Bill Text: CA SB13 | 2009-2010 | Regular Session | Introduced
Bill Title: Personal income taxes.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2010-02-01 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB13 Detail]
Download: California-2009-SB13-Introduced.html
BILL NUMBER: SB 13 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Hollingsworth
DECEMBER 1, 2008
An act to amend Sections 17041 and 19602 of, to add Section
17063.1 to, to repeal Sections 17043 and 19602.5 of, and to repeal
Chapter 2.1 (commencing with Section 17062) of Part 10 of Division 2
of, the Revenue and Taxation Code, relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
SB 13, as introduced, Hollingsworth. Personal income taxes.
The Personal Income Tax Law imposes a tax upon taxable income at
various rates depending upon the amount of that income, and also
imposes an alternative minimum tax based upon specified tax
preference items.
This bill would, commencing with taxable years beginning on or
after January 1, 2009, reduce all marginal tax rates, as provided,
and would eliminate the tax on taxable income for taxable years
beginning on or after January 1, 2013. This bill would also repeal
the alternative minimum tax for taxable years beginning on or after
January 1, 2013.
The Mental Health Services Act, enacted by initiative statute,
establishes a state personal income tax surcharge of 1% on taxpayers
with annual taxable incomes of more than $1 million and uses the
funds derived therefrom for expanding county mental health programs,
as specified.
This bill would repeal that 1% surcharge along with associated
provisions specifying the allocation of those revenues. This bill
would provide that these repeal provisions would become operative
only when submitted to, and approved by, the voters.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 17041 of the Revenue and Taxation Code is
amended to read:
17041. (a) There shall be imposed for each taxable year upon the
entire taxable income of every resident of this state who is
not a part-year resident , except the head of a household
as defined in Section 17042, taxes in the following amounts and at
the following rates upon the amount of taxable income
computed for the taxable year as if the resident were a resident of
this state for the entire taxable year and for all prior taxable
years for any carryover items, deferred income, suspended losses, or
suspended deductions :
If the taxable income The tax is:
is:
Not over $3,650........ 1% of the taxable income
Over $3,650 but not
$36.50 plus 2% of the
over $8,650........... excess
over $3,650
Over $8,650 but not
$136.50 plus 4% of the
over $13,650.......... excess
over $8,650
Over $13,650 but not
$336.50 plus 6% of the
over $18,950.......... excess
over $13,650
Over $18,950 but not
$654.50 plus 8% of the
over $23,950.......... excess
over $18,950
$1,054.50 plus 9.3% of
Over $23,950........... the
excess
over $23,950
(b) (1) There shall be
imposed for each taxable year upon the taxable income of every
nonresident or part-year resident, except the head of a household as
defined in Section 17042, a tax as calculated in paragraph
(2).
(2) The tax imposed under paragraph (1) shall be calculated by
multiplying the "taxable income of a nonresident or part-year
resident," as defined in subdivision (i), by a rate (expressed as a
percentage) equal to the tax computed under subdivision (a) on the
entire taxable income of the nonresident or part-year resident as if
the nonresident or part-year resident were a resident of this state
for the taxable year and as if the nonresident or part-year resident
were a resident of this state for all prior taxable years for any
carryover items, deferred income, suspended losses, or suspended
deductions, divided by the amount of that income.
(c) There shall be
imposed for each taxable year upon the entire taxable income of every
resident of this state who is not a part-year resident for that
taxable year, when the resident is the head of a household, as
defined in Section 17042, taxes in the following amounts and at the
following rates upon the amount of taxable income computed for the
taxable year as if the resident were a resident of the state for the
entire taxable year and for all prior taxable years for carryover
items, deferred income, suspended losses, or suspended deductions:
that shall be equal to the tax computed under
subdivision (a) as if the nonresident or part-year resident were a
resident multiplied by the ratio of California adjusted
gross income to total adjusted gross income from all sources. For
purposes of computing the tax under subdivision (a) and gross income
from all sources, the net operating loss deduction provided in
Section 172 of the Internal Revenue Code, as modified by Section
17276, shall be computed as if the taxpayer was a resident for all
prior years.
(c) There shall be imposed for each taxable year upon the entire
taxable income of every resident of this state, when the resident is
the head of household, as defined in Section 17042, taxes in the
following amounts and at the following rates upon the amount of
taxable income:
If the taxable income The tax is:
is:
Not over $7,300......... 1% of the taxable income
Over $7,300 but not
$73 plus 2% of the
over $17,300........... excess
over $7,300
Over $17,300 but not
$273 plus 4% of the
over $22,300........... excess
over $17,300
Over $22,300 but not
$473 plus 6% of the
over $27,600........... excess
over $22,300
Over $27,600 but
not
$791 plus 8% of the
over $32,600........... excess
over $27,600
$1,191 plus 9.3% of the
Over $32,600............ excess
over $32,600
(d) (1) There shall be
imposed for each taxable year upon the taxable income of every
nonresident or part-year resident when the nonresident or part-year
resident is the head of a household, as defined in Section 17042, a
tax as calculated in paragraph (2).
(2) The tax imposed
under paragraph (1) shall be calculated by multiplying the "taxable
income of a nonresident or part-year resident," as defined in
subdivision (i), by a rate (expressed as a percentage) equal to the
tax computed under subdivision (c) on the entire taxable income of
the nonresident or part-year resident as if the nonresident or
part-year resident were a resident of this state for the taxable year
and as if the nonresident or part-year resident were a resident of
this state for all prior taxable years for any carryover items,
deferred income, suspended losses, or suspended deductions, divided
by the amount of that income. that shall be equal to
the tax computed under subdivision (c) as if the nonresident or
part-year resident were a resident multiplied by the ratio of
California adjusted gross income to total adjusted gross income from
all sources. For purposes of computing the tax under subdivision (c)
and gross income from all sources, the net operating loss deduction
provided in Section 172 of the Internal Revenue Code, as modified by
Section 17276, shall be computed as if the taxpayer was a resident
for all prior years.
(e) There shall be imposed for each taxable year upon the taxable
income of every estate, trust, or common trust fund taxes equal to
the amount computed under subdivision (a) for an individual having
the same amount of taxable income.
(f) The tax imposed by this part is not a surtax.
(g) (1) Section 1(g) of the Internal Revenue Code, relating to
certain unearned income of minor children taxed as if the parent's
income, shall apply, except as otherwise provided.
(2) Section 1(g)(7)(B)(ii)(II) of the Internal Revenue Code,
relating to income included on parent's return, is modified, for
purposes of this part, by substituting "1 percent" for "15 percent."
(h) For each taxable year beginning on or after January 1, 1988,
the Franchise Tax Board shall recompute the income tax brackets
prescribed in subdivisions (a) and (c). That computation shall be
made as follows:
(1) The California Department of Industrial Relations shall
transmit annually to the Franchise Tax Board the percentage change in
the California Consumer Price Index for all items from June of the
prior calendar year to June of the current calendar year, no later
than August 1 of the current calendar year.
(2) The Franchise Tax Board shall do both of the following:
(A) Compute an inflation adjustment factor by adding 100 percent
to the percentage change figure that is furnished pursuant to
paragraph (1) and dividing the result by 100.
(B) Multiply the preceding taxable year income tax brackets by the
inflation adjustment factor determined in subparagraph (A) and round
off the resulting products to the nearest one dollar ($1).
(i) The income tax rates prescribed in subdivisions (a) and (c)
shall be modified as follows:
(1) For any taxable year beginning on or after January 1, 2009,
and before January 1, 2010, 1 percent shall be 0.80 percent, 2
percent shall be 1.6 percent, 4 percent shall be 3.2 percent, 6
percent shall be 4.8 percent, 8 percent shall be 6.4 percent, and 9.3
percent shall be 7.54 percent.
(2) For any taxable year beginning on or after January 1, 2010,
and before January 1, 2011, 1 percent shall be 0.60 percent, 2
percent shall be 1.2 percent, 4 percent shall be 2.4 percent, 6
percent shall be 3.6 percent, 8 percent shall be 4.8 percent, and 9.3
percent shall be 5.58 percent.
(3) For any taxable year beginning on or after January 1, 2011,
and before January 1, 2012, 1 percent shall be 0.40 percent, 2
percent shall be 0.80 percent, 4 percent shall be 1.6 percent, 6
percent shall be 2.4 percent, 8 percent shall be 3.2 percent, and 9.3
percent shall be 3.72 percent.
(4) For any taxable year beginning on or after January 1, 2012,
and before January 1, 2013, 1 percent shall be 0.20 percent, 2
percent shall be 0.40 percent, 4 percent shall be 0.80 percent, 6
percent shall be 1.2 percent, 8 percent shall be 1.6 percent, and 9.3
percent shall be 1.86 percent.
(5) For any taxable year beginning on or after January 1, 2013, 1
percent shall be 0 percent, 2 percent shall be 0 percent, 4 percent
shall be 0 percent, 6 percent shall be 0 percent, 8 percent shall be
0 percent, and 9.3 percent shall be 0 percent.
(i)
(j) (1) For purposes of this part, the term
"taxable income of a nonresident or part-year resident"
section, the term "California adjusted gross income"
includes each of the following:
(A) For any part of the taxable year during which the taxpayer was
a resident of this state (as defined by Section 17014), all items of
gross income and all deductions , regardless of
source.
(B) For any part of the taxable year during which the taxpayer was
not a resident of this state, gross income and deductions
derived from sources within this state, determined in
accordance with Article 9 of Chapter 3 (commencing with
Section 17301) and Chapter 11 (commencing with Section
17951).
(2) For purposes of computing "taxable
"California adjusted gross income of a nonresident or part-year
resident" under paragraph (1), the amount of any net operating loss
sustained in any taxable year during any part of which the taxpayer
was not a resident of this state shall be limited to the sum of the
following:
(A) The amount of the loss attributable to the part of the taxable
year in which the taxpayer was a resident.
(B) The amount of the loss which, during the part of the taxable
year the taxpayer is not a resident, is attributable to California
source income and deductions allowable in arriving at
taxable income of a nonresident or part-year resident.
adjusted gross income.
(3) For purposes of computing "taxable income of a nonresident or
part-year resident" under paragraph (1), any carryover items,
deferred income, suspended losses, or suspended deductions shall only
be includable or allowable to the extent that the carryover item,
deferred income, suspended loss, or suspended deduction was derived
from sources within this state, calculated as if the nonresident or
part-year resident, for the portion of the year he or she was a
nonresident, had been a nonresident for all prior years.
SEC. 2. Section 17043 of the Revenue and Taxation Code is
repealed.
17043. (a) For each taxable year beginning on or after January 1,
2005, in addition to any other taxes imposed by this part, an
additional tax shall be imposed at the rate of 1 percent on that
portion of a taxpayer's taxable income in excess of one million
dollars ($1,000,000).
(b) For purposes of applying Part 10.2 (commencing with Section
18401) of Division 2, the tax imposed under this section shall be
treated as if imposed under Section 17041.
(c) The following shall not apply to the tax imposed by this
section:
(1) The provisions of Section 17039, relating to the allowance of
credits.
(2) The provisions of Section 17041, relating to filing status and
recomputation of the income tax brackets.
(3) The provisions of Section 17045, relating to joint returns.
SEC. 3. Section 17063.1 is added to the Revenue and Taxation Code,
to read:
17063.1. This chapter shall remain in effect only until January
1, 2013, and as of that date is repealed.
SEC. 4. Section 19602 of the Revenue and Taxation Code is amended
to read:
19602. Except for amounts collected or accrued under Sections
17935, 17941, 17948, 19532, and 19561, and revenues
deposited pursuant to Section 19602.5, all moneys and
remittances received by the Franchise Tax Board as amounts imposed
under Part 10 (commencing with Section 17001), and related penalties,
additions to tax, and interest imposed under this part, shall be
deposited, after clearance of remittances, in the State Treasury and
credited to the Personal Income Tax Fund.
SEC. 5. Section 19602.5 of the Revenue and Taxation Code is
repealed.
19602.5. (a) There is in the State Treasury the Mental Health
Services Fund (MHS Fund). The estimated revenue from the additional
tax imposed under Section 17043 for the applicable fiscal year, as
determined under subparagraph (B) of paragraph (3) of subdivision
(c), shall be deposited to the MHS Fund on a monthly basis, subject
to an annual adjustment as described in this section.
(b) (1) Beginning with fiscal year 2004-2005 and for each fiscal
year thereafter, the Controller shall deposit on a monthly basis in
the MHS Fund an amount equal to the applicable percentage of net
personal income tax receipts as defined in paragraph (4).
(2) (A) Except as provided in subparagraph (B), the applicable
percentage referred to in paragraph (1) shall be 1.76 percent.
(B) For fiscal year 2004-2005, the applicable percentage shall be
0.70 percent.
(3) Beginning with fiscal year 2006-2007, monthly deposits to the
MHS Fund pursuant to this subdivision are subject to suspension
pursuant to subdivision (f).
(4) For purposes of this subdivision, "net personal income tax
receipts" refers to amounts received by the Franchise Tax Board and
the Employment Development Department under the Personal Income Tax
Law, as reported by the Franchise Tax Board to the Department of
Finance pursuant to law, regulation, procedure, and practice
(commonly referred to as the "102 Report") in effect on the effective
date of the act establishing this section.
(c) No later than March 1, 2006, and each March 1 thereafter, the
Department of Finance, in consultation with the Franchise Tax Board,
shall determine the annual adjustment amount for the following fiscal
year.
(1) The "annual adjustment amount" for any fiscal year shall be an
amount equal to the amount determined by subtracting the "revenue
adjustment amount" for the applicable revenue adjustment fiscal year,
as determined by the Franchise Tax Board under paragraph (3), from
the "tax liability adjustment amount" for applicable tax liability
adjustment tax year, as determined by the Franchise Tax Board under
paragraph (2).
(2) (A) (i) The "tax liability adjustment amount" for a tax year
is equal to the amount determined by subtracting the estimated tax
liability increase from the additional tax imposed under Section
17043 for the applicable year under subparagraph (B) from the amount
of the actual tax liability increase from the additional tax imposed
under Section 17043 for the applicable tax year, based on the returns
filed for that tax year.
(ii) For purposes of the determinations required under this
paragraph, actual tax liability increase from the additional tax
means the increase in tax liability resulting from the tax of 1
percent imposed under Section 17043, as reflected on the original
returns filed by October 15 of the year after the close of the
applicable tax year.
(iii) The applicable tax year referred to in this paragraph means
the 12-calendar month taxable year beginning on January 1 of the year
that is two years before the beginning of the fiscal year for which
an annual adjustment amount is calculated.
(B) (i) The estimated tax liability increase from the additional
tax for the following tax years is:
(ii) The "estimated tax liability increase from the additional tax"
for the tax year beginning in 2009 and each tax year thereafter
shall be determined by applying an annual growth rate of 7 percent to
the "estimated tax liability increase from additional tax" of the
immediately preceding tax year.
(3) (A) The "revenue adjustment amount" is equal to the amount
determined by subtracting the "estimated revenue from the additional
tax" for the applicable fiscal year, as determined under subparagraph
(B), from the actual amount transferred for the applicable fiscal
year.
(B) (i) The "estimated revenue from the additional tax" for the
following applicable fiscal years is:
(ii) The "estimated revenue from the additional tax" for
applicable fiscal year 2007-08 and each applicable fiscal year
thereafter shall be determined by applying an annual growth rate of 7
percent to the "estimated revenue from the additional tax" of the
immediately preceding applicable fiscal year.
(iii) The applicable fiscal year referred to in this paragraph
means the fiscal year that is two years before the fiscal year for
which an annual adjustment amount is calculated.
(d) The Department of Finance shall notify the Legislature and the
Controller of the results of the determinations required under
subdivision (c) no later than 10 business days after the
determinations are final.
(e) If the annual adjustment amount for a fiscal year is a
positive number, the Controller shall transfer that amount from the
General Fund to the MHS Fund on July 1 of that fiscal year.
(f) If the annual adjustment amount for a fiscal year is a
negative number, the Controller shall suspend monthly transfers to
the MHS Fund for that fiscal year, as otherwise required by paragraph
(1) of subdivision (b), until the total amount of suspended deposits
for that fiscal year equals the amount of the negative annual
adjustment amount for that fiscal year.
SEC. 6. Sections 2, 4, and 5 of this act affect an initiative
statute and shall take effect and become operative only when
submitted to, and approved by, the voters of California, pursuant to
subdivision (c) of Section 10 of Article II of the California
Constitution.
