GOOD MORNING. I DON'T HAVE.
LIKE AND SHARE
YEAH.
I'LL SPARE US ALL THE GAVEL
TODAY A GOOD MORNING I THINK
EVERYONE FOR COMING FOR JOINING
US TODAY TO DISCUSS THE FEDERAL
TAX REFORM AND ITS POTENTIAL
IMPLICATIONS.
FOR CALIFORNIA.
IT SAID OF GOING OVER THE
ENTIRETY OF THE TAX CUTS AND
JOBS ACTS WILL BE MAINLY
FOCUSING TODAY'S BRIEFING ON
CHANGES.
TO THE FEDERAL PERSONAL INCOME
TAX SPECIFICALLY WILL BE
DISCUSSING ELIMINATION OF
CERTAIN TO DESK DEDUCTIONS
PERSONAL EXEMPTIONS AND A CAP ON
ITEMIZED DEDUCTIONS FOR STATE
AND LOCAL TAXES. AND I COULD GO
THROUGH THIS WHOLE THING BUT I
THINK THAT THERE ARE PEOPLE HERE
WHO ARE BETTER SUITED TO EDUCATE
ALL OF US ON THIS MATTER.
SO WITH THAT WHO REALLY STARTED.
OKAY BUT THAT WE HAVE JOINING
WITH US TODAY IS JUSTIN GROSSI
FROM THE LEGISLATIVE ANALYST'S
OFFICE WILL BE PROVIDING A BRIEF
OVERVIEW. OF FEDERAL TAX.
THANK YOU FOR COMING PAY GOOD
MORNING I'M JUSTIN GROSSLY FROM
THE LA JOH IN SO BRIEFLY I ONCE
WANT TO GO OVER SOME OF THE
MAJOR PROVISIONS OF THE FEDERAL
TAX BILL THE RECENTLY PASSED.
SO IF YOU FLIP TO PAGE ONE AND.
.
THE ESTIMATED COST OVER THE NEXT
TEN YEARS COMBINED IS ABOUT A
TRILLION AND A HALF NOW IT'S
IT'S NOT SORT OF EVENLY.
A HUNDRED FIFTY BILLION A YEAR
BECAUSEIN SOME PROVISIONS PHASE
IN SOME PHASE OUT SO IT'S KIND
OF UNEVEN.
BUT IS OVERALL IT'S EXPECTED
COSTS ABOUT TRILLION HAVE.
THE INDIVIDUAL INCOME TAX
PROVISIONS ARE EXPECTED TO COST
ABOUT ONE POINT ONE TRILLION.
THE CORPORATE TAX PROVISIONS
THAT DEAL WITH.
DOMESTIC ACTIVITIES OUR
EXPECTED TO COST ABOUT SEVEN
HUNDRED. BILLION.
AND THAT PROVISIONS OF
SPECIFICALLY DEAL WITH THE
OVERSEAS INCOME OF U. S.
CORPORATIONS ARE EXPECTED TO
RAISE ABOUT THREE HUNDRED
BILLION.
OKAY SO THE NEXT SLIDE SHOWS.
THE EFFECTIVE DATES.
ALMOST EVERYTHING THAT WAS IN
THAT TAX BILL IS ALREADY IN
EFFECT. THERE'S A HANDFUL OF
PROVISIONS THAT HAVEN'T YET
THAT'S WHICH WE'LL GET TO LATER
BUT. PRETTY MUCH EVERYTHING IS
ALREADY YOU KNOW. IN PLACE.
NOW.
ALMOST ALL OF THE INDIVIDUAL
INCOME TAX PROVISIONS GO AWAY
AFTER THE TWO THOUSAND TWENTY
FIVE TAX YEAR.
SO.
THERE'S ONLY A HANDFUL THAT
AREN'T THAT WE'LL GET TO LATER
BUT. BASICALLY ALMOST ANYTHING
THAT DEALS WITH THE INDIVIDUAL
INCOME TAX TO SUNSET AFTER TWO
THOUSAND TWENTY FIVE.
IN. MAYBE THEY'LL BE EXTENDED OR
MAYBE THEY WON'T. MAYBE SOME OF
THEM WILL BE EXTENDED AND SOME
OF THEM WON'T AS WE SAW WITH THE
OF. THE BUSH TAX CUTS THAT WERE
A. PASSED I THINK IN TWO
THOUSAND TWO IN SUNSET IN TWO
THOUSAND TWELVE I MEAN THAT.
CONGRESSMAN PRESENT SORT OF.
.
PICKS IT PICKED AND CHOSE WHICH
ONES THEY WANTED TO KEEP AND
WHICH ONES THEY DIDN'T MAYBE
WE'LL SEE THE SAME THING AFTER
TWO THOUSAND TWENTY FIVE WOULD
HAVE TO STAY TUNED.
THE CORPORATE PROVISIONS IN
CONTRAST ALMOST ALL OF THEIR
PERMANENT.
AND WE'LL GET TO THE EXPENSING A
LITTLE BIT LATER.
THE FLIP NOW TO PAGE THREE.
OKAY THE HANDOUTS SAYS KEY
INDIVIDUAL PROVISIONS FOR NON
ITEMIZE HERS. MOST OF THESE ALSO
APPLIED ITEMIZE THERE'S.
NOW ONE THING THE BILL DID IS
ELIMINATED THE PERSONAL
EXEMPTIONS THAT WERE IN THE
CURRENT IN THE.
.
THE OLD TAX CODE WAS ABOUT FOUR
THOUSAND DOLLARS A PERSON THOSE
ARE GOING THE WAY NOW. BUT ONE
OF THE THINGS THEY DID TO
COMPENSATE FOR THAT IS TO RAISE
THE STANDARD DEDUCTION.
THEY THEY.
THE HANDOUT SHOWS WHAT HAPPENS
FOR JOINT RETURNS.
BUT THE STANDARD DEDUCTION WAS
ALSO NEARLY DOUBLED FOR.
.
SINGLE FILERS AND FOR HEAD OF
HOUSEHOLD FILERS.
IN ADDITION TO THAT THE RATES
ARE A LITTLE BIT LOWER ACROSS
THE BOARD.
WE DON'T SHOW THE TABLE HERE BUT
IN GENERAL THEY'RE A BIT LOWER.
ANOTHER THING THEY DID TO
COMPENSATE PEOPLE FOR
ELIMINATING THE PERSONAL
EXEMPTIONS WAS.
TO INCREASE THE CHILD CREDITS
UNDER THE OLD LAW.
YOU CAN CLAIM A THOUSAND DOLLARS
FOR EVERY A YOUNG DEPENDENT YOU
HAVE UNDER THE AGE OF EIGHTEEN.
THAT DOUBLES THE TWO THOUSAND
DOLLARS ANOTHER DIFFERENCE.
ANOTHER CHANGE THEY MADE.
WAS IT UNDER THE OLD LOT NONE OF
IT WAS REFUNDABLE MEANING THAT
YOU CAN NOT USE.
CHILD CREDIT TO REDUCE YOUR
LIABILITY BELOW ZERO.
NOW IT IS REFUNDABLE TO A
CERTAIN EXTENT SO EVEN IF YOUR
LIABILITY IS BELOW. THE AMOUNT
OF YOUR CHILD CREDIT YOU CAN
ACTUALLY.
YOU STILL CLAIM THE AMOUNT OF
THE CHILD CREDIT IN THE.
INSTEAD OF HAVING POSITIVE Y.
BILL YOU HAVE NEGATIVE LIABILITY
IS SOME TAXPAYERS CURRENTLY DO
ESPECIALLY IF THEY TAKE THE
EARNED INCOME TAX CREDIT.
SO THAT'S HOW THE NEW CHILD
CREDIT WOULD WORK.
IF YOU'D FLIP NOW TO PAGE FOUR.
THIS SHOWS A BRIEF EXAMPLE OF
HOW.
.
HOW IS SAMPLE HOUSEHOLD WOULD BE
AFFECTED?
UNDER THE NEW LAW COMPARED TO
THE OLD LAW.
SO THIS IS THE HOUSEHOLD WITH
TWO ADULTS TWO KIDS UNDER
EIGHTEEN SEVENTY FIVE THOUSAND
DOLLARS IN INCOME.
UNDER THE OLD LAW THE WE GET FOR
PERSONAL EXEMPTIONS YA ONE FOR
EACH ADULT AND THEN ONE FOR EACH
KID.
SO THAT WOULD REDUCE THEIR
INCOME BY SIXTEEN POINT TWO K..
THOUSAND THIS SIXTEEN THOUSAND
TWO HUNDRED.
THEY WERE ASSUMING THEY'RE NOT
ITEMIZING THEY WOULD ALSO TAKE
THE STANDARD DEDUCTION WHICH FOR
A JOINT RETURN UNDER THE OLD LAW
WAS TWELVE THOUSAND SEVEN
HUNDRED.
TO PUT THOSE TOGETHER TAXABLE
INCOME GOES FROM SEVENTY FIVE
DOWN TO FORTY SIX ONE.
NOTING THE NEW LAW THE PERSONAL
EXEMPTIONS ARE GONE BUT THE
STANDARD DEDUCTIONS A LOT
BIGGER.
SO TAXABLE INCOME FALLS TO FIFTY
ONE THOUSAND OKAY
SO TAXABLE INCOME HAS GONE UP
UNDER THE NEW LAW BUT. REMEMBER
THE RATES ARE ALSO GENERALLY A
LITTLE BIT LOWER ACROSS THE
BOARD.
SO EVEN WITH THE HIGHER TAXABLE
INCOME.
THEY END UP WITH A LOWER BASED
TAX BEFORE THEY CLAIM THEIR
CREDITS AND IT DROPS A LITTLE
OVER TWO HUNDRED DOLLARS.
NOW REMEMBER THOUGH.
THE CHILD CREDITS HAVE DOUBLED
FROM A THOUSAND DOLLARS A KID TO
TWO THOUSAND DOLLARS A KID.
SO STEM CLAIMING TWO THOUSAND
CHILD CREDITS THEY CAN NOW CLAIM
FOUR THOUSAND.
SO OVERALL THEIR TAX THEIR
FEDERAL INCOME TAX BILL. DROPS
FROM A LITTLE UNDER FOUR
THOUSAND TO ABOUT.
.
SEVENTEEN HUNDRED IN SHADE YOUR
A CHANGE A LITTLE OVER TWO
THOUSAND DOLLARS.
NOW ARM.
OBVIOUSLY FOR OTHER HOUSEHOLDS A
CHANGE OF THE DIFFERENT
DEPENDING ON THEIR INCOME HOW
MANY.
DID DEPENDENCE THEY HAVE AND
WHETHER THEY ITEMIZE OR DON'T
ITEMIZE.
SO HE FLIPPED A PAGE FIVE.
IT'LL SHOW SOME PROVISIONS THAT
APPLY ONLY TO ITEMIZE IS BUT NOT
TO PEOPLE WHO DON'T ITEMIZE.
.
AS YOU KNOW THE CHAIR MENTIONED
EARLIER THIS STATE AND LOCAL TAX
DEDUCTION HAS BEEN PARED BACK.
UNDER THE OLD LAW.
YOU CAN DEDUCT YOUR PROPERTY TAX
IT EITHER YOUR INCOME TAX YOUR
SALES TAX WHICHEVER ONES HIGHER
IN CALIFORNIA ALMOST EVERYONE
WHO TOOK THIS DEDUCTION DEDUCTED
THEIR INCOME TAXES OPPOSED THEIR
SALES TAX.
ANYWAY.
THAT HAS THAT SET UP HIS NOT
CHANGE WHICH CHANGED IS THAT.
UNDER THE OLD LAW YOU CAN DEDUCT
AS MUCH AS YOU KNOW.
THE TAXES YOU OWED UNDER THE NEW
LAW YOU CANNOT DEDUCT MORE THAN
TEN THOUSAND DOLLARS.
AND SO.
THAT'S GOING TO BUY IT A FAIR
NUMBER OF PEOPLE IN CALIFORNIA.
OKAY ALSO IN MADE SOME CHANGES
TO THE MORTGAGE INTEREST
DEDUCTION UNDER THE OLD LAW. IT
WAS LIMITED TO MORTGAGE DEBT
UNDER A MILLION DOLLARS SO WHAT
THAT MEANS IS IF YOU'RE MORTGAGE
WAS OVER A MILLION. IT'S REDUCE
PROPORTIONATELY BY YOU KNOW THE
MOUTH WAS OVER FOR EXAMPLE IF
YOU HAD A TWO MILLION DOLLAR
MORTGAGE YOU CAN DEDUCT HALF OF
YOUR MORTGAGE INTEREST.
KATE THAT BASIC SET UP IS THE
SAME EXCEPT THAT THE LIMIT NOW
DROPS FROM A MILLION TO SEVEN
HUNDRED FIFTY THOUSAND.
SO IF YOU'RE MORTGAGE IS A
MILLION AND A HALF THEN YOU CAN
TO DOT HACK YOUR MORTGAGE
INTEREST.
ANOTHER CHANGE THAT WAS MADE IS
THAT YOU CAN NOT WE CAN NO
LONGER.
IN DOT THE MORTGAGE INTEREST ON
A HOME EQUITY LOAN.
OKAY.
SO IF YOU FLIP NOW TO PAGE SIX
THERE ARE SOME OTHER.
PROVISIONS THAT.
EFFECT.
INDIVIDUAL INCOME TAX PAYERS
MOST OF THEM DON'T APPLY TO
EVERYONE BUT SOME OF THEM DO.
THE CHANGE OF THRESHOLD THAT
THEY USED TO CALCULATE WHETHER
YOU NEED.
PART OF THE CHANGE A THRESHOLD
OF INCOME.
FOR PEOPLE THE DETERMINE WHETHER
THEY HAVE TO USE THE ALTAR.
HOW THROUGH THE MINIMUM TAX OR
NOT?
BECAUSE IF YOUR INCOME WAS BELOW
A CERTAIN LEVEL YOU DIDN'T HAVE
TO DO THE CALCULATION.
WHAT THEY DID IS THEY TOOK THAT
LEVEL? IN THEY RAISED IT SO
FEWER PEOPLE ARE GOING TO GET
HIT BY THE ALTERNATIVE MINIMUM
TAX.
ALSO.
.
THERE ISN'T A NEW TWENTY PERCENT
DEDUCTION FOR SOME TYPES OF
BUSINESS INCOME THAT SOME.
NOT CORPORATE INCOME BUT
BUSINESS INCOME THAT'S PAID
UNDER THE INDIVIDUAL INCOME TAX
WHICH IS TYPICALLY THINGS LIKE
PARTNERSHIP FOR PROPRIETORS
INCOME. THE WAY THEY SET IT UP
IS THEY WANTED TO APPLY MOSTLY
TO PARTNERSHIPS AS OPPOSED TO
INDEPENDENT CONTRACTORS ARE SOLE
PROPRIETORS. BUT THE WAY THEY A
CALCULATE THE OF. THAT NEW
DEDUCTION THERE'S.
A FAIR AMOUNT OF GRAY AREA AND
SO IT'S NOT ENTIRELY CLEAR HOW
THAT'S GONNA SHAKE OUT.
ANYWAY.
ANOTHER THING THE BILL DOES IS
REALLY REPEALS THE MANDATE THAT
INDIVIDUALS BUY HEALTH INSURANCE
NOW THIS IS ONE OF THE FEW
THINGS THAT IS NOT IN EFFECT YET
THAT DOESN'T DOESN'T GOING TO
PLACE UNTIL. TWO THOUSAND
NINETEEN.
SO WE PROBABLY WON'T SEE ANY.
.
EFFECTS FROM THAT THIS YEAR BUT
WE'LL SEE WHAT HAPPENS NEXT
YEAR.
ANOTHER THING THE ALSO THAT'S
PERMANENT THAT DOESN'T GO AWAY
AFTER TWO THOUSAND TWENTY FIVE.
ANOTHER THING THEY DID IS CHANGE
THE WAY THEY CALCULATE THE
INFLATION ADJUSTMENT FOR
BRACKETS IN FOR A THE STANDARD
DEDUCTION AND THAT SORT OF
THING.
WITH THE THEY ONE USES A
DIFFERENT METHOD OF.
DETERMINING THE CONSUMER PRICE
INDEX IT TAKES INTO ACCOUNT
CHANGES IN A CONSUMER BEHAVIOR.
THE UPSHOT OF THAT IS THAT. IN
MOST YEARS YOU WOULD EXPECT A
SLIGHTLY LOWER INFLATION
ADJUSTMENT THAN WE'D WE'VE HAD
IN THE PAST.
UNDER THE OLD LAW.
INVENT THAT'S ALSO A PERMANENT
CHANGE IT DOESN'T GO BACK TO THE
OLD LAW AFTER TWO THOUSAND
TWENTY FIVE SO. THIS CHANGE
ISN'T EXPECTED TO HAVE A BIG
IMPACT RIGHT AWAY BUT OVER TIME
MIDDLE ACCUMULATED HAVE A
SLIGHTLY LOWER INFLATION
ADJUSTMENT EVERY YEAR. AND SO BY
TWO THOUSAND TWENTY SEVEN THAT'S
ACTUALLY A. FAIRLY SIGNIFICANT
PIECE.
FINALLY ONE THING THEY DID WAS
INCREASE THE EXEMPTIONS FOR.
.
THE ESTATE TAX IN OTHER WORDS
THEY WERE.
THE INCREASED THE THRESHOLD OF
THE SIZE OF IN THE STATE THE
TAXES DUE ON IN SO. THE RESULT
OF THAT IS THAT.
FEWER PEOPLE TO HAVE TO PAY THE
ESTATE TAX IN THE WERE A COLLECT
LESS MONEY FROM.
FINALLY THE LAST SLIDE SHOWS
SOME OF THE BUSINESS PROVISIONS.
.
THERE REDUCING THE CORPORATE
RATE FROM THIRTY FIVE PERCENT TO
TWENTY ONE PERCENT. AND THEY'RE
ALSO.
.
PUTTING IF A TEMPORARY PROVISION
FOR FIVE YEARS THAT ALLOWS
PEOPLE TO.
.
BASICALLY DEDUCT ALL THE COST OF
NEW EQUIPMENT THAT ALLOWS
CORPORATIONS I SAY TO. ALL THE
COSTS NEW EQUIPMENT THEY BY IN
THE FIRST YEAR INSTEAD OF USING
A DEPRECIATION SCHEDULE LIKE
THAT TO DO UNDER THE CURRENT
LAW.
OKAY THEY PAY FOR SOME OF THIS
BY LIMITING THE DEDUCTION THAT.
.
CORPORATIONS CAN TAKE ON
INTEREST THEY PAY. IN SOME
OTHER.
.
DEDUCTIONS RELATING TO NET
OPERATING LOSSES AND SOME OTHER
THINGS THAT RECRUITS A LOT OF
THE REVENUE.
THAT THEY'RE GOING TO LOSE FROM
REDUCING THE RATE IN ALLOWING
THIS EXPENSING BUT IT DOESN'T
RECOUP AT ALL.
ANOTHER THING THEY DO IS THEM.
DEALS WITH THE TREATMENT OF THE
FOUR FILL THE OVERSEAS
AFFILIATES OF THE U. S.
CORPORATIONS.
THE WAY IT WAS DONE UNDER THE
OLD LAW.
ALL THE INCOME OF THE
CORPORATION WHETHER THEY EARN IT
IN THE U. S. OR ABROAD WAS TAXED
IN SORT OF TOTALED UP BUT THE
INCOME OF THEIR OVERSEAS
AFFILIATES WAS NOT TAXED UNTIL
IT'S PULLED BACK INTO THE U. S..
LIFE WITH THE DOING NOW IS A
SORT OF GETTING RID OF THAT IN.
TREATING THE U. S. AFFILIATE
COMPLETELY SEPARATELY FOR THE
FOREIGN AFFILIATE BUT.
BECAUSE A LOT OF THESE
CORPORATIONS HAD A LOT OF MONEY
SORT OF.
.
STORED UP IN THEIR OVERSEAS
AFFILIATES THAT HADN'T BEEN
TAXED YET WITH THE DOING IS
IMPOSING A ONE TIME TAX ON THAT
AT A MUCH LOWER RATE. THAN THE A
CURRENT CORPORATE RATE.
BUT AFTER THAT IT JUST SORT OF
GOES AWAY AND IT BECOMES SOME.
JUST INCOME OF THEIR FOREIGN
AFFILIATES WHICH IS IN.
WE JUST TREAT AS A COMPLETELY
SEPARATE ENTITY NOW FROM THEIR A
U. S. AFFILIATE.
AND THAT'S THE LAST SLIDE I
HAVE.
I'M DANIEL HUMMEL FROM THE
UNIVERSITY OF CHICAGO ALL SPEAK
BRIEFLY ABOUT THE POLICY
CONSIDERATIONS SURROUNDING THE
NEW TEN THOUSAND DOLLAR CAP ON
THE SAME LOCAL TAX DEDUCTION.
AYE AND STRATEGIES THAT OTHER
STATES ARE PURSUING TO PRODUCER
OF THE ABILITY OF THEIR
RESIDENTS TO PAY FOR STATE AND
LOCAL PUBLIC GOODS AND SERVICES
WITH FEDERALLY DEDUCTIBLE
DOLLARS. ON AND THEN A PROFESSOR
SANSKI WILL SPEAK IN MORE DETAIL
ABOUT CHAIR OF A CREDIT.
OPPORTUNITIES HERE IN
CALIFORNIA AND OTHER POSSIBLE
CHANGES AT TO THE CALIFORNIA
CODE SO I AM FROM ILLINOIS AND
SHE PROFESSED.
A. M.. RETRIEVE IGNORANCE ABOUT
AYE CALIFORNIA SPECIFIC ISSUES.
BROUGHT UP BY. MUCH OF WHAT
CALIFORNIA'S DEALING WITH RIGHT
NOW OTHER STATES OTHER STATES
THAT SOMEONE CALLED HIGH TAX
STATES OTHER STATES THAT INVEST
HEAVILY BY IN. PUBLIC EDUCATION
AND PUBLICLY PROVIDED HEALTH
CARE A ARE ARE GRAPPLING WITH
I CHIU FIRST ON SLIDE FOR AND I
THINK THIS IS I AGREE A GREAT
PLACE TO START. YOU MIGHT SAY
WHY ARE WE WORRIED ABOUT THIS
AYE THIS FAMILY IS EXPERIENCING
A AT TWO THOUSAND DOLLAR
DECREASE IN THEIR NET TAX
LIABILITY. AND MOST TELEPHONES
WILL SEE THEIR TAX BILLS GO DOWN
WHEN THEY FILE IN APRIL OF
TWENTY NINETEEN.
SO WHAT'S THE PROBLEM.
WELL. THERE ARE TWO PROBLEMS
ONE IS ON WHERE'S THAT IF TWO
THOUSAND DOLLARS ARE BY NO
LONGER GOING FROM THIS FAMILY TO
THE FEDERAL GOVERNMENT.
OUT WILL WHAT'S THE FEDERAL
GOVERNMENT BUT I DO NOW IT'S GOT
LESS MONEY IT'S IT'S GOT TWO
OPTIONS ONE IT COULD RAISE TAXES
IN THE FUTURE. BY IN WHICH CASE
BUT THIS IS A TWO THOUSAND
DOLLAR GAIN NOW FOR THE FAMILY
BUT I THERE ARE THE PARENTS OR
THEIR KIDS DOWN THE ROAD ARE
GOING TO PAY MORE SO IF THEY
THINK THEY'RE BETTER OFF. BY
THEN THEY'RE LIVING UNDER AN
ILLUSION.
ANOTHER POSSIBILITY IS THE
FEDERAL GOVERNMENT WILL I THINK
WE'LL JUST SPEND LESS RIGHT WE
WILL SEE FEDERAL LEVEL PUBLIC
SECTOR DISINVESTMENT.
I AND IF THAT'S THE CASE WILL
SOMEONE ELSE TO PICK UP THE
SLACK ON AND HISTORICALLY THAT
HAS FALLEN TO STATE AND LOCAL
GOVERNMENTS.
AND ADDITIONALLY AT THE AT THE
HIGH END IN CALIFORNIA WE
ACTUALLY SEE PEOPLE'S MARGINAL
RATES GOING UP.
TOP STATUTORY RATE WENT DOWN
FROM THIRTY NINE POINT SIX
PERCENT TO THIRTY SEVEN PERCENT
BUT IF YOU'RE A HIGH BRACKET
TAXPAYER IN CALIFORNIA.
PREVIOUSLY FOR ANOTHER DOLLAR
YOU AREN'T YOU WOULD PAY OFF
FORTY EIGHT POINT EIGHT CENTS IN
CALIFORNIA INCOME AND FEDERAL
INCOME TAXES.
THIRTY NINE POINT SIX PERCENT
PLUS ONE POINT TWO PERCENT FOR
SOMETHING CALLED.
THAT THE PEACE PROVISION BOMB
WHICH IS NOW GONE AWAY ARM AND
THEN YOU WOULD PAY AN ADDITIONAL
THIRTEEN POINT THREE PERCENT AT
THE TOP RATED CALIFORNIA. BOMB
BUT THEN YOU WOULD BE ABLE TO
DEDUCT THAT AGAINST YOUR FEDERAL
TAXES SO IT WOULD BE AS IF
YOU'RE PAYING A PERCENT
CALIFORNIA TAX RATE AFTER YOU
FACTOR IN THE FEDERAL DEDUCTIONS
THAT TOTALS UP TO FORTY EIGHT
POINT EIGHT.
NOW YOU'RE YOU'RE TAUGHT FEDERAL
RATE IS THIRTY SEVEN
BUT YOU'RE STE PAIN THIRTEEN
POINT THREE TO CALIFORNIA AND
YOU'RE NOT DEDUCTING THAT.
BUT SO YOUR TOP MARGINAL RATE IS
GOING FROM FORTY EIGHT POINT
EIGHT PERCENT TO FIFTY POINT
THREE PERCENT TO ACTUALLY DO YOU
SEE FOR SOME PEOPLE IN
CALIFORNIA AN INCREASE AYE IN
MARGINAL RATES IN THE MARGINAL
RATES THAT THEY SHOULD THINK
ABOUT IF THEY'RE THINKING ABOUT
WHAT HOW MUCH. IS THE GOVERNMENT
MANY TAKE FOR MY NEXT
I NEXT DOLLAR.
AND FOR A LARGE PORTION OF
CALIFORNIANS WE SEE AN INCREASE
IN THE AFTER TAX PRICE OF STATE
AND LOCAL GOVERNMENT SERVICES
WHAT THAT MEANS IS IF I WERE A
TOP BRACKET TAXPAYER AND I WERE
THINKING ABOUT HOW MUCH WILL AN
EXTRA DOLLAR. OF CALIFORNIA
SPENDING COST ME WELL I WOULD
PAN EXTRA DOLLAR IN STATE TAXES
TO CALIFORNIA AND THEN I WOULD
BE ABLE TO CLAIM A THIRTY NINE
POINT SIX PERCENT DEDUCTION CALL
IT FORTY PERCENT. SO ESSENTIALLY
I AM PAYING SIXTY SET SIXTY
POINT FOUR CENTS FOR EXTRA
DOLLAR OF STATE LOCAL PUBLIC
GOODS AND SERVICES.
ONCE I GET OVER THE TEN THOUSAND
DOLLAR CAP NOW I'M PAYING A
DOLLAR FOR AN EXTRA DOLLAR OF
STATE AND LOCAL. PUBLIC GOODS
AND SERVICES AND THIS AFFECTS
NOT ONLY PEOPLE WHO ARE HIT BY
THE TEN THOUSAND DOLLAR CAP. BUT
A HUGE PORTION THE POPULATION IS
GOING TO SHIFT FROM ITEMIZING TO
CLAIMING THE STANDARD DEDUCTIONS
SO RIGHT NOW ABOUT A THIRD OF
INDIVIDUALS ITEMIZE ON THEIR TAX
RETURNS.
I BUT WITH THE STANDARD
DEDUCTION GOING UP TO TWENTY
FOUR THOUSAND DOLLARS FOR A
MARRIED COUPLE.
ACTUALLY DOT THAT DOESN'T MAKE
THE MARRIED COUPLE WITH TWO KIDS
ARE BETTER OFF NOT BECAUSE
THEY'RE LOSING PERSONAL
EXEMPTIONS AND DEDUCTIONS BUT IT
MEANS THAT THEY'RE ONLY GOING TO
ITEMIZE IF THEY HAVE MORE THAN
TWENTY FOUR THOUSAND DOLLARS OF
ITEMIZED DEDUCTION.
AND FEWER THAN THE OTHER
APPROXIMATELY ONE TENTH OF THE
POPULATION WILL ITEMIZE UNDER
THE NEW REGIME SO WE'RE GOING
FROM A THIRD TO ONE TASK SO FOR
THOSE PEOPLE WHO ARE NO LONGER
ITEMIZING. FOR THEM THE AFTER
TAX PRICE OF STATE LOCAL
GOVERNMENT.
GOVERNMENT SERVICES IS GOING UP
A LOT BUT AND THIS IS AT A TIME
WHEN WE ARE ASKING STATE AND
LOCAL GOVERNMENTS TO DO MORE
BECAUSE A FEDERAL LEVEL PUBLIC
SECTOR. AYE DISINVESTMENT.
SO THERE'S I THINK GOOD
ECONOMETRIC RESEARCH ON HOW
STATE IN STATES AND LOCALITIES
RESPOND TO ARE THE INCENTIVES
CREATED BY FEDERAL TAX LAW AND I
THINK THEY DO RESPOND THOUGH YOU
CAN GET A BUNCH OF ECONOMISTS IN
THE ROOM. AND BY.
YOU WOULD GET A WHOLE BUNCH OF
DIFFERENT STORIES NAM ON THAT.
ONE INTUITIVELY WELL WHEN THE
PRICE OF A GOOD OR SERVICE GOES
UP.
PEOPLE BY LAST.
AND ESSENTIALLY WHAT THIS IS
DOING IS FOR A LARGE PORTION OF
CALIFORNIA'S POPULATION
RAISING THE PRICE A PUBLIC
SECTOR PROVIDED GOODS AND
SERVICES.
I.
SO IS THIS A PROBLEM OUT WHY
SHOULD WE CARE ABOUT IT WELL
MORE THAN HALF OF STATE AND
LOCAL GOVERNMENT SPENDING HERE
IN CALIFORNIA AND IN OTHER
STATES GOES TOWARD HUMAN CAPITAL
INVESTMENT.
EDUCATION ADVOCATED TWELVE LEVEL
AND AT THE HIGHER EDUCATION
LEVEL. AND HEALTH CARE.
WE HAVE HERE AS I JUST AND
TALKED ABOUT A SHIFT TOWARD
EXPENSING WHICH IS IN IMMEDIATE
RIGHT OFF FOR NEW INVESTMENT IN
PHYSICAL CAPITAL.
HOW IS IT THAT WE'RE MOVING
TOWARD AN IMMEDIATE RIGHT OFF
FOR NEW INVESTMENT IN PHYSICAL
CAPITAL BUT DENYING A DEDUCTION
FOR CALIFORNIA TAXPAYERS WHO ARE
EFFECTIVELY INVESTING IN HUMAN
CAPITAL? THROUGH STATES AND
LOCALITIES.
A MOREOVER NOT CONGRESS DECIDED
THAT IT ONE TO PRESERVE THE
ABILITY OF PEOPLE TO PAY FOR
HEALTHCARE
WITH FEDERALLY DEDUCTIBLE
DOLLARS BY KEEPING THE EXCLUSION
FOR EMPLOYER PROVIDED HEALTH
INSURANCE.
I AND BY ACTUALLY EXPANDING THE
MEDICAL EXPENSE DEDUCTION.
WELL IN CALIFORNIA AND OTHER
STATES THAT INVEST ROBUSTLY IN
THEIR PUBLIC HOSPITAL SYSTEMS.
PART OF WHAT WE PAY FOR
HEALTHCARE IS TO STAY LEVEL TAX.
BOB WEIR WE RIPPING AWAY THE
ABILITY OF PEOPLE TO PAY FOR
HEALTH CARE WITH FEDERALLY
DEDUCTIBLE DOLLARS.
AND MOREOVER OUT ONE OF THE
GOALS OF THAT TAX REFORM WAS CHU
I CONTINUE TO PROMOTE
HOMEOWNERSHIP THAT WAS WHY THE
MORTGAGE INTEREST DEDUCTION
DIDN'T GO AWAY AND IT THAT THE
ROLLBACK OF THE MORTGAGE
INTEREST DEDUCTION AFFECTS A
RELATIVELY SMALL NUMBER OF
PEOPLE EVEN IN CALIFORNIA. RIGHT
I MEAN A CALIFORNIA HAS MORE
PEOPLE THAN ANY OTHER STATE WITH
A MORTGAGE LOANS OVER SEVEN
HUNDRED FIFTY THOUSAND DOLLARS
OR STILL TALKING ABOUT A PRETTY
HIGH INCOME SET. BUT FOR A LOT
OF PEOPLE IT'S ACTUALLY THE
DEDUCTION FOR STATE LOCAL
PROPERTY TAXES THAT IS THE ONE
FEDERAL TAX INCENTIVE THAT THEY
GET FOR HOMEOWNERSHIP.
I THEY GET IF THEY OWN THEIR OWN
HOME NOT IF THEY RENT AND AFTER
THEY PAY DOWN THEIR MORTGAGE
LOAN THEY'RE NOT GETTING THE
MORTGAGE INTEREST DEDUCTION
ANYMORE SO THAT INCENTIVE FOR A
HOMEOWNERSHIP. IS GOING AWAY.
OKAY SO HOW DO WE PRESERVE THE
ABILITY OF INDIVIDUALS TO PAY
FOR PUBLIC GOODS AND SERVICES
PROVIDED BY STATE LOCAL
GOVERNMENTS WITH FEDERALLY
DEDUCTIBLE DOLLARS IF CALIFORNIA
THINK THAT THAT'S ARE A
DESIRABLE GOAL. THEIR THREE
APPROACHES THAT STATES HAVE BEEN
TAKING.
ONE IS ARE A PAYROLL TAX SHIFT.
BUT IN NEW YORK HAS BEEN THE
LEADER ON THE S.
AND THE IDEA IS PREVIOUSLY LET'S
SAY THAT YOU HAD A FIVE PERCENT
STATE TAX RATE.
STATE INCOME TAX RATE.
YOU ARE A HUNDRED DOLLARS FROM
YOUR EMPLOYER.
FIVE DOLLARS GOES TO THE STATE
NINETY FIVE DOLLARS GOES TO YOU.
IF YOU CAN CLAIM THE SAME LOCAL
TAX DEDUCTION YOUR FEDERAL
TAXABLE INCOME IS NINETY FIVE
DOLLARS.
NOW WE'RE TAKING THE ABILITY OF
A LOT OF PEOPLE.
TO DEDUCT
WELL WHY NOT JUST SAY TO MY
EMPLOYER WHILE YOU PAY ME NINETY
FIVE.
YOU PAY FIVE TO THE STATE.
MY GROSS INCOME FOR FEDERAL TAX
PURPOSES IS NINETY FIVE.
I'M NO WORSE OFF BEFORE ACTUALLY
I'M BETTER OFF BEFORE I THAN
BEFORE ON BECAUSE NOW WE'RE
BETTER OFF THAN I WOULD BE UNDER
THE NEW TRUMP TAX PLAN BECAUSE
THE FEDERAL GOVERNMENT IS TAXING
ME ON NINETY FIVE RATHER THAN
HUNT.
AND MY EMPLOYER IS JUST AS HAPPY
BECAUSE THEY KNEW TAX LAW
PRESERVES THE ABILITY OF
BUSINESSES TO DEDUCT STAY MOBILE
TAX.
SO THIS WORKS THIS IS REALLY
EASY TO IMPLEMENT IN A FLAT TAX
STATE LIKE ILLINOIS. BUT IT IS A
LITTLE BIT MORE COMPLICATED IN
PROGRESSIVE TAX STATES LIKE NEW
YORK IN CALIFORNIA NEW YORK IS
ACTUALLY IN LISTED A WHOLE BUNCH
OF ACADEMICS BY IN DEVELOPING A
CREDIT APPROACH.
I THAT WOULD ALLOW IT WOULD KEEP
THE INCOME TAX IN PLACE
WE WOULD IMPOSE A PAYROLL TAX ON
WAGES INDIVIDUALS WITH THEN GET
TO CLAIM A CREDIT AGAINST SATAN
A STATE INCOME TAXES FOR THE
PAYROLL TAXES PAID BY THE
EMPLOYER. AND NEW YORK IS FIGURE
OUT A FORMULA AND I'M HAPPY TO
TALK ABOUT THE DETAILS OF IT
THAT.
CREATES A PROGRESSIVE CREDIT
THAT BEN PRESERVES THE
PROGRESSIVITY OF THE OVERALL TAX
SYSTEM.
KNOW THIS ONLY AFFECTS REGION
CALM BUT IT ACTUALLY EXPANDS THE
STATE AND LOCAL TAX DEDUCTION IN
SOME RESPECTS BEYOND WHERE IT
WAS PRE TWENTY SEVENTEEN BECAUSE
REMEMBER PRE SEVEN A PRE TWENTY
OR PRE TWENTY EIGHTEEN. THIRTY
THE POPULATIONS ITEMIZING THAT
MEANS THAT TWO THIRDS OF PEOPLE
WEREN'T CLAIM THAT'S A LOCAL TAX
DEDUCTION
THEY WERE CLAIMING THE STANDARD
DEDUCTION.
THIS WOULD I CHANGE THIS WOULD
ALLOW EVERYONE WHO GET WARRANTS
WAGES TO PAY WITH FEDERALLY
DEDUCTIBLE DOLLARS FOR STATE AND
LOCAL GOVERNMENT SERVICES.
SO YOU'RE INCREASE YOUR YOUR
FEDERAL GROSS INCOME GOES FROM A
HUNDRED TO NINETY FIVE
REGARDLESS OF WHETHER YOU TAKE
THE STANDARD DEDUCTION OR YOU
ITEMIZE THE CHALLENGING
CALIFORNIA'S I UNDERSTAND THIS
WOULD LIKELY REQUIRE A TWO
THIRDS VOTE.
OF UP THE LEGISLATURE THAT SAID
IT'S A WIN WIN.
FOR EVERYONE IN CALIFORNIA IT'S
A WIN FOR US FOR EMPLOYEES WHOSE
WAGES ARE WHOSE AFTER TAX WAGES
WOULD GO UP RIGHT AND BECAUSE
THEY THEY THEY THEY ALL OF THEM
COULD NOW CLAIM A FEDERAL TAX
DEDUCTION BUT VERY FEW OF THEM.
WILL CLAIM UNDER THE NEW STATUS
QUO AND FROM EMPLOYERS IS
DESIRABLE BECAUSE IF EMPLOYERS
ARE ENOUGH
APPLE IS TRYING TO LURE AN
ENGINEER AWAY FROM AYE DALLIN
TAXES WELL THE FACT THAT THE
SALT DEDUCTION HAS GONE AWAY OR
GONE AWAY FOR MOST PEOPLE MAKES
CALIFORNIA LESS ATTRACTIVE
BUSINESS CLIMATE. IF CALIFORNIA
CAN EFFECTIVELY BRING BACK THIS
A LOCAL TAX DEDUCTION FOR
EMPLOYEES IN CALIFORNIA WELL
THAT SEEMS LIKE SOMETHING THAT
EMPLOYERS SHOULD WATCH YES NOW
THEY'RE TECHNICALLY PAYING
ATTACKS BEFORE THEY WORK.
OUR BUT I AT THE END OF THE DAY
EVERYONE IN CALIFORNIA.
WOULD WOULD SEEM TO BE BETTER
OFF.
THE SECOND APPROACH AND. IS TO
IMPOSE A TAX ON PASS THROUGHS ON
PARTNERSHIPS ASK OPERATIONS AYE
AND SOLE PROPRIETORSHIPS
THAT WOULD BE PAID OUT THE
PARTNERSHIP LEVEL OR AT THE SOLE
PROPRIETORSHIP LEVEL OR AT THE
ESCORT LEVEL. AND IT WOULD BE A
TAX ON THE ENTITIES AND CON AND
THEN THE PARTNER THE SOLE
PROPRIETOR WOULD BE ABLE TO
CLAIM.
A CREDIT ON BY HIS OR HER OWN
STATE INCOME TAXES UP FOR WHAT
THE SOLE PROPRIETORSHIP HAS PAID
NEW YORK ACTUALLY NEW YORK CITY
ALREADY DOES THIS AND SO IF YOU
WERE AN UBER DRIVER IN NEW YORK
CITY. YOU ARE A SOLE
PROPRIETORSHIP YOUR SOLE
PROPRIETORSHIP PAYS A TAX TO NEW
YORK YOU THEN CLAIM A CREDIT FOR
IT. ON YOUR NEW YORK CITY INCOME
TAXES
I AND THE FEDERAL GOVERNMENT
CONSIDERS THAT TO BE A TAX PAID
BY THE BUSINESS RATHER THAN A
TAX PAID BY YOU SO EVEN IF AT
THE END OF THE DAY YOU CLAIM THE
STANDARD DEDUCTION.
YOUR THIS STILL ALLOWS YOU TO
PAY IN NEW YORK LOCAL INCOME
TAXES WITH FEDERALLY DEDUCTIBLE
DOLLARS
IT WOULD ACTUALLY BE PRETTY EASY
BY IT. TO IMPLEMENT THIS AT THE
STATE LOCAL LEVEL AND THE
PROBLEM IN CALIFORNIA AGAIN IS
THAT THE THE TWO THIRDS.
REQUIREMENT BUT I. CONNECTICUT
IS MOVING FULL SPEED AHEAD ON
THIS.
AND.
AT NEW JERSEY AND NEW YORK ARE
CONSIDERING THIS TO THE THIRD
APPROACH ARE ON WHICH THERE HAS
BEEN CONSIDERABLE PROGRESS IN
CALIFORNIA I THINK I THOUGHT
LEADERS IN THE ROOM.
ON THIS I IS THE CHARITABLE
CREDIT APPROACH WHICH.
MY COLLEAGUE PROFESSOR CHANCE
IT WILL I TALK ABOUT MORE
DETAIL.
GREAT ON.
THANK YOU AND IT'S A PLEASURE TO
BE HERE SO I'M.
TODAY ARE KIND OF TAG TEAM IT'S
WISE WANT TO ADD JUST A FEW
THINGS TO. ARM.
TO WHAT HE TO HIS REMARKS THAT I
WILL PIVOT TO THE CHARITABLE
DEDUCTION SO FIRST I JUST WANTED
TO. MAKE BRING YOUR ATTENTION TO
THE FTP IS PRELIMINARY REPORT ON
THE EFFECT OF THE TAX CUT JOBS
ACT WHICH HAD SOME NUMBERS. IN
TERMS OF ITEMIZED OR SO STILL BE
SOMETHING ON THE ORDER OF TWO
MILLION PEOPLE ALL OF TAXPAYERS
WHO WILL BE AFFECTED BY THE SOFT
CAP QUITE WHO WOULD HAVE BEEN
ABLE TO TALK MORE THAN TEN
THOUSAND DOLLARS BUT NOW WILL
NOT.
OF THOSE UNDER A MILLION.
WELL ACTUALLY END UP PAYING MORE
THAN A HUNDRED DOLLARS MORE SO
THERE IS ABOUT PEOPLE WHO REALLY
BE HIT BY THE CAP.
TWO MILLION DOLLARS WILL BE HIT
TWO MILLION WHO BE HAD SOMEONE
NOW IN CALIFORNIA BECAUSE OF
PROP FIFTY FIVE AND BECAUSE OF
ALL THE TO ALL UP ALTHOUGH I'M
LOCAL ELECTIONS OUR CAR TWO
THIRDS VOTE. THE QUESTION OF TAX
PRICE ON IT AND TERMS OF THE.
FEELING THAT PEOPLE HAVE AS TO
HOW MUCH THEIR ON TAXES ARE
GOING TO COST THAT IS
SIGNIFICANT RIGHT AWAY RIGHT SO
THESE PLEASE VOTERS ARE GOING TO
BE ASKED.
TO INCREASE INCREASED LOCAL
TAXES RIGHT AND WHAT THEIR NEXT
ON BOND LECTURES RIGHT WITH AN
EX PARCEL TAX ELECTION HAD SO.
PROP FIFTY FIVE DOESN'T EXPIRE
UNTIL TWO THOUSAND THIRTY BUT
THEN THE WILL BE HERE
THEORETICALLY REQUESTED
INCREASED THOSE TAXES IN THOSE
TAXPAYERS WILL SUDDENLY BE
HAVING A FORTY PERCENT HIGHER
TAX PRICE. IN THE MEDIUM TERM
AND SHORT TERM THERE'S GOING TO
BE.
HIS PARCEL TAX AND BOND
ELECTIONS WHERE I'M AT THIS TAX
PRICE IS GOING TO MATTER.
PUMPHOUSE WHAT THE STATE COUPLE
OF THINGS ABOUT THE PAYROLL AN
ENTITY LEVEL TAXES THE CAN
BEFORE WE GO TO THE CHARITABLE
DEDUCTION SO.
THE PAYROLL TAX ID I GUESS I
JUST WANT TO ADD ONE OTHER
ASPECT IS THAT. MEMBER
CONTINUITY COLLECTS A PAYROLL
TAX IN THE CUT CONTEXT WAS
UNEMPLOYMENT SHARON'S AHMED SO
IT IS POSSIBLE TO STICK TO TO P.
BACK ON THAT TOOK HIM TO THE
ADMISSIBILITY. OF THE TAX AND
PAYROLL TAXES.
.
YOU KNOW HOW PLUSES AND MINUSES
ONE OF THEIR.
PLUSES IS THAT THEY'RE
RELATIVELY SIMPLE WAY OF FUNDING
I'M BROAD BASED SOCIAL SERVICES
RIGHT THAT'S HOW WE USE IT FOR
HER POINT
SHERATON STILL SECURITY.
AND SO IT'S SOMETHING TO THINK
ABOUT ON IN TERMS OF WHAT OTHER
THINGS.
COULD WE DO IF WE ARE GOING TO.
USE THE.
ON WELCOME SPUR OF THIS TAX PLAN
TO CHANGE CALIFORNIA'S TAX
SYSTEM WHAT CAN WE DO THAT WE
MIGHT WANT TO DO YOU ANYWAY.
SO FOR INSTANCE I'M IN THE
HEALTH CARE CONTEXT THERE ARE A
LOT OF PEOPLE WHO DON'T GET THE
TAX CREDITS RIGHT AND DON'T GET
EMPLOYER PROVIDED HEALTH CARE TO
PEOPLE IN THE MIDDLE. OF
WOULDN'T IT BE NICE TO BE ABLE
TO PROVIDE THEM SOME BENEFITS.
BY IMPOSING I'M OUT UP SOME
PORTION OF THIS PAYROLL TAX
TOWARDS PROVIDING HEALTH CARE
CREDITS I'M TO THOSE PEOPLE IN
THE MIDDLE OF THE AISLE THAT
DON'T KNOW THAT'S JUST A
PROPOSAL BUT THE IDEA IS THAT.
WE SHOULD TRY TO VIEW WHAT I'M
THIS TAX PLAN IS FORCING US TO
DO IS NOT WHAT YOU NEED TO MAKE
THINGS BETTER AND NOT BE POORLY
RESPONSIVE. ANOTHER ON BENEFIT.
THINK ABOUT TERMS OF THE ENTITY
LEVEL TAXATION SORT OF THE NEW
YORK UNINCORPORATED BUSINESS TAX
IS TO REMEMBER THAT THE.
TRUMP TAX PLAN CREATES THIS
TWENTY PERCENT ON DEDUCTION
FIRST I'M QUALIFIED BUSINESS
INCOME.
AT LEAST IN A LOT OF CASES.
IT'S NOT CLEAR THAT THAT'S A
VERY GOOD IDEA.
AND SO IF WE WERE GOING TO
IMPOSE IT.
UNKNOWN CORPORATE BUSINESS TAX
SOME KIND OF I'M A BUSINESS ACT
IT COULD BE AN OPPORTUNITY TO
CLAW BACK ON SOME SOME OF THOSE
BENEFITS.
AND FURTHERMORE THERE'S A LARGER
QUESTION IS AS TO WHY AS IT IS
WE TAX CORPORATIONS.
AND NOT OTHER LARGE BUSINESS
ENTITIES SO AGAIN BEFORE
THINKING OF CHANGING
CALIFORNIA'S TAX SYSTEM IN
RESPONSE TO THIS DE. ALL CHANGES
WHAT ARE THINGS THAT WE MIGHT
HAVE THOUGHT ABOUT TO DO ANYWAY
SO TO THE SAYS THERE ARE ONLY
TAXING CORPORATIONS AND OTHER
LARGE BUSINESSES. THERE WAS
NEVER A GOOD REASON TO DO THAT
OVER GOING TO HAPPEN
UNINCORPORATED BUSINESS TAX
LET'S HAVE OF.
ATTACKS ON LARGE INCORPORATED
BUSINESSES TO PUT THEM ON A
LEVEL PLAYING FIELD CORPORATIONS
AND MAYBE EVEN CLUB BACK ON SOME
OF THE QUALIFIED BUSINESS
INCOME.
PERHAPS.
OKAY SO I WANNA FOCUS A LITTLE
BIT ON THE THIRD I'M OPTION THE
ONE THAT'S GOTTEN FROM THEM OF
THE FARTHEST LEGISLATIVELY HERE
IN CALIFORNIA AND THAT'S USING
CHARITABLE CREDITS. THE.
COME NEW FEDERAL TAX LAW AS WE
NOW KNOW PERHAPS THE STATE LOCAL
TAX DEDUCTION IT DOES NOT CAP
THE CHARITABLE.
THE CHARITABLE DEDUCTION IS ALSO
AN ITEMIZED DEDUCTION AND OF THE
A PLAIN LANGUAGE OF THE INTERNAL
REVENUE CODE SAYS YOU CAN DEDUCT
A CONTRIBUTION TO A STATE LAW
GOVERNMENT.
AND SO THE IDEA IS TO ARM PERMIT
TAXPAYERS TO I'M GIVE TARGETED
CONTRIBUTIONS ON TO STATE AND
LOCAL GOVERNMENTS IN RETURN FOR
AN EIGHTY FIVE PERCENT.
SPENT TWO I'M ROUGHLY
SUMMARIZING THE BILL'S WHO SORT
OF COMING FROM THE SENATE SIDE
S. B. TO
TWENTY SEVEN S. B. FIVE EIGHTY
ONE SO AGAIN.
A TAXPAYER MAKES A CONTRIBUTION
TO.
A STATE OR LOCAL GOVERNMENT.
.
AND GETS AND EIGHTY FIVE PERCENT
CREDIT AND THEN THEY GET TO
DIRECT SOME OF THEIR FUNDS
TOWARDS A PARTICULAR PROGRAM
RIGHT SO THE COMPONENT IS.
EIGHTY FIVE PERCENT CREDIT WHICH
MEANS THAT. THE STATE.
THAT'S MONEY RIGHT THE TAXPAYER
IS GIVING MORE THE TAXPAYER GETS
ADDITIONAL DIRECTION BY DISTANCE
TO SAY WHERE THE MONEY'S OING
TO GO. TO TAXPAYERS BETTER OFF
BECAUSE EVEN AT EIGHTY FIVE
PERCENT CREDIT IF THEY'RE IN THE
THIRTY SEVEN PERCENT TAX BRACKET
THE HIGHEST MARGINAL RATE.
THEY'LL STILL DOING WELL AT THE
FEDERAL LEVEL BECAUSE THERE'D
ADOPTION
GREATER ON THEN THE AMOUNT OF
THE ADDITIONAL DOCTOR PAY TO
CALIFORNIA.
SO THAT'S THE BASIC IDEA AND THE
QUESTION IS.
DOES THAT WORK RIGHT WHAT IS TO
I'M I'M LEGAL STATUS OF THE.
SURE AND SO.
AND WE CAN GO REALLY DEEP IN THE
WEEDS ON THIS BUT THE BASIC IDEA
IS THAT. ARE THE CONCERN IS
THAT.
THE STATE IS BASICALLY GIVING
SOMETHING BACK TO THE.
SO.
.
HOW CAN THAT BE A CHARITABLE
DONATION RIGHT IF THE STATE IS
GIVING YOU EIGHTY FIVE PERCENT
OF THE CREDIT UP TO
STILL THE NATION BACK IT CAN'T
BE ACCOUNTABLE CONTRIBUTION? AND
THE ANSWER IS HOW THE TAX CODE
ANALYZE HIS TAX CUT
SO FOR INSTANCE.
WHEN NEVADA.
GAVE BIG TAX CREDITS TO TESLA
THE FEDERAL GOVERNMENT DIDN'T
SAY OH WELL TESLA YOU AVOIDED
ALL THAT TAX IN THE BONTA. THAT
COUNTS AS INCOME TO YOU WHAT
WE'RE GOING TO TAX YOU ON THE
INCOME YOU AVOID IT RIGHT THAT'S
NOT HOW THE FEDERAL GOVERNMENT
AT THE FEDERAL TAX CODE.
CONCEIVES OF STATE LOCAL TAXES
RIGHT A CONCEIVES OF THESE TAX
INCENTIVES TO HAVE A STATE OF
PALESTINE OVER. DECIDING TO
REDUCE YOUR TAX LIABILITY RIGHT
IT'S NOT CONCEIVED OF AS MONEY
THAT YOU HAD AND THEN DIDN'T PAY
AND SO. THAT RULE IS FAIRLY WELL
ESTABLISHED IN FEDERAL TAX LAW
AND SO.
THERE ARE ABOUT TWO HUNDRED OF
THESE PROGRAMS IN THIRTY STATES
THAT GIVE SUBSTANTIAL CREDITS.
AND THERE ARE ETERNAL IRIS
DOCUMENTS PARTICULAR.
MEMORANDUM WHICH IF COUNSEL'S
OFFICE ARTICULATING THIS
POSITION.
THAT EVEN IF A CREDIT IS ONE
HUNDRED PERCENT THE.
IRIS IS POSITION AGAIN BORROWING
THEY HAVE A PROVISO THEIR
UNUSUAL CIRCUMSTANCES IN THE.
CLEARLY IN AN AREA THAT WE HAVE
TO BE VERY AWARE OF RIGHT THIS
IS NOT.
.
SOMETHING THAT IS UNASSAILABLE
AND IT'S ONE REASON WE HAVE TO
THINK CAREFULLY ABOUT HOW WE
DESIGN. OUR PROGRAM BUT FOR THE
MOST PART CREDITS ARE TREATED AS
A REDUCTION OF STATE AND LOCAL
TAX LIABILITY AND NOT AS INCOME
TO THE TAXPAYER AND THAT RULE IS
IMPORTANT IN VARIOUS CONTEXTS
NOT JUST. THIS CONTEXT SO FOR
INSTANCE A LOT OF CREDITS ARE
TRANSFERABLE.
AND SO IF YOU TRANSFER CREDIT
THE QUESTION IS WHAT IS YOUR
BASIS IN THE CREDIT THIS IS SORT
OF IN THE WEEDS TAX.
POLICY BUT IF THE CREDIT GIVEN
TO YOU WAS TREATED AS INCOME TO
YOU.
THEN YOU SHOULD HAVE A BASIS IN
THAT TAX CREDIT BECAUSE IT'S
LIKE THE GOVERNMENT GAVE YOU TEN
THOUSAND DOLLARS IN TAX BREAKS
AND YOU PAY TAX ON IT. AND THEN
WHEN YOU GO ON TO SELL IT YOU
SHOULD BE ABLE TO GET THAT TEN
THOUSAND DOLLARS BACK.
THAT'S NEVER BEEN THE WAY THE
IRS IS TREATED THESE.
SINCE SO.
THERE'S UP. GET A STRONG AND
LEGAL FOUNDATION NOT YOU KNOW.
DID THIS PARTICULAR CASE HAS
NEVER BEEN POLITICALLY CRISIS
IMPORTANT EMPHASIZE THAT BUT
THERE'S A STRONG LEGAL
FOUNDATION THAT.
TAX CREDITS ARE TREATED AS
REDUCTION AND NOT HIS INCOME
TAXPAYER.
AND WE THINK THAT TO THE EXTENT
THAT THE TAXPAYER IS ACTUALLY
CHANGING THEIR POSITION VIS A
VIS THE STATE AT PARTICIPATING
MORE. INFANTRY IT CONTRIBUTED TO
STATE GOVERNMENT THAT IS GOING
TO BE ON A STRONG RIGHT THOUGH
NOT UNASSAILABLE POSITION
ANOTHER WAY OF LOOKING AT THIS
OR OR. OP APPROACHES TO
CONSIDER.
THAT.
ARIZONA HAS A PROGRAM WITH A
HUNDRED PERCENT CREDIT THAT YOU
CAN GIVE TO YOU I'M STUDENT
TUITION ORGANIZATIONS AND THOSE
STUDENT TUITION ORGANIZATIONS
CAN ACTUALLY USE THAT MONEY. TO
SEND STUDENTS TO PRIVATE SCHOOLS
INCLUDING SECTARIAN SCHOOLS
AND THE QUESTION WAS WELL. CAN
YOU DO THAT AT THAT VIOLATE THE
ESTABLISHMENT CLAUSE
ISN'T THAT SPENDING PUBLIC
DOLLARS ON IN SUPPORT TOP
RELIGIOUS INSTITUTION THE WENT
ALL THE WAY UP TO THE SUPREME
COURT AND ACTUALLY TO STANDING
CASE. OF IT BUT THE UPSHOT IS
THE SUPREME COURT SAID IF YOU
USE CREE
GOV CREDIT IS NOT SPENDING
MONEY.
RIGHT IT'S A REDUCTION OF TAX
LIABILITY AND SO DOES NOT
VIOLATE THE ESTO.
AND SO ULTIMATELY ARIZONA
ARIZONA'S PROGRAM WAS ON UPHELD.
WHICH MEANS IN EFFECT THAT YOU
CAN CURRENTLY USE TAX CREDITS A
HUNDRED PERCENT TAX CREDITS I'M
TO FUND PRIVATE AND SECTARIAN
SCHOOLS AND SO WHAT THE
CALIFORNIA PROGRAM. IS
ESSENTIALLY SAYING IS IF YOU CAN
USE ALMOST LARGE TAX CREDITS TO
FUND PRIVATE SCHOOLS HOW COULD
IT NOT BE POSSIBLE TO USE THOSE
KINDS OF CREDITS TO FUND PUBLIC.
AND THAT'S THE THE IDEA ON
BEHIND THOSE KINDS.
.
TAKE MORE QUESTIONS OUT ANY
QUESTIONS ABOUT THAT AND BEFORE
I STOP THOUGH I DO WANT TO.
TALK BRIEFLY BRIEFLY BRIEFLY.
ABOUT THE INTERNATIONAL
PROVISION.
POPPED UP THE
BUT I WANT USED MAKES LIVE TO.
TWO POINTS I'M ONE IS THAT.
THE.
THE SHIP TO A TERRITORIAL TAX
SYSTEM AT THE ADVENT OF I'M SOME
ENTIRELY NEW KINDS OF TAXES IS
GOING TO REQUIRE A LOT OF
THOUGHT. HOW THAT INTERACTS WITH
CALIFORNIA?
AND THAT DOESN'T HAVE TO BE I'M
SETTLED NECESSARILY IMMEDIATELY
BUT IT DOES NEED TO BE THOUGHT
ABOUT VERY CAREFULLY.
BECAUSE.
IT'S IT IT IT.
WELL HONESTLY WITH THAT WE CAN.
THE SECOND THING IS MORE
PRESSING SO INSOFAR AS.
THE CHANGE FROM A WORLDWIDE
SYSTEM OF TAXATION TO A
TERRITORIAL SYSTEM MEANS THAT
THE FEDERAL GOVERNMENT HIS
DEMAND THAT TWO POINT SIX
TRILLION HOWEVER MUCH THAT'S
OUTSTANDING. TO BE REPATRIATED
AND REPATRIATED AS OF DECEMBER
OF LAST YEAR.
AND THAT MONEY IS COMING HOME
AND THE QUESTION IS.
WILL THE STATE'S ON TAX THAT.
AND RIGHT NOW CALIFORNIA'S AND
WE HAD AGAINST HIM PER THE FTP
IS PRELIMINARY ANALYSIS IS NOT
GOING TO TAX THAT MONEY VERY
MUCH.
AND THE REASON IS THAT
CALIFORNIA'S TAX LAW WASN'T
WRITTEN WITH THAT MADRE THIS IS
DID THAT JUST IT GOES NO FAULT
HERE IS JUST THAT.
THERE'S A NEW SECTION NIGHT
SIXTY FIVE OF THE INTERNAL
REVENUE CODE THAT ACHIEVES THIS
TEAM REPATRIATION. CALIFORNIA'S
CURRENT LAW DOESN'T REALLY
REFERRED TO DO YOU TO TO SECTION
NINE SIXTY FIVE AND THIS IS NOT
REALLY. AYE AYE HE SAYS THE FTP
SEASON A STATUTORY HOKE TOM TO
TAX ON THAT INCOME I THINK THAT.
THAT WITHOUT THAT IS UNFORTUNATE
ON THE AND THAT SHOULD BE
ADDRESSED AND ESPECIALLY TO THE
EXTENT THAT ONE BELIEVES IS AS I
THINK. THAT A FAIR AMOUNT OF
THAT TWO POINT SIX TRILLION
DOLLARS WAS ACT WAS ACTUALLY
EARNED IN CALIFORNIA AND WAS
STRATEGICALLY MOVED A BROUHAHA
ABROAD AND SO. TO THE EXTENT OF
THIS IS AN OPPORTUNITY I'M TO
TAX THAT REVENUE.
I THINK THE CALIFORNIA SHOULD
IT WOULD NEED TO COME A CHANGED
LOCKED.
THANK YOU I KNOW ASSEMBLY MEMBER
BONTA HAS TO GO SO DO YOU HAVE
ANY QUESTIONS.
I'M.
ARE THERE EFFORTS A FOOT AT THE
MOMENT ON THE EMPLOYEES.
ON THE PLAYER PAYROLL TAX
SIDE ADJUSTMENT I KNOW YOU WERE
TALKING A LITTLE BIT ABOUT SOME
OF THE I THINK NEW YORK HE SAID
IS DOING IT IN.
AND OTHERS AND IS THAT SOMETHING
THAT IN EACH SORT OF TALK ABOUT
OF A FOUNDATION.
BOB. OF.
.
THESE ARE PAYROLL TAXES ALREADY
THAT WE CAN BUILD ON THAT IS
THAT A ME THAT YOU A MATTER OF
MAKING RECOMMENDATIONS TODAY OR
JUST KIND OF LAYING OUT OPTIONS
BUT IS THAT SUMMIT YOU THINK WE
SHOULD BE.
IT WE DO HAVE A SPOT BILL IN
PLACE FOR SOMETHING SIMILAR TO
WHAT NEW YORK IS DOING WE WERE
JUST KIND OF WANTED TO TAKE A
LOOK AND SEE WHAT NEW YORK'S
LOOK LIKE AND BECAUSE THEY DO
HAVE SUCH A ROBUST AND. GROUP
LOOKING AT WHAT THAT IS GOING TO
KEEP EVOLVING INTO SO WE HAVE
SOMETHING IN PLACE TO.
WE NOW HAVE DROPPED LEGISLATION
FROM NEW YORK WHICH ARE THE
GOVERNOR'S OFFICE IS POSTED
ONLINE WE CAN MAKE SURE THAT.
A COPY GETS TO YOU IT SAM IT'S
WRITTEN INSERTED NEW YORK
LEGISLATIVE LANGUAGE WHICH
SOUNDS A LITTLE BIT DIFFERENT
FROM CALIFORNIA LEGISLATIVE
LANGUAGE. ON BUT THIS IS I GUESS
ONE THING THAT I'VE LEARNED
ABOUT NEW YORK STATE POLITICS IS
THAT WHEN GOVERNOR CUOMO SEIZES
UPON AN IDEA THINGS BEGIN TO
HAPPEN AND THERE'S AN APRIL
FIRST DEADLINE FOR THE BUDGET. I
AND THIS WAS A PLANK IN HIS
BUDGET PLATFORM FROM THE STATE
OF THE STATE. AYE SO THERE IS.
MEALS ARE SPENDING AYE OR THAT
MAKES IT SOUND BAD I'M ENGINES
ARE.
ENGINES ARE BOOMING IN NEW IN
NEW YORK.
THANK YOU AND INSERTED YOU KNOW
I I THINK YOU'RE FRAMING.
SO TO ALL THESE DIFFERENT
OPTIONS AS.
.
IF IF IN CALIFORNIA WANT TO
HAVE.
HAVE LOCAL STATE INCOME TAXES
PAID WITH FEDERALLY DEDUCTIBLE
DOLLARS HERE SOME OF OUR
CHOICES.
WE DEATHLY WANT THAT.
ARE THESE THE ONLY CHOICES.
.
I THINK.
I MEAN GIVEN THAT THERE'S BEEN
THERE'S LIMITS NOW ON THE.
WHAT WE CAN DO WITH PROPERTY
INCOME AND SALES TAXES THAT?
BUT DOESN'T LEGAL A WHOLE LOT I
MEAN THERE'S A THEIR AS KNOW
PROFESSOR SHE ASK YOU MENTIONED
WE DO WE ALREADY HAVE A PAYROLL
TAX OR UNEMPLOYMENT INSURANCE
AND SO.
VISIT THE STATE WANTED TO WE
COULD BE SO GO BIGGER ON THE
PAYROLL TAX AND MAYBE SMALLER ON
THE OTHER TAXES.
WITH OR WITHOUT THE CREDIT THAT
WAS SUGGESTED.
WE THERE'S THERE'S THERE'S
DIFFERENT WAYS OF SETTING IT UP.
AND ALL AND WHILE I THINK THESE
ARE REALLY THE ONLY THREE
PROPOSALS THAT I'VE HEARD.
SPINOUT AM.
THEY'RE THEY'RE NOT MUTUALLY
EXCLUSIVE AND IF YOU IMPLEMENTED
ALL THREE. YOU WOULD GET A
PRETTY CLOSE TO A HUNDRED
PERCENT COVERAGE.
FOR AT LEAST FOR STATE INCOME
TAXES
BUT SO. EMPLOYEES ARE OUT WOULD.
CLAIM THE WOULD WOULD BENEFIT
FROM THE PAYROLL TAX
SHIFT.
FOLKS WITH PASSED THROUGH
INCOME WOULD BENEFIT FROM THE
UNINCORPORATED BUSINESS.
AND THEN FOLKS WITH OTHER SORTS
OF AND CALM DIVIDEND INCOME
CAPITAL GAINS AND COM WOULD BE
ABLE TO.
.
PROFITS THE EFFECTS OF THE
FEDERAL.
ROLLBACK BY USING SOMETHING
LIKE THE CHARITABLE CREDIT.
APPROACH.
GOOD JUST IN THAT IN THAT VEIN
I.
CAN YOU DESCRIBE FOR PEOPLE IN
EACH CATEGORY WHETHER IT'S THE
TERRIBLE DONATION OF THE PAYROLL
TAX WHAT THAT PERSON LOOKED LIKE
SO. HOW MUCH DOES THAT PERSON
MAKE LIKE IT ANY VERY KIND OF
VISUAL WAY CAN YOU DESCRIBE THAT
PERSON FOR EACH FOR EACH
CATEGORY WHAT THAT PERSON LOOKS
LIKE THAT BENEFITS FROM EACH OF
THE OPTION?
NOT JUST IN IT IT'S HARD I KNOW
BUT IT'S REALLY WHAT HELPED THEY
THINK EVERYBODY UNDERSTAND WHO
WERE TALKING ABOUT. PASSED OUT
WHETHER THEY WHETHER THEY FILE
ITEMIZED ARE.
BUT SUIT TO THE PAYROLL TAX A
APPROACH IS GOING TO BENEFIT.
I.
FOLKS IN THE BOTTOM NINETY
PERCENT
WHO ARE NOT ITEMIZING DEDUCTIONS
IT'S I WHO CLAIMING THE STANDARD
DEDUCTION.
IT DOESN'T MATTER ALL THAT MUCH
FOR PEOPLE WHO ARE FOR MARRIED
COUPLES MAKING LESS THAN TWENTY
FOUR THOUSAND DOLLARS
NOT BECAUSE THEY'RE NOT PAYING
ANY FEDERAL TAX ANYWAY. BUT ONCE
YOU GET ABOVE TWENTY FOUR
THOUSAND DOLLARS IT IT DOES
START TO MATTER EVEN IF YOU'RE
IN THE TEN PERCENT BRACKET WHILE
YOU'D RATHER PAY NINETY CENTS ON
THE DOLLAR FOR STATE LOCAL
GOVERNMENT SERVICES.
THEN A HUNDRED CENTS ON THE
DOLLAR AND WHAT THIS LOOKS LIKE
PRACTICALLY ARM IS YOU STILL
FILE A CALIFORNIA RETURN I AT
THE END OF THE YEAR.
AND AND WE WOULD HAVE A NEW
CATEGORY OF.
WE COULD CALL IT WAGES PAID BY
GOLDEN STATE EMPLOYERS.
YOU COULD BECOME A A A GOLDEN
STATE EMPLOYER A GOLDEN STATE
EIGHT NEW YORK IS DOING THIS WE
THEIR SOMETIMES CALLED EMPIRE
WORKS EMPLOYERS AN IGNORANT BUT
YOU'RE OBVIOUSLY NOT GOING TO
COLLEGE FIREWORKS. AND AND NEW
YORK ACTUALLY.
ALLOWS YOU TO ELECT INTO EMPIRE
WORKS EMPLOYER STATUS IT DOESN'T
NEED TO BE.
.
YOU DON'T NEED TO MAKE IT
MANDATORY AS LONG AS THERE'S AN
IRREVOCABLE ELECTION SO ANY
EMPLOYER THAT JUST DOESN'T
UNDERSTAND THIS MIGHT. I MIGHT
OPT OUT BUT.
APPLE GOOGLE FACEBOOK ARE
OBVIOUSLY GOING TO ONE OFTEN
BECAUSE THEY HAVE A LOT OF
EMPLOYEES WHO ARE HURT BY THIS
ALL DEDUCTION IN THIS OR THE
ROLL BACK IN THIS OP PRODUCTION
AND THIS DIMINISHES OUR ABILITY
TO COMPETE FOR. TALENT
AND THEN THERE YOU OUT A NEW
LINE TO THE CALIFORNIA STATE
TAX.
RETURN THAT WOULD SAY WAGES
PAID BY AT WE JUST PAID BY
GOLDEN STATE EMPLOYER.
AND AND YOU WOULD THAT THERE'D
BE A PROGRESSIVE CREDIT FORMULA.
AND THAT WOULD BE A LITTLE BIT
HARD TO DO BY HAND BUT NOT BACK
HARD TO DO BY HAND AND I ASSUME
MOST PEOPLE ARE GOING TO BE
USING TURBO TAX OR SOME SORT OF
SOFTWARE ACCOUNTANTS.
BUT ANYWAY TERMS OF. COMPARING
THIS TO THE OTHER CALCULATIONS
THAT YOU NEED TO MAKE ON YOUR
TAX RETURNS
CHILD CREDIT PHASE OUT BY
ITEMIZED DEDUCTIONS THE THIS IS
THIS IS PRETTY EASY.
AND ANY WOULD OFFSET YOUR TAX
LIABILITY BY THAT. IF YOUR IT IN
A LOWER MID BRACKET IN
CALIFORNIA WOULD MEAN THAT AN
YOU ONLY HAVE WHICH INCOME THAT
WOULD MEAN THAT YOU OWE NOTHING
TO THE STATE AND HERE. SO PEOPLE
WHO ARE EARNING WILL HIGH FIVE
DIGIT SALARIES LOW SIX DIGIT
SALARIES WOULD STILL PROBABLY
PAY NOTHING TO THE ITS STATE AT
THE END OF THE YEAR SOME OF THEM
I GET A REFUND.
YOU COULD MAKE IT A REFUNDABLE.
CREDIT.
AND THEN I FOLKS AT THE HIGH END
WOULD PROBABLY STILL HAVE SOME
INCOME THAT BECAUSE OF THE RATE
THAT YOU SET FOR THIS NEW ALBUM
PAYROLL TAX
IF YOU'RE. AYE IF YOU'RE PLAYING
FOR THE GOLDEN STATE WARRIORS IN
MAKING MANY MILLIONS OF DOLLARS
A YEAR YOU WIND UP GETTING THAT
THIRTEEN POINT THREE PERCENT
RATE OR PINE NOT GONNA HAVE A
THIRTEEN POINT THREE PERCENT
PAYROLL TAX WILL PICK A LOWER
NUMBER THAT'S. CLOSER TO THE
EFFECTIVE RATE STATEWIDE FIVE OR
SIX
SO THEN YOU NEED TO LOOK FOR
OTHER OPTIONS IN ORDER TO.
OFFSET THAT LAST BIT OF BY
STATE TAX LIABILITY SO THAT'S
WHEN YOU'D LIKE TO THE
CHARITABLE CREDIT THE FOLKS WILL
BENEFIT FROM THE CHARITABLE
CREDIT ARE GOING TO BE THE TOP
TEN PERCENT WHO ARE ITEMIZED
DEDUCTIONS BECAUSE IF YOU'RE NOT
ITEMIZING DEDUCTIONS BENDIS
DOESN'T DO YOU. BY ANYTHING UP
FOR YOU I'M SAID THIS IS PEOPLE
WITH SALARIES INTO FOR THE MOST
PART DOLLARS INTO THE SIX
FIGURES.
AND THEN ON THE UNRELATED.
OR THE UNINCORPORATED BUSINESS
TAX
WHEN WE THINK OF PASS THROUGHS
AND WE THINK OF THE COKE RATHER
AS WE THINK OF THESE ASK COURTS
WE THINK OF LAW FIRM PARTNERS.
I'M BUT IT'S A LOT OF PEOPLE
LOWER DOWN.
DE I'M INCOME LADDER AS WELL
CERTAINLY THE SHOPKEEPER WHO'S
ORGANIZED AS AN LLC BOMB IT IS
GOING TO BE THE UBER DRIVER AYE
AS WELL WHOSE TIME A SOLE
PROPRIETOR. AND IT'S GOING TO BE
THE PERSON WHO CONSULTS AS AN
INDEPENDENT CONTRACTOR TO ANYONE
WHO'S GETTING INCOME THAT'S NOT
ON A W. TO.
AND SETS UP AYE AS.
SO PROPRIETORSHIP OR A
PARTNERSHIP RATHER THAN A
CORPORATION WOULD BENEFIT FROM.
WELL I JUST WANTED TO ADD THAT
THERE IS ALSO A DESIGN ELEMENT
TO THIS RIGHT SO THE PAYROLL TAX
MEAN. IT COULD SAID IN A
DIFFERENT THRESHOLDS WHERE WE
HAVE A CHOICE AS TO AS TO HOW WE
WANT TO DO IT SO IT IT IS SO
IT'S ATTRACTIVE AND THAT IT
COULD. IT COULD HELP THE MOST
PEOPLE BUT TO THE EXTENT THAT.
THERE'S A TENSION BETWEEN HOW
MANY PEOPLE IT REACHES ADDRESS
ADMINISTRATIVE ARM.
FEASIBILITY AND SO THAT'S THAT'S
A POLITICAL QUESTION AS TO WHERE
YOU WANT TO DRAW THE LINE.
YOU KNOW I'D NEW YORK'S IS
SETTING IN AT LEAST UNDER THE
CURRENT DROPPED FORTY THOUSAND
DOLLARS.
AND THE THOUGHT IS FOR FOLKS
UNDER FORTY THOUSAND DOLLARS
MOST THEIR INCOME IS SHELTERED
FROM FEDERAL INCOME TAX BY THE
STANDARD DEDUCTION AND BY CHILD
TAX CREDITS IN THE EARNED INCOME
TAX CREDIT. BY AND NEW YORK HAS.
STEEPLY GRADUATED RATE
STRUCTURES OF THEIR STATE.
STATE INCOME TAXES ARE
SUBSTANTIAL UP FOR THEM MAKING
THEM CALCULATE DISCREDIT THEIR
TAX RETURN
IT JUST SEEMS LIKE.
SAVING THEMSELVES
BUT THEN OVER FORTY THOUSAND
DOLLARS IT KICKS IN ARE UNDER
NEW YORK'S APPROACH AT SOMETHING
LIKE A FIVE PERCENT RATE.
BUT TO QUESTIONS THAT. I THINK
YOU SAID SOMETHING TO THE EFFECT
OF IF WE WILL THAT ALL THREE
OPTIONS WE WOULD BE ESSENTIALLY
PROVIDING A HUNDRED PERCENT
RELIEF ON THE ON THE STATE. TAX
SIDE IT IS THERE. BUT BUT YOU
DID MENTION THIS SORT OF THE
LOCAL TAX SIDE OF SALT.
IS THERE A ROLE FOR LOCALITIES
TO PLAY TO PROVIDE ADDITIONAL
RELIEF THAT THEY MAY OR MAY NOT
BE OR MAYBE THEY'RE DOING IT AND
AND MAYBE HAS A WAY FOR US TO
ENCOURAGE LOCALITIES TO.
I'M PRIDE OPTIONS FOR
CALIFORNIANS TO PAY THE LOCAL
TAXES WITH FEDERALLY DEDUCTIBLE
DOLLARS THAT THAT'S A QUESTION
ONE AND THE QUESTION TWO IS IT.
IF IF WE REACT.
ARMED WITH SOME OF THESE OPTIONS
AS OTHER STATES ARE.
DOES THE FEDERAL GOVERNMENT THEN
REACTED ARE REACTION AND THEN WE
JUST SORT OF ARE IN THIS AND THE
CYCLE OF TRYING TO GET BACK TO
THE ORIGINAL. INTENT.
THEM LIKE THAT REQUIRES YOU TO
HAVE A CRYSTAL BALL AND
EVERYTHING BUT BUT I'M JUST SORT
OF.
WONDERING IT MEANS THEY CAN JUST
ACT AGAIN STATUTORILY RIGHT AND
AND CLOSE SOME OF THESE
LOOPHOLES HOODIES DESIGNED
AROUND SUCH THAT YOU KNOW THE
CRAZY BLUE STATES WORKING ON
LIKE NEW YORK IN CALIFORNIA.
YEAH WE CAN GET BACK TO YOU ONE
WOULD.
.
IF LOCAL GOVERNMENTS MIGHT BE
ABLE THE.
DO SOMETHING LIKE THIS I MEAN
THEY HAVE MUCH LESS FLEXIBILITY
JUST BECAUSE THEY'RE.
BASICALLY THAT THE SALES TAX IN
THE.
PROPERTY TAX AND.
THEY'LL HAVE NO FEES AND OTHER
THINGS BUT THEY DON'T HAVE AS
MANY DIFFERENT YOU KNOW
POTENTIAL OPTIONS IS A STATE
DOES BUT WE'VE SEEN. PEOPLE IN
THE REQUESTED BROUGHT IT BACK TO
YOU ON THAT. AND.
.
YEAH HE IS ALWAYS THE
POSSIBILITY THE FEDERAL
GOVERNMENT DOING SOMETHING ABOUT
THIS BUT.
YEAH THEY TENS THE WORKS.
TENDS TO WORK SLOWLY MOST THE
TIME IT REALLY IT REALLY JUST
DEPENDS ON WHERE THEY WANT TO GO
WITH THAT.
TO ADD TWO POINTS FIRST ON ON
WHAT YOU COULD DO FOR LOCAL
GOVERNMENTS
I'M.
ALL.
I AM I MIGHT RUN INTO A STATE
CONSTITUTIONAL PROBLEM WITH THIS
EXPLANATION.
BUT I I THINK IT WORKS YOU CAN
HAVE A SYSTEM THAT LOOKS A LOT
LIKE THE AND.
THE CHARITABLE CREDIT IDEA.
WHERE WE CREATE SOMETHING
CALLED GOLDEN STATE POINTS
EVERYONE'S GAGA ABOUT BUT COIN
WE NOW HAVE GOLDEN STATE POINTS
AND A SCHOOL DISTRICT OR CITY
BUYS A GOLDEN STATE POINT?
UP FROM THE STATE.
.
FOR EIGHTY FIVE CENTS.
I AND I'M A DONOR THEN GIVES A
DOLLAR TO THE SCHOOL DISTRICT
I AND GETS A GOLDEN STATE GOING
BACK.
THAT'S WORTH EIGHTY FIVE CENTS.
I THAT THEY CAN THEN USE TO
OFFSET THEIR STATE TAX LIABILITY
THEIR STATE INCOME TAX
LIABILITY.
BY EIGHTY FIVE SECONDS.
I AND THE DONORS BETTER OFF.
BECAUSE AND EIGHTY FIVE CENTS
TO GET STATE TAXES PLUS AT THEIR
TOP BRACKET THIRTY SEVEN CENTS.
I AM I DEDUCTION THAT THEY
OTHERWISE WE WOULDN'T BE GETTING
SO WE'VE ALREADY GOTTEN THEM
WELL OVER A DOLLAR. AND THE
LOCALITIES BETTER OFF BECAUSE IT
ESSENTIALLY BY FROM THE STATE
FOR EIGHTY FIVE CENTS
SOMETHING THAT IT WAS WORTH A
DOLLAR TO THEM THEY GOT A
DOLLAR.
FROM THE DONOR NEEDED STRUCTURE
THE ENTIRE CHARITABLE CREDIT
THAT WHY I THINK IT'S ACTUALLY
AN ATTRACTIVE WAY ON TO DO IT
NOT ONLY BECAUSE. IT TAPS INTO.
THAT THE CRYPTO CRAZE.
BUT ALSO IT MAKES THE FLOW OF
FUNDS NOT GO THROUGH THE GENERAL
FUND IT GOES DIRECTLY FROM THE
DONOR TO THE SCHOOL DISTRICT.
AND AND I THINK THE THE
ATTRACTION OF THAT I IS I THAT.
THE IRS COULD CONCEIVABLY
DISTINGUISH BETWEEN SAY THE
ARIZONA PROGRAM AND CALIFORNIA
BY SAYING WELL IN ARIZONA
THEY'RE PAYING THE SCHOOL
TUITION ORGANIZATION THEY'RE NOT
PAYING THE STATE IF THE MONEY'S
GOING TO THE GENERAL FUND IT
LOOKS MORE LIKE. A PAYMENT IN
LIEU OF STATE TAXES ON BUT IF
YOU DO THIS APPROACH YOUR
BENEFITING.
LOCALITIES AND I THINK PUTTING
YOURSELF ON FIRMER GROUND.
FOR FEDERAL LAW PURPOSES
BECAUSE THE DOLLARS GOING
DIRECTLY FROM THE THE DONOR.
TO TO THE SCHOOL DISTRICT AND
AND THERE'S REAL ECONOMIC
SUBSTANCE TO THE SCHOOL DISTRICT
FIFTEEN CENTS BETTER OFF RIGHT
IT'S NOT JUST LEAVING EVERYONE
IN THE SAME POSITION AS BEFORE.
ON THE SECOND POINT BOMB COULD I
COULD THIS ALL GO AWAY WILL
LIKELY IT COULD ALL GO WAYS IF
IN TWENTY TWENTY AND CONTROL OF.
THE. TWO POLITICAL BRANCHES
SHIPS AND WE.
ROLL BACK THAT I TWENTY
SEVENTEEN TAX LAW THEN. YOU'RE
NO LONGER DEALING WITH A TEN
THOUSAND DOLLAR CAP THOUGH ON
THE PAYROLL TAX SIDE. BUT YOU
WOULD STILL BE BENEFITING THE
TWO THIRDS OF YOUR POPULATION
THAT UP TILL NOW WASN'T ABLE TO
PAY WITH FEDERALLY DEDUCTIBLE
DOLLARS BOND FOR THE SECOND. YOU
COULD IMAGINE.
A STATUTE I THINK ALL THREE OF
US COULD WRITE A STATUTE THAT
TARGETED THESE
AND THAT WOULD BE
CONSTITUTIONAL.
THAT WOULD TIGHTEN MAKE OUR
EFFORTS ALL FOR NAUGHT.
YOU CAN IMAGINE THE STATUTE YOU
CAN'T COUNTY TO EIGHTEEN IN THE
HOUSE
ON THAT BCAUSE IF THERE IS A
STATUTE THAT IS DESIGNED TO TAKE
AWAY TAX BUT.
FROM PEOPLE IN CALIFORNIA AND
NEW JERSEY AND NEW YORK.
AND YOU TAKE AWAY THE CALIFORNIA
AND NEW JERSEY AND NEW YORK
REPUBLICANS WHO VOTED FOR THE
TAX LAW. THEN IT'S GOING TO BE
REALLY HARD FOR.
FOR THE HOUSE TO ASSEMBLE A
SIMPLE MAJORITY ON THE.
I AM CURIOUS IN ARIZONA ABOUT
HOW MUCH DOES THE TERRIBLE FUND
RAISE A YEAR.
IT'S MUCH SMALLER.
THEN THEN WHAT WE'RE PROPOSING
THERE'S NO QUESTION I THINK
IT'S.
CAPTAIN
FIVE HUNDRED OR A THOUSAND
DOLLARS NUMBER CONTRIBUTION
SOME.
OF THESE SO IT'S CAPS YEAH STILL
IN YOUR PROJECTIONS HOW MUCH.
HAVE USED TO OR HOW MUCH ARE YOU
PROJECTING THAT OUR CHARITABLE
FUND WOULD MAKE A YEAR I MEAN
CONSIDERING THE UNIVERSE THAT IT
BENEFITS.
WELL I I CERTAINLY.
WE KNOW WE'RE NOT ECONOMIST I'M
SO I MEAN I'M ON SUCH HOT AND
I'M IN A PRETTY.
BUT.
THE FTV REPORT PROJECTED THAT HE
DOES.
THE. ORDER OF MAGNITUDE WHICH
SEEMS ABOUT RIGHT TO IS AT THE
OUTFLOW OF LOSING THE SALT
ADOPTION IS SOMEWHERE BETWEEN
FIFTEEN AND TWENTY BILLION
DOLLARS PER YEAR FOR THE PAST
THE AMOUNT. OF.
CALIFORNIA DEDUCTIONS LOST.
WHETHER THE CHARITABLE.
CREDIT PLAN WOULD BRING ALL THAT
BACK I MEAN I I DON'T THINK YOU
KNOW AS DANIEL EXPLAINED IT
WOULD DO THAT BY DESIGN BUT IT
COULD BE A GIVE IT COULD BE ON
THE ORDER OF SEVERAL BILLION
DOLLARS FOR SURE. WEEKS WHEN YOU
SAY THERE'S FIFTEEN SEE SAID
THERE'S FIFTEEN TO TWENTY
MILLION LOSS BILLION BILLION
LOST.
INDEED ACTIONS THAT IS ACROSS
THE BORDER AND THAT IS JUST THE
UNIVERSE THAT WE ARE THINKING
WOULD USE THAT CHARITABLE
DONATION. THAT ISSUED WHAT THE
F. TO BE CALCULATED FOR TWENTY
FIFTEEN FOR THE TOTAL TAXPAYERS.
HOW MUCH THEY LOST IN THAT THEY
WOULD HAVE LOST IN THEIR
DEDUCTION IS WITH THE TEN
THOUSAND DOLLARS?
OKAY.
AND THEN ON THE REPATRIATION TAX
THAT TWO POINT SIX TRILLION.
THERE WERE NOT TAX AND.
.
WHAT KIND WAIT WHAT DO YOU WHAT
IT KIND OF AYE? SUGGESTIONS TO
HAVE ON THAT SORT OF ON TAXING
THAT. REPATRIATION MONEY FOR
CALIFORNIA.
BECAUSE THAT'S A HUGE LOSS FOR
US.
YES WELL I WOULD.
PROPOSE.
NOT.
TINKERING WITH.
CURRENT CORPORATE INCOME TAX ITS
FEET ITS IT THAT JUST HAVE A
SORT OF A STANDALONE HAVE A
STANDALONE PROVISION
THAT SAYS. THAT THIS TEAM TO
REAP SOME PORTION OF THE STEAM
REPATRIATION WAS OUT IN
CALIFORNIA.
WE HAVE TO APPLY A REASONABLE
APPORTIONMENT FORMULA IN ORDER
TO PREVENT THAT WHEN NOT. DOUBLE
TAXING IT RELATIVE TO FOREIGN
GOVERNMENTS AND RELATIVE TO
OTHER STATES.
AND THOSE FORMULAS ARE.
.
EVALUATED BY COURTS
DIFFERENTIALLY.
AS FOR BEING REASONABLE TOWARDS
WHAT I THINK A REASONABLE
FORMULA MIGHT BE.
HERE'S ONE IDEA IF YOU COULD
SAY WELL IT'S TWO POINT SIX
TRILLION DOLLARS EARNED OVER.
THE OF DECADES.
ALL OVER THE WORLD.
SOME PORTION OF IT WAS EARNED IN
THE U. S.
LET'S SAY.
BY PEOPLE DO A BY U. S. GDP
SO TWENTY FIVE OR THIRTY
PERCENT.
AND THE LAST.
AND THEN OF THAT AMOUNT THAT WAS
EARLY IN THE U. S.
A CERTAIN AMOUNT WAS OWNED IN
CALIFORNIA CAN WILL DO A ROUGH
CUT WILL SAY. NO TEN TWELVE
PERCENT BY CALIFORNIA GDP RIGHT
SO IF YOU DO THAT THOSE NUMBERS
THEN IT'S NO IT'S STILL A LARGE
AMOUNT OF TIME OF MONEY.
.
WITH AND BE.
A PORTION OF ALL TO CALIFORNIA
AND THEN CALIFORNIA COULD THEN
APPLY EITHER ITS REGULAR IT
CORPORATE INCOME TAX RATE OF
EIGHT POINT EIGHT FOUR PERCENT.
OR THEORETICALLY COULD SAY WILL
KEY WILL DO A POINT A FOUR
PERCENT PLUS.
TWO PERCENT PENALTY BECAUSE
REALLY YOU SHOULD OF LUCID GOT
MISS MONEY YEARS AGO SO ATTRACT
INTEREST NOW. ANY ADDITIONAL
RATE OVER THE REGULAR RATE.
.
WOULD.
I'M EACH
BE AN ADDITIONAL CHALLENGE THAT
THE BUT THE RULE IS YOU CAN'T
DISCRIMINATE AGAINST FOREIGN
INCOME AND SO YOU'D OR ANY UP
AND SO TO THE EXTENT THAT THERE
WAS AN ARGUMENT THAT THIS INCOME
WAS EARNED ABROAD DAN HAPPY TO
HIRE IT WOULD BE A PROBLEM
AGAIN.
ON THIS CONCEPTUAL STATION IT
WOULD BE INCOME I'M EARNED
DOMESTICALLY.
SO.
BASIC IDEA.
HAVE A SEPARATE STATUTE
SPECIAL APPORTIONMENT FORMULA
YOU CAN APPLY AT LEAST YOUR
REGULAR CORPORATE INCOME TAX
RATE. HE PROBABLY ALSO SHOULD
HAVE SOME KIND OF PROVISION.
I'M FOR PETITIONS FOR SPECIAL
CIRCUMSTANCES SO FOR INSTANCE.
UP CERTAIN CALIFORNIA
CORPORATIONS RIGHT NOW
CALIFORNIA SAYS WE'RE GONNA TAX
YOU ON ALL OF YOUR WORLDWIDE
INCOME.
SO THERE COULD BE CORPORATIONS
THAT HAVE THEORETICALLY PAY TAX
ON THIS INCOME ALREADY
AND IF THAT'S THE CASE THEY
SHOULD HAVE TO PAY TAX ON IT TO
GET.
NOW.
WHY WHY PRETTY CONFIDENT THAT'S
NOT TRUE POST BECAUSE?
YOU CAN TAKE A WATERSHED
ELECTION WHICH IS TO SAY THAT IF
YOU'RE A MULTINATIONAL
CORPORATION EARNS LOTS OF MONEY
ABROAD YOU CAN CHOOSE TO ONLY BE
TAXED ON YOU YOU S. AND.
SO I'M FAIRLY CONFIDENT THAT
FAKE ONLINE CORPORATIONS THAT
HAVE ALL THIS MONEY ABROAD TOOK
THE WATER'S EDGE ELECTIONS.
AND THEREFORE DID NOT PAY TAX.
ON THAT IT UP BUT IT'S
DEFINITELY HAS TO BE A PROVISION
FOR THAT ARE IN THE LAW.
I'M COMMITTEE I'M SOME KIND OF
OF. PROCEDURE I'M IN CASE THE
INCOMES BUT TAXED ALREADY.
I'M HAPPY TO GO INTO FURTHER
DETAIL BUT THAT'S THE.
JUST ABOUT.
THAT HELPS
.
WELL I I THINK OF HOW UNHAPPY TO
A.
IT CAN THE IRISH AT THE SOUND BY
RIGHT I REGULATION.
.
IT I THINK IT VARIES FROM.
FROM PLAN TO PLAN.
.
ON THE ON THE PAYROLL TAX.
THE IDEA THAT.
EMPLOYER PAID PAYROLL TAXES ARE
NOT INCLUDED IN EMPLOYEE GROSS
INCOME.
GOES WAY BACK RIGHT
I MEAN IT GOES BACK TO NINETEEN
THIRTY FIVE.
WERE AND.
FOR EVERY A HUNDRED DOLLARS I
EARNED SIX DOLLARS TWENTY CENTS
IS PAID BY MY EMPLOYER.
IN.
OASDI IN SOCIAL SECURITY AYE NO
ONE THINKS THAT I SHOULD REALLY
BE TAXED ON A HUNDRED AND SIX
DOLLARS AND.
FOR THAT.
AND AND WE HAVE.
THE YEARS OF EMPLOYER SIDE
PAYROLL TAXES FOR UNEMPLOYMENT
INSURANCE
DC HAS DONE THIS FOR.
FOR PAY WE PAID LEAVE AT NEW
YORK'S DOES THIS TO FIND I'M.
ITS MTI ADDS A AYE METRO TRANSIT
AUTHORITY AND AND.
UNSETTLING THAT WOULD BE A I
THINK DIFFICULT.
AND IT WOULD. BE DOING IT BY
REGULATION WOULD.
.
RAISE A LOT OF RISK FOR.
FOR THE IRS AND COULD THEY DO
IT YEAH I GUESS THEY COULD
PROMULGATE REGULATIONS AND THEN
WAIT FOR IT TO BE CHALLENGE IN
COURT BUT THIS WOULD MOST
CERTAINLY BE.
AND THE CHALLENGE IN COURT AND I
WOULD BET ON THE TAXPAYERS.
ON THE CHARITABLE CREDITS.
IT IS.
I THINK SO STUDENT WHATWERE
LARGELY GOING ON HERE'S A CHIEF
COUNSEL ADVICE MEMORANDUM FROM
TWO THOUSAND ELEVEN THAT WAS
ADDRESSING THE MISSOURI I CREDIT
SCHEME.
AND.
WHICH
I I CHIEF COUNSEL ADVICE
MEMORANDUM HAS YOU KNOW
PRESIDENTIAL AUTHORITY TAXPAYERS
LOOK TO IT LOOK TO THESE ALL THE
TIME BUT THE IRS COULD BY
REGULATION.
GO BACK ON.
AND I THINK THERE ARE.
CHIU DOWNSIDES OF THAT FROM
THIRD CHIU.
POTENTIAL ICEBERGS OF THE IRIS
IT.
ONE.
YOU'D BE ARE CATCHING IN THE IN
THE CROSS HAIRS ALL WHOLE BUNCH
OF RED STATE PROGRAMS.
THAT ARE VERY POLITICALLY
POPULAR AMONG.
SOME MEMBERS OF CONGRESS BASE
RIGHT AT THE THAT I ARIZONA
PROGRAM IS POPULAR LARGELY
BECAUSE ITS FIRST AMENDMENT
ARBITRAGE NOT TAX.
NOT
WASN'T INITIALLY TAX MOTIVATED
BUT THEY'RE REAL TAX BENEFITS
THAT MANY IF YOU LOOK AT THE
ADVERTISEMENTS AT THE ARIZONA
SCHOOL TUITION ORGANIZATIONS.
MAKE IT BAD TAXES A KEY
COMPONENT OF THIS
SO ESPECIALLY IF YOU HAVE THE
FLOW OF FUNDS GO FROM DONOR TO
AN ENTITY OTHER THAN THE GENERAL
FUND IT'S GOING TO BE VERY HARD
TO WRITE A REGULATION THAT KILLS
THAT. THAT DOESN'T KILL A WHOLE
BUNCH OF PROGRAMS THAT.
AB THE IRS CHIEF COUNSEL WOULD
BE HAPPY TO HILL AYE KILL BUT
WILL BE AYE GETTING SECRETARY OF
TREASURY BY AND.
AS HE NEEDS TO FOR AND.
REGULATION
OUT WILL BE A LOT HARDER SECOND
THERE'S A SUPREME COURT CASE
RANDALL VERSUS LAS GOTTEN FROM I
THINK IT'S NINETEEN EIGHTY SIX
THAT. IS ABOUT ACTUALLY A
SECURITIES LAW ISSUE.
I AND THERE IS A LINE IN IT. I.
AND IT'S KIND OF A THROWAWAY
LINE BUT IT'S IN A SUPREME COURT
OPINION.
AND THAT SAYS
WE WILL NOT ASSUME THAT A
CREDIT.
AYE IS PART OF GROSS INCOME FOR
PURPOSES OF SECTION SIXTY ONE OF
THE INTERNAL REVENUE CODE UNLESS
CONGRESS HAS CLEARLY INDICATED
THAT IT OUGHT TO BE.
AND AND YEAH IT'S IN THE SUPREME
COURT COULD GO BACK ON THAT.
BUT YOU CAN'T BY REGULATION ON
DO SOMETHING THAT THE SUPREME
COURT HAS SAID AND YOU BET THAT
IF THE IRS PROMULGATES
REGULATIONS.
BUT THAT ARE TRYING TO SHUT DOWN
THESE.
NASCENT TERRIBLE CREDIT SCHEMES
ARE NOT SCHEMES CHARITABLE
CREDIT. THAT.
I USE THE WORD SCHEME IN A.
.
WITHOUT ANY PEJORATIVE SENSE.
DEDUCTION PHYLLIS IT IF IT GOT
DEDUCTION FACILITATION STRATEGY.
AND THAT THAT THAT SUPREME COURT
LANGUAGE WILL BE.
.
THROWN AROUND AND AND THERE'S
ADDITIONAL LANGUAGE OF JUSTICE
KENNEDY'S OPINION IN THE ARIZONA
SCHOOL TUITION AYE CASE BUT
AGAIN IT WASN'T QUITE ON POINT
IT WAS REALLY ABOUT THE FIRST
AMENDMENT. BUT SUPREME COURT
DIPPED I CAN GET IN THE WAY OF
THE TREASURY REGULATION.
AND.
SO SO THE UPSHOT IS THAT THERE
DEFINITELY IS ARRESTED.
AND IT'S ONE OF THE REASONS WE
NEED TO FOCUS ON THE LEGISLATION
THAT COMES OUT BEING A STRONG.
AS POSSIBLE.
AND THAT.
GET THAT THERE IS A. A
RELATIONSHIP BETWEEN.
.
HOW STRONG WE MAKE THE?
BILL OR.
AND HOW LIKELY IRIS ACTION IS
RIGHT SO TO THE EXTENT THAT WE
ARE MAKE THE BILL HAVE.
FIELD BY DESIGN A LOT OF
SUBSTANCE RIGHT AS WE IMAGINING
HOW I'M CERTAIN TAXPAYERS ARE
FINANCING GOVERNMENT THE
STRONGER OUR POSITION IS UMP
CANNOT BE CHALLENGED.
AND THEN I WILL ASK QUESTIONS SO
IF THERE IS LONG TERM FEDERAL
LEVEL AT THE FEDERAL LEVEL.
INVESTMENT LEAST PROJECT WILL GO
DOWN WHICH OF THESE WHEN I COME
HOME SCHEMES WE KNOW WHICH OF
THESE IDEAS WHICH PAYROLL TAX
CONTRIBUTION WHICH WHICH ONE
WILL ACTUALLY. BE THAT HAVE THE
BEST OPPORTUNITY TO OFFSET.
THAT
BUT INVESTMENT GOING DOWN.
IN TERMS OF GENERATING REVENUE
FOR THE STATE.
.
I GUESS.
I WOULD BE INCLINED TO SAY THAT.
WHAT THE STRATEGIES ARE
STRUCTURED TO DO IS O ENABLE?
THE STATE TO CONTINUE TO SNOOZE
FEDERALLY DEDUCTIBLE DOLLARS TO
THE SAME EXTENT AS IT'S BEEN
SPENDING.
PREVIOUSLY.
AND THAT DAY AS DANIEL EXPLAINED
ARE ALL COMPLIMENTARY.
AND THAT IT'S UNCLEAR CLEAR
ESPECIALLY WE DON'T KNOW THE
UPTAKE OF THE CHARITABLE
DEDUCTION THING WE DON'T KNOW
HOW THE IRIS WILL APPROACH IT.
WE DON'T KNOW WHAT THE LIMIT
WILL BE PUT THE PAYROLL TAX IT
IF IT'S VOLUNTARY HOW WHAT THE
UPTAKE WILL BE THERE SO THESE
ARE ALL THINGS WE DON'T KNOW BUT
IT. THEN ASKED WE WILL END UP
WHERE WE WERE TWO THOUSAND
SEVENTEEN RIGHT IN TERMS OF.
HOW MUCH OF CALIFORNIA
GOVERNMENT IS FUNDED WITH
FEDERALLY DEDUCTIBLE DOLLARS TO
THE EXTENT THAT SAY?
?
THERE'S GOING TO BE A BIG TWENTY
BILLION DOLLAR HIT BECAUSE OF
ADDITIONAL OBAMACARE REPEAL ALL
OF WHICH TO DO WHICH IS KIND AND
WHAT WE'RE TALKING LOGISTICS
MONTHS AGO. AND NONE OF THESE
STRATEGIES
THEMSELVES
WILL MITIGATE THAT.
HOWEVER.
.
I'D LIKE TO THINK THAT AT LEAST
SOME OF THEM HAVE THE POTENTIAL
TO HELP MITIGATE
SO AGAIN THAT'S WHY I SIGNALED
WHILE. HE OF THE PAYROLL TAX IS
IMPOSED AND THE CREDIT IS NINETY
PERCENT. BIDAK COULD GENERATE
TEN PERCENT CREDITS TOWARDS A
MITIGATING THE IMPACT OF THEIR
NAM OBAMACARE.
I'M FOR INSTANCE SO THAT TOOK
THAT SO I DON'T THINK IT.
ANY OF THESE PROPOSALS WOULD
GENERATE ADDITIONAL REVENUE BUT
MAYBE IT COULD SET THE
SUPERSTRUCTURE.
FORD FOR OTHER KINDS BECAUSE I
I'LL SHIP YOU KNOW.
JUST RETURN TO SOMETHING THAT
DAVID IS HEARD ME SAY MANY TIMES
CREATURES THAT THE CALIFORNIA.
SPACE SICK TAX SYSTEM HASN'T
CHANGED SINCE THE NINETEEN
THIRTIES.
.
TERMS OF THE PERSONAL INCOME TAX
CORPORATE INCOME TAX STRUCTURE
OF THIS
TAX
I'M EXCEPT FOR THE VARIOUS
PROPERTY TAX LIMITATIONS ON
SINCE NINETEEN SEVENTY EIGHT.
AND SO WE DON'T EVEN HAVE A
STATE OF THE ART TWENTIETH
CENTURY.
RIGHT MUCH LESS A TWENTY FIRST
CENTURY.
SO IF THIS SHOCK TO THE SYSTEM
WERE TO SORT OF MOTIVATE US TO
THINK ALONG THOSE LINES THAT
WOULD BE.
YOU KNOW IT MAKE LEMONADE.
I
CAN I JUMP IN ON ON THAT SO OF
THE THREE IF IT'S WHICH WILL.
.
WHICH WILL DO THE MOST RAISE
REVENUE FOR.
THE STATE OF CALIFORNIA WE CAN
VOTE ONE OFF THE ISLAND
IMMEDIATELY THE UNINCORPORATED
BUSINESS TAX IS A SMALLER PIECE
OF THE PUZZLE BECAUSE MOST
INCOME THERE'S MUCH MORE WAGE
INCOME THAN THERE IS.
PASS THROUGH INCOME IN
CALIFORNIA AND OTHER STATES.
AND I THINK THE PAYROLL TAX
DOES MORE TO FACILITATE PAYMENT
OF.
STATE TAXES WITH BUT WE
DEDUCTIBLES OPTICS RIGHT BECAUSE
IT AFFECTS A HUNDRED PERCENT OR
IT AFFECTS ALL WORKERS RATHER
THAN JUST THE TEN PERCENT. OF
ITEMIZE YEARS AND AT LAST IT
STILL HELPS THEM BEYOND TWENTY
TWENTY FIVE EVEN IF EVERYTHING
PHASES OUT.
I'M AND THEIR REASONS WHY WOULD
WANT TO HELP PEOPLE BE ON TWENTY
TWENTY FIVE EVEN IF EVERYTHING
FACES OUT BECAUSE THE ONE POINT
FIVE TRILLION DOLLARS DOESN'T
COME BACK IN TWENTY TWENTY FIVE
RIGHT THROUGH THE FEDERAL
SPENDING CUTS HAVE TO HAPPEN
SOMETIME I AND I DON'T THINK
THEY'RE ALL. GOING TO HAPPEN
BETWEEN NOW AND TWENTY TWENTY
FIVE IN CALIFORNIA WILL BE.
BEARING A LARGER.
BURDEN AS A RESULT
IF IT'S ACTION IS IT SHOULD AND
THAT WILL MAKE PEOPLE MORE
LIKELY TO SUPPORT INCREASES IN
STATE LEVEL TAXES BECAUSE THE
AFTER TAX PRICE TO THEM IS LOWER
THAN IT WOULD BE WITHOUT.
IF IT'S ABOUT DIRECTLY MAKING
MONEY FOR OUR THE STATE GENERAL
FUND BUT I THINK YOU CAN DO THAT
WITH A TERRIBLE CREDIT. I AND
YOU CAN DO IT IN A THE FOLLOWING
WHY SAID THIS IS I'M.
LET'S IMAGINE LET'S GO BACK FOR
A GOLDEN STATE POINTS.
AND LET'S SAY THAT BY THE SCHOOL
DISTRICT BUYS GOLDEN STATE POINT
IN THIS.
OR IT COULD REALLY BE ANY
CHARITY BUYS GOLDEN STATE COINS
FROM CALIFORNIA FROM THE STATE
FOR AYE NINETY CENTS.
SO. WE WE COULD WE DEPEND IT'S A
PRIVATE SCHOOL STANFORD
UNIVERSITY PAYS NINETY SET.
TO CALIFORNIA FOR ECOLOGICAL.
I.
AND THEN.
CAN SOMEONE GIVES A DOLLAR TO
STANFORD.
AND THEN.
STANFORD GIVES A GOLDEN STATE
COIN.
YOU KNOW GIVES US A MUG AND A
GOLD STATE COURT.
OR TWO.
AND AND THE THE TAXPAYER THEN
USES THE GOLDEN STATE CORNING TO
OFFSET STATE LOCAL INCOME.
I AND WE SAY THEY CAN DO THAT
EIGHTY CENTS
ON THE DOLLAR THERE'S STILL
HAPPY BECAUSE THEY'VE PAID A
DOLLAR FOR SOMETHING THAT'S
WORTH EIGHTY CENTS BUT EIGHTY
CENTS.
WHAT'S THE THIRTY SEVEN SENT
FEDERAL DEDUCTION THEY'RE STILL
ABOUT THE DOLLAR
STANFORD'S HAPPY BECAUSE IT PAID
NINETY CENTS TO THE STATE FOR
THIS GOLDEN STATE COIN AND THEN
GOT A DOLLAR.
FROM THE DONOR.
UP WITH THE GENERAL FUNDS
ACTUALLY BETTER OFF TO. BECAUSE
THE GENERAL FUND SOLD TO SANFORD
STANFORD THIS GOLDEN STATE POINT
FOR NINETY CENTS
POT AND THEN ONLY GAVE THE
PERSON EIGHTY CENTS OF CREDIT.
ON.
ONCE IN INCOME TAXES
IT'S ARE YOU CAN DO THIS FOR
SCHOOL DISTRICTS YOU CAN DO THIS
FOR PUBLIC UNIVERSITIES YOU
COULD ACTUALLY DO IT FOR ANY
FIVE ONE C. THREE ORGANIZATION.
IN CALIFORNIA AND THEN YOU COULD
RAISE A LOT OF REVENUE.
AND IT'S IT'S IT'S AN
OPPORTUNITY I MEAN IT'S AN
OPPORTUNITY THAT EXISTS BETWEEN
TWENTY EIGHTEEN AND TWENTY
TWENTY FIVE BECAUSE IF WE GO
BACK TO A WORLD IN WHICH YOU'RE
GETTING THE SAME DEDUCTION FOR
STATE LOCAL TAXES. AS YOU'RE
GETTING FOR TERRIBLE
CONTRIBUTIONS AND THERE'S NOT
MUCH OF AN INCENTIVE I TO DO
THIS AND A FEW ALTERNATIVE
MINIMUM TAX PAYERS WHO CLAIM THE
GENERAL CONTRIBUTION DEDUCTION
BUT NOT THE STATE LOCAL TAX
DEDUCTION. ARE PROBABLY NOT A
LARGE ENOUGH OR OR DON'T EVEN
KNOW THAT THEIR IN THAT POOL AND
BUT YOU HAVE A LIKE A FLEETING
REVENUE OPPORTUNITY THAT COULD
BE I MEAN IF YOU THINK OF ALL
THE BILLIONS OF DOLLARS THAT
FLOW TO FIVE ONE C. THREES I IN
CALIFORNIA. ON TOP OF THE NOT
GOING TO.
SCHOOL DISTRICT STATE AGENCIES
THAT'S A LOT OF MONEY.
AND I THOUGHT I WAS MY LAST
QUESTION I ONE MORE QUESTION. DO
YOU HAVE ANY.
BESIDES THAT NATURAL
INCLINATION FOR SOME COMPANIES
WHEN THEY'RE TRYING TO GET FOLKS
FROM OTHER STATES FOR THE
PAYROLL TAX.
.
INCENTIVE.
DO YOU HAVE ANY OTHER IDEAS ON
INCENTIVIZING BUSINESSES TO
UTILIZE IT.
I.
SEE YOU COULD MAKE.
A CERTAIN CREDITS AVAILABLE TO
BUSINESSES IF THERE ARE IF THERE
GOLDEN STATE.
GOLDEN STATE WORKS EMPLOYERS.
AND NOT IF THEY'RE NOT AND YOU
COULD ALLOW THEM TO CLAIM STATE
ARE DE CREDITS IF THEY ARE BUT
NOT IF THEY'RE.
YOU COULD HAVE.
YOU COULD MODEST LEAVE REDUCE
THEIR CORPORATE TAX RATE.
I MEAN EVEN IF IT'S.
OR POINT ONE PERCENTAGE POINTS
OUT MATTERS.
TO.
A LOT OF EMPLOYERS
I'M YOU COULD RELIEVE THEM FROM.
WHATEVER REGULATORY REQUIREMENT
MOST.
ANGERS EMPLOYERS.
IN CALIFORNIA I ASSUME THAT YOU
HAVE GOOD REASONS FOR THAT
REQUIREMENTS SO.
SO PROBABLY WHEN DO THAT BUT
ACTUALLY THE PROGRAM IS EVEN
BETTER IF THERE ARE LEGAL
DIFFERENCES OTHER THAN THE
PAYROLL TAX DIFFERENCE.
BETWEEN GOLDEN STATE WORKS
EMPLOYERS AND OTHER EMPLOYERS A
CAN BE FAVORABLE DIFFERENCES
BECAUSE.
YOU KNOW TO THE EXTENT THAT THE
IRS CHALLENGES THIS BILL LIKELY
ARGUMENT IS GOING TO BE WELL I
THERE'S NO REASON TO BECOME A
GOLDEN STATE WORKS EMPLOYER
OTHER THAN TO REDUCE FEDERAL TAX
LIABILITY IF YOU CAN SAY
ACTUALLY NO THERE ARE OTHER
REASONS TO BECOME A GOLDEN
STATE.
WORKS EMPLOYER THERE IS ECONOMIC
SUBSTANCE.
TO THIS THEN NOT ONLY DO YOU
GOT MORE BY AND.
IF THOSE DIFFERENCES ARE ARE
POSITIVE DIFFERENCES REASONS WHY
YOU WOULD WANT EAGLE THE STATE
WORKS
I EMPLOYER BUT YOU PUT YOURSELF
ON.
MORE SALT LEGAL FOOTING.
I WOULD THINK THE THREE OF YOU
THINK YOU FOR YOUR.
TO HAVE ANY PUBLIC ON THEIR
QUESTIONS.
NO SEEING AND. THEN SEEING NONE.
I THINK YOU'LL FAIR
COMPREHENSIVE REVIEW I
APPRECIATE IT AND IT WAS VERY
INFORMATIVE THOSE WHO ARE HERE
AND FOR THOSE WHO ARE WATCHING.
I THINK YOU FOUGHT FOR ALL BEING
HERE.
BOTH PROFESSORS AND THE LA
OFFICE.
WITHOUT YOUR KNOWLEDGE OR
BECAUSE IT'S AN EDUCATIONAL
BRIEFING