Economy and Taxes Publications

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Annual Report on Tax Exemptions for Medicinal Cannabis

July 1, 2021 - Chapter 837 of 2019 (SB 34, Wiener) established new tax exemptions for donations of medicinal cannabis. The law directs our office to submit an annual report containing data on three outcomes related to the exemptions: the number of medicinal cannabis patients served, the amount of medicinal cannabis products donated, and the amount of tax revenue lost. This report fulfills that statutory requirement for 2020.

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The 2021-22 May Revision—Overview and Analysis of Workforce Development Proposals

May 18, 2021 - This handout lists the Governor's workforce proposals, provides a high-level assessment of those proposals, and offers guidance were the Legislature to want to increase spending in this area.

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Tax Credit Expansions in the American Rescue Plan

April 13, 2021 - The federal American Rescue Plan (ARP) that passed on March 11 expanded a number of federal income tax credits. This piece will briefly describe the changes to three credits that apply to many lower-income and middle-income filers: the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC), and the Child and Dependent Care Expenses Credit (“child care credit”). We also discuss changes to the dependent care exclusion which is linked to the child care credit.

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Evaluating State Economic Stimulus Proposals

February 1, 2021 - In this report, we offer the Legislature guidance on how to evaluate fiscal stimulus proposals. We pose six key questions to ask when assessing specific proposals and provide specific elements that can be incorporated into proposals to increase their potential effectiveness.

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The 2021-22 Budget: Business Tax Incentives

January 28, 2021 - The Governor’s budget proposes several changes to taxation to support businesses. Two key factors for evaluating these proposals are: (1) which level of government would forgo revenue; and (2) which businesses would receive assistance. Based on these criteria and others, we recommend that the Legislature prioritize expansion of the Main Street credit, explore alternative structures for an elective S Corporation tax, and reject the proposed one-time expansions of the CAEATFA exclusion and California Competes.

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The 2021-22 Budget: Golden State Stimulus

January 22, 2021 - This handout provides an overview of the Governor's budget proposal to provide a one-time $600 refund to certain low-income workers, evaluates the Governor's proposal, and provides a more targeted alternative for the Legislature to consider.

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The 2021-22 Budget: Small Business Grants

January 22, 2021 - This handout assesses the Governor's proposal to expand a recently created small business grants program by $575 million.

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The 2020-21 Spending Plan: Tax Changes

October 5, 2020 - The 2020‑21 budget package included several tax policy changes. Overall, the budget package assumes these changes will result in a net revenue increase of about $4 billion in 2020‑21. Starting in 2023‑24, the net effect of these changes are expected to reduce revenues below what they otherwise would have been.

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An Update on California’s Cash Management Situation

August 31, 2020 - Provides an update on California’s cash management situation, including recent developments in spring 2020 and the outlook for 2020-21.

Hearing Handout

Overview of Initiative Measure to Change Tax Assessment of Commercial Property

June 4, 2020 - Assembly Committee on Local Government and Assembly Committee on Revenue and Taxation

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The 2020-21 May Revision: Revenue Proposals in the 2020-21 May Revision

May 20, 2020 - The May Revision includes a number of revenue-related proposals. This post describes these proposals and offers our initial comments and recommendations. We also offer alternative revenue options that the Legislature could consider.

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Assessing Recent Changes to California Competes

March 30, 2020 - California Competes is an economic development tax incentive program that allows the administration to negotiate tax credit agreements with individual companies that agree to meet multiyear hiring and investment targets. In this report we provide background information about the California Competes program and the changes that the Legislature made in 2018. Next, we describe the effects of these changes on the program in 2018‑19, the first year of their implementation. We then assess how the changes have affected the administration of the California Competes program and consider whether it is more or less effective than before. Lastly, looking forward, we suggest working to find ways to expand the pool of qualified applicants and advise the Legislature to continue its oversight of the program.

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The 2020-21 Budget: Expanding the Minimum Franchise Tax Exemption

March 23, 2020 - In this budget analysis brief, we provide background information on the current tax expenditure and assess the merits of the administration’s proposal to expand it. We conclude that the Legislature should reject the Governor’s proposal. We further suggest the Legislature reconsider the current exemption.

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The 2020-21 Budget: California Department of Tax and Fee Administration (CDTFA)

March 20, 2020 - The Governor’s 2020-21 budget includes proposals related to CDTFA’s administration of cannabis taxes, tobacco taxes, and fuel taxes. In this post, we discuss some budget reductions included in the cannabis and tobacco proposals, and we assess the adequacy of the fuel tax proposal.

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The 2020-21 Budget: Taxation of E-Cigarettes

February 24, 2020 - In this report, we discuss issues for the Legislature to consider as it decides whether to change the state’s approach to taxing e‑cigarettes. We find that a tax based on nicotine content has some advantages. We also suggest that the Legislature consider a wide range of possible tax rates. Once the Legislature has chosen a rate, we recommend indexing the rate to inflation and revisiting it frequently to assess whether further adjustments are warranted. If the Legislature chooses to enact a new tax on e‑cigarettes, we recommend that it take an approach to revenue allocation that prioritizes flexibility.

Economy and Taxes Staff

Chas Alamo
(916) 319-8357
Employment, Labor Law, and Property Taxes
 
Ann Hollingshead
(916) 319-8305
State Budget and Federal Funding
 
Lourdes Morales
(916) 319-8320
Local Government
 
Nick Schroeder
(916) 319-8314
Public Employment, CalPERS, and Elections
 
Brian Weatherford
(916) 319-8337
Corporation Tax and Insurance
 
Angela Short
(916) 319-8309
Teachers' Retirement Policy/ Child Welfare/ Community Care Licensing
 
Brian Uhler
(916) 319-8328
Deputy Legislative Analyst: Economy, Taxes, and Labor
 
Justin Garosi
(916) 319-8359
Personal Income Tax
 
Seth Kerstein
(916) 319-8365
Sales and Excise Taxes and Demographics