(2) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542 under Article 2 (commencing with Section 19542) of Chapter 7 of Part 10.2 of Division 2 of the Revenue and Taxation Code.