The $100 Billion Deal: California's Budget.

• Author: WRIGHT, KATHLEEN K.
• Position: Tax relief proposals - Brief Article

California has a $12 billion to $15 billion surplus and legislators are looking for ways to spend money. The result, so far, is a budget that in my opinion is "greased" with an awful lot of compromises (better termed "pork") to be sure all districts will be happy with the result. The governor (to his credit) used his line item veto to eliminate some of the more outrageous ideas but much slipped through. Following are summaries of some of the tax relief measures included in the $100.8 billion state budget, all of which are effective for tax years beginning on or after Jan. 1, 2000.

Child Care Tax Credit [AB 480 (Ducheny) Rev and TC 17052.6]: This bill provides a refundable child care credit which is based on a percentage of the federal credit. The credit is set at 63 percent of the federal credit for taxpayers with adjusted gross income under $40,000; 53 percent of the federal credit for taxpayers with adjusted gross income between $40,000--$70,000; and 42 percent of the federal credit for taxpayers with adjusted gross income between $70,000--$100,000. There is no credit for taxpayers with income of more than $100,000. Taxpayers with incomes modestly above $100,000 will lose more in tax benefit from the credit than they will have as incremental income.

Teacher Tax Credit Relief [AB 2879 (Jackson) Amends Rev and TC 17039 and adds 17052.2]: The bill provides a special tax credit for credentialed teachers who teach in elementary, secondary or vocational technical schools providing education for grades K-12. The credit is one of the more unusual provisions of this year's budget and is the result of compromise negotiations. The credit increases based on years of service starting at $250 (4-5 years of service), $500 (6-10 years of service), $1,000 (11-19 years of service), and $1,500 for teachers with 20 or more years of service. The credit can not be for more than 50 percent of the tax that teachers would have paid based on their salary. Teachers who are married filing jointly will have to prepare a second return including only their income to determine if the limit applies.

Long-term Care Tax Credit [AB 2871, (Correa) PIT: Rev and TC 17053.80]: This bill, as modified by AB 511, provides a $500 tax credit for eligible caregivers. The taxpayer must be an eligible caregiver for an individual who requires long-term care for a 180 consecutive day period. Taxpayers are eligible caregivers if they are the taxpayer, the taxpayer's spouse or the...