Report 2015-127 All Recommendation Responses
Report 2015-127: Corporate Income Tax Expenditures: The State's Regular Evaluation of Corporate Income Tax Expenditures Would Improve Their Efficiency and Effectiveness (Release Date: April 2016)
Recommendation for Legislative Action
To increase oversight of existing and future tax expenditures through the use of best practices, the Legislature should consider enacting a joint legislative rule requiring specific goals, purposes, and objectives as well as detailed performance indicators for all tax expenditure types, including elections and exemptions.
Description of Legislative Action
AB 263 (Chapter 743, Statutes of 2019) requires each bill enacting a new tax expenditure under both the Personal Income Tax and Corporate Tax laws to describe the goals, purposes, and objectives for authorizing such an expenditure, and to specify detailed performance indicators intended to measure the effectiveness of the expenditure. This statute defines a tax expenditure as a credit, deduction, exclusion, exemption, or any other tax benefit as provided for by the State, and only applies to tax expenditures enacted by bills introduced on or after January 1, 2020.
- Legislative Action Current As-of: April 2020
California State Auditor's Assessment of Annual Follow-Up Status: Legislation Enacted
Description of Legislative Action
AB 263 (Burke) would require each bill enacting a new tax expenditure under both the Personal Income Tax and Corporate Tax laws to describe the goals, purposes, and objectives for authorizing such an expenditure, and to specify detailed performance indicators intended to measure the effectiveness of the expenditure. This bill would define a tax expenditure as a credit, deduction, exclusion, exemption, or any other tax benefit as provided for by the State, and would only apply to tax expenditures enacted by bills introduced on or after January 1, 2020.
- Legislative Action Current As-of: April 2019
California State Auditor's Assessment of Annual Follow-Up Status: Legislation Introduced
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: April 2018
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Recommendation for Legislative Action
To increase oversight of existing and future tax expenditures through the use of best practices, the Legislature should consider enacting a joint legislative rule to require sunset dates for all future tax expenditures.
Description of Legislative Action
The Legislature did not take action in the 2021-2022 Legislative session to address this specific recommendation.
- Legislative Action Current As-of: November 2022
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of April 12, 2021, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: April 2021
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of April 12, 2020, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: April 2020
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
The Legislature has not taken any action to address this specific recommendation.
- Legislative Action Current As-of: April 2019
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: April 2018
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Recommendation for Legislative Action
To increase oversight of existing and future tax expenditures through the use of best practices, the Legislature should consider enacting a law requiring a state entity to conduct a comprehensive evaluation of all tax expenditures and develop conclusions and recommendations to continue, modify, or repeal each of them. The state entity should have the necessary resources and a reasonable time frame for analysis.
Description of Legislative Action
AB 545 (Quirk,2021) would have, until February 15, 2025, requested the Regents of the University of California to perform a comprehensive assessment of major tax expenditures to study the legislative intent, the beneficiaries, the number of affected returns or business entities, the cost to the General Fund, the effectiveness of those tax expenditures, and options to modify the tax expenditures to improve their effectiveness or reduce their cost. The bill would have requested the Regents to provide a report to the Legislature by January 1, 2024, and provided that the Senate Committee on Governance and Finance and the Assembly Committee on Revenue and Taxation would have held a joint public hearing on the report by August 15, 2024. The bill died in the Senate.
- Legislative Action Current As-of: November 2022
California State Auditor's Assessment of Annual Follow-Up Status: Legislation Proposed But Not Enacted
Description of Legislative Action
On February 10, 2021, Assembly Member Quirk introduced AB 545, which would have requested that the Regents of the University of California perform a comprehensive assessment of major tax expenditure programs. The bill was sent to suspense in August 2021.
- Legislative Action Current As-of: April 2021
California State Auditor's Assessment of Annual Follow-Up Status: Legislation Introduced
Description of Legislative Action
SB 956 (Jackson) was introduced on February 10, 2020, and would establish the California Tax Expenditure Review Board as an independent advisory body to comprehensively assess major tax expenditures and make recommendations to the Legislature. The bill also would request that the University of California, through a new or existing research center, perform a comprehensive assessment of the major tax expenditures and present a comprehensive, peer-reviewed assessment to the board by July 1, 2022, at a public hearing.
- Legislative Action Current As-of: April 2020
California State Auditor's Assessment of 1-Year Status: Legislation Introduced
Description of Legislative Action
SB 468 (Jackson) would require the Legislative Analyst's Office (LAO), prior to December 1, 2022, to conduct an analysis of specified tax expenditures describing, in part, economic, social, or any other benefits of the tax expenditure to the State. The bill would require the LAO to submit a report to the Legislature on its findings.
- Legislative Action Current As-of: April 2019
California State Auditor's Assessment of Annual Follow-Up Status: Legislation Introduced
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: April 2018
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Recommendation for Legislative Action
To increase oversight of existing and future tax expenditures through the use of best practices, the Legislature should consider enacting a joint legislative rule requiring a legislative body to consider the state entity's conclusions to aid it in developing recommendations to continue, modify, or repeal every tax expenditure.
Description of Legislative Action
The Legislature did not take action in the 2021-2022 legislative session to address this specific recommendation.
- Legislative Action Current As-of: November 2022
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of April 12, 2021, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: April 2021
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of April 12, 2020, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: April 2020
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
The Legislature has not taken any action to address this specific recommendation.
- Legislative Action Current As-of: April 2019
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: April 2018
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Recommendation for Legislative Action
To ensure that the research and development (R&D) credit is effectively fulfilling its purpose, the Legislature should consider commissioning a study on the cost-effectiveness of the R&D credit for stimulating additional R&D activity or new jobs within the State, including an impact analysis on how the credit affects the state economy. The study should also define performance metrics for use in subsequent reports.
Description of Legislative Action
The Legislature did not take action in the 2021-2022 legislative session to address this specific recommendation.
- Legislative Action Current As-of: November 2022
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of April 12, 2021, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: April 2021
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of April 12, 2020, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: April 2020
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
The Legislature has not taken any action to address this specific recommendation.
- Legislative Action Current As-of: April 2019
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
SB 468 (Jackson) would require the Legislative Analyst's Office (LAO), prior to December 1, 2022, to conduct an analysis of specified tax expenditures describing, in part, jobs created by the tax expenditure, whether the jobs created were short or long term, and the economic, social, or any other benefits of the tax expenditure to the State. The bill would require the LAO to submit a report to the Legislature on its findings.
- Legislative Action Current As-of: April 2019
California State Auditor's Assessment of Annual Follow-Up Status: Legislation Introduced
Description of Legislative Action
The Legislature has not taken action to address this recommendation.
- Legislative Action Current As-of: April 2018
California State Auditor's Assessment of 1-Year Status: No Action Taken
Description of Legislative Action
The Legislature has not taken any action to address this specific recommendation.
- Legislative Action Current As-of: April 2018
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Recommendation for Legislative Action
To ensure that the minimum franchise tax exemption is effectively fulfilling its purpose, the Legislature should consider commissioning an evaluation of it to determine if it is effectively encouraging business formation within the State.
Description of Legislative Action
The Legislature did not take action in the 2021-2022 legislative session to address this specific recommendation.
- Legislative Action Current As-of: November 2022
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of April 12, 2021, the Legislature has not taken any additional action to address this specific recommendation.
SB 468 (Jackson, 2019) would have required the Legislative Analyst's Office to conduct an analysis of specified tax expenditures before December 1, 2022, that would, in part, describe the economic, social, or any other benefits of the tax expenditure to the State. The bill would have required the LAO to submit a report to the Legislature on its findings. The bill was vetoed by the Governor.
- Legislative Action Current As-of: April 2021
California State Auditor's Assessment of Annual Follow-Up Status: Legislation Vetoed
Description of Legislative Action
SB 468 (Jackson) would require the Legislative Analyst's Office (LAO), prior to December 1, 2022, to conduct an analysis of specified tax expenditures describing, in part, the economic, social, or any other benefits of the tax expenditure to the State. The bill would require the LAO to submit a report to the Legislature on its findings.
- Legislative Action Current As-of: April 2019
California State Auditor's Assessment of Annual Follow-Up Status: Legislation Introduced
Description of Legislative Action
Assembly Bill 1432 (Melendez) would have required the California State University' s Center for California Studies to conduct research on the impact of the minimum franchise tax and annual tax on businesses. This bill failed passage in the Assembly.
- Legislative Action Current As-of: April 2018
California State Auditor's Assessment of 1-Year Status: Legislation Proposed But Not Enacted
Description of Legislative Action
The Legislature has not taken any action to address this specific recommendation.
- Legislative Action Current As-of: April 2018
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Recommendation for Legislative Action
To improve the effectiveness of the water's edge election, the Legislature should consider modifying it to include tax havens within the water's edge and thus subject to state tax apportionment.
Description of Legislative Action
The Legislature did not take action in the 2021-2022 legislative session to address this specific recommendation.
- Legislative Action Current As-of: November 2022
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of April 12, 2021, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: April 2021
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of April 12, 2020, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: April 2020
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
The Legislature has not taken any action to address this specific recommendation.
- Legislative Action Current As-of: April 2019
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: April 2018
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Recommendation for Legislative Action
To improve the effectiveness of the water's edge election, the Legislature should consider making it mandatory and require all multinational corporations to exclude foreign income, except tax havens, from state tax apportionment.
Description of Legislative Action
The Legislature did not take action in the 2021-2022 legislative session to address this specific recommendation.
- Legislative Action Current As-of: November 2022
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of April 12, 2021, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: April 2021
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of April 12, 2020, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: April 2020
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
The Legislature has not taken any action to address this specific recommendation.
- Legislative Action Current As-of: April 2019
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: April 2018
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Recommendation for Legislative Action
To improve the effectiveness of the low-income housing credit, the Legislature should consider allowing low-income housing developers to sell project credits to investors in a manner that reduces the federal tax implications for investors who claim the credit.
Description of Legislative Action
AB 1288 (Quirk-Silva, 2022) would have, among other things, made a taxpayer who has purchased a low-income housing tax credit eligible to claim the credit commencing in the year the building is placed in service and the federal credit period commences notwithstanding that the California Tax Credit Allocation Committee has not certified the amount of the tax credit. The bill was vetoed by the Governor.
- Legislative Action Current As-of: November 2022
California State Auditor's Assessment of Annual Follow-Up Status: Legislation Proposed But Not Enacted
Description of Legislative Action
As of April 12, 2021, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: April 2021
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of April 12, 2020, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: April 2020
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
The Legislature has not taken any action to address this specific recommendation.
- Legislative Action Current As-of: April 2019
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: April 2018
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Recommendation for Legislative Action
If not otherwise addressed by the LAO's planned report on the film and television credit, the Legislature should commission a study to determine how to limit instances in which the credit benefits projects that would have filmed in the state without it.
Description of Legislative Action
This issue was addressed in the September 29, 2016, Legislative Analyst's Office report, "California's First Film Tax Credit Program."
- Legislative Action Current As-of: November 2022
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
This issue was addressed in the September 29, 2016 Legislative Analyst's Office report, "California's First Film Tax Credit Program."
- Legislative Action Current As-of: April 2021
California State Auditor's Assessment of Annual Follow-Up Status: No Longer Necessary
Description of Legislative Action
This issue was addressed in the September 29, 2016 Legislative Analyst's Office report "California's First Film Tax Credit Program."
- Legislative Action Current As-of: April 2020
California State Auditor's Assessment of Annual Follow-Up Status: No Longer Necessary
Description of Legislative Action
This issue was addressed in the September 29, 2016 Legislative Analyst's Office report "California's First Film Tax Credit Program."
- Legislative Action Current As-of: April 2019
California State Auditor's Assessment of Annual Follow-Up Status: No Longer Necessary
Description of Legislative Action
This issue was addressed in the September 29, 2016 Legislative Analyst's Office Report "California's First Film Tax Credit Program".
- Legislative Action Current As-of: April 2018
California State Auditor's Assessment of Annual Follow-Up Status: No Longer Necessary
All Recommendations in 2015-127
Agency responses received are posted verbatim.