Economy and Taxes Publications

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Report

The 2017-18 Budget: Governor's Gann Limit Proposal

March 2, 2017 - Under the State Constitution, state tax revenues in excess of the Prop 4 (1979) state appropriations limit, or Gann Limit, must be split between taxpayer rebates and additional school spending. The Governor now proposes a new calculation methodology that creates $22 billion in additional state spending capacity. We find that the Governor's proposal violates the spirit of Proposition 4 and—in our view—is highly vulnerable to legal challenges. We recommend that the Legislature reject the proposal and offer options for legislative consideration.

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The 2017-18 Budget: California Competes Tax Credit

February 27, 2017 - In this analysis, we discuss our findings and recommendations regarding the Governor's proposals regarding the California Competes tax credit program. This affects two departments: (1) the Governor's Office of Business and Economic Development (GO-Biz) and (2) Franchise Tax Board.

Report

The 2017-18 Budget: An Overview of the Governor's Proposition 56 Proposals

February 22, 2017 - Proposition 56 was approved by voters in November 2016 to increase taxes on cigarettes and other tobacco products. Questions have been raised as to whether the Governor’s proposals for allocating Proposition 56 revenues meet the initiative’s requirement to supplement—and not supplant—existing spending in several areas. To examine these questions, we begin by reviewing the provisions of Proposition 56 and the Governor’s budget proposals. We then discuss whether the Governor’s proposals for Medi‑Cal could be viewed as supplanting General Fund resources and identify the relevant case law. We conclude by describing some trade‑offs for the Legislature to consider in allocating the Proposition 56 revenues.

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Volatility of the Personal Income Tax Base

February 8, 2017 - From 1990 to 2014, personal income in California grew fairly consistently, with limited volatility. On the other hand, California's personal income tax (PIT) base was much more volatile. This is because (1) some of the more stable pieces of personal income are not taxed under California's PIT and (2) the PIT tax base includes capital gains, which are extremely volatile and are not counted as part of personal income in federal statistics. This brief examines the volatility of the PIT tax base, one important element of the PIT's overall volatility in California. (This brief does not focus on other reasons for PIT volatility, such as California's PIT rate structure, in which high-income Californians pay a bigger fraction of their income than lower- and middle-income Californians.)

Hearing Handout

Technology Transfer Agreements and California’s Sales Tax

January 30, 2017 - Presented to: Assembly Revenue and Taxation Committee

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Income Mobility in California Across Generations

January 4, 2017 - In this report, we analyze intergenerational income mobility in California—the extent to which children attain higher (or lower) incomes than their parents. We find that California children have somewhat higher rates of income mobility than their peers in other states. The report’s findings suggest this is the result of their parents’ and their own characteristics, not because growing up in California results in more mobility.

Three short videos highlight some of the concepts and findings in the report.

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Statewide Minimum Wage Increasing in January

December 6, 2016 - A new law passed in 2016 (SB 3 [Leno]) will increase California’s statewide minimum wage over a period of several years. The first increase will occur on January 1, 2017. This budget and policy post is a supplement to our series on the California Economy and Taxes blog, where we describe California's low-wage workers and highlight the parts of the state with local minimum wages higher than the statewide minimum wage in 2017.

(Updated 12/21/2016 to include Los Altos.)

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California’s First Film Tax Credit Program

September 29, 2016 -

In this report, as required by law, we evaluate the economic effects and the administration of the first film tax credit program passed in 2009. We find that about one–third of the film and television projects receiving incentives under this program would probably have been made in California anyway. We suspect that this level of “windfall benefits” to some credit recipients may be low compared to other tax credits, which would suggest that the first film tax credit program targeted the types of production vulnerable to being filmed outside the state relatively well.

Also see these four short videos that highlight findings from this report.

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Common Claims About Proposition 13

September 19, 2016 -

Proposition 13 was a landmark decision by California’s voters in June 1978 to limit property taxes. Today, there are many questions about the impacts of these changes. This report examines some of these questions and which of them can be answered by the data available.

Also see the companion videos for this report.

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Community Development Financial Institution (CDFI) Tax Credit

June 30, 2016 - This report is in response to Chapter 608 of 2013 (AB 32, J. Pérez), which requires our office to evaluate the effectiveness of the tax credits allowed for qualified investments in community development financial institutions (CDFIs), with a focus on employment in low-to-moderate income and rural areas, and on the benefits of these tax credits to low-to-moderate income and rural persons.

Hearing Handout

Tax Extension to Fund Education and Healthcare. Initiative Constitutional Amendment.

June 29, 2016 - Presented to Assembly Budget Committee, Assembly Education Committee, Senate Budget and Fiscal Review Committee

Hearing Handout

Cigarette Tax Initiative

June 14, 2016 - Presented to: Assembly Health Committee Assembly Revenue and Taxation Committee Senate Health Committee

Report

Options for Modifying the State Child Care Tax Credit

April 7, 2016 - The Child and Dependent Care Expenses Credit (“child care tax credit” or “credit”) is a provision of the state income tax code that allows filers with income below $100,000 to reduce their tax liability by a percentage of their eligible child care expenses. The 2015–16 Budget Act required our office to prepare a report providing options to extend the credit to low– and middle–income families not currently receiving child care subsidies. This report provides an analysis of the costs, benefits, and trade–offs associated with these options.

Hearing Handout

Background on the California EITC

March 29, 2016 - Presented to: Assembly Budget Subcommittee No. 4 on State Administration

Hearing Handout

Perspectives on Legislative Oversight: Economic Development Activities

March 1, 2016 - Presented to: Assembly Committee on Jobs, Economic Development and the Economy

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