Taxation: tax expenditures: Legislative Analyst’s Office: assessment, report, and recommendation.
Vote required
Majority
Fiscal committee
No
Appropriation
No
Current location
Enrolled
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed Senate
- Passed Assembly
- To Governor
- Became Law
Overview
This bill directs the Legislative Analyst’s Office (LAO) to conduct a comprehensive review of California’s tax expenditures – exemptions, deductions, and credits – to determine their effectiveness and potential for savings. The LAO will produce detailed reports on each major tax expenditure, considering factors like cost-effectiveness and impact on the state’s budget and economy. These reports will be publicly available and subject to a legislative hearing, with the goal of identifying opportunities to reduce or eliminate tax expenditures that are no longer serving their intended purpose.
Key provisions
- The Legislative Analyst’s Office (LAO) must assess major tax expenditures.
- The LAO must publish reports on each major tax expenditure, including an analysis of potential savings.
- The LAO must consider cost-effectiveness, impact on the General Fund, and economic effects when evaluating tax expenditures.
- The LAO must produce its first report by October 15, 2027, and subsequent reports annually until January 1, 2032.
- The Senate and Assembly Revenue and Taxation Committees must hold joint public hearings on the LAO’s reports each August 15th.
- The bill will be repealed on January 1, 2033.
- Specific tax expenditures included in the initial assessment are listed, including water’s-edge election, research credits, and like-kind exchanges.
Who is affected
- Taxpayers
- The California Legislature
Bill text
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