The bill establishes explicit requirements for businesses relating to their procurement practices, which could have significant implications for taxation of corporations and the overall business landscape in California. By enforcing supplier diversity goals—5% in the first taxable year, 10% in the third, and 20% by the fifth taxable year—it attempts to promote diversity among suppliers in state contracting. This could potentially foster greater inclusivity within the state's economy, encouraging large businesses to engage with smaller, diverse suppliers.
Summary
Assembly Bill 1346, introduced by Assembly Member Ridley-Thomas on February 17, 2017, aims to modify California's taxation system by implementing supplier diversity goals within the framework of income tax credits. The bill proposes that taxpayers who claim a tax credit against the Personal Income Tax Law or Corporation Tax Law after January 1, 2018, must meet certain supplier diversity benchmarks to receive their credits. Specifically, it requires a minimum procurement from certified diverse suppliers, including those approved by organizations like the National Minority Supplier Development Council and the U.S. Small Business Administration's 8(a) Program.
Contention
AB 1346 does not apply to individuals or small businesses defined as those with gross receipts under $2 million per year. As a result, there may be concerns among smaller entities about the level of burden it places on larger businesses while excluding a significant portion of the local business community. Additionally, the requirement for the Franchise Tax Board to audit compliance with diversity goals may invoke discussions about the feasibility and resource allocation to support such audits, potentially raising objections regarding the administrative burden and the costs incurred by taxpayers under audit.
An Act Concerning The Public Utilities Regulatory Authority, The Regulation Of Electric Rates And State Public Policy Concerning Electricity Generation.
An Act Concerning The Public Utilities Regulatory Authority, Whistleblower Protection, The Purchased Gas Adjustment Clause, Electric Supplier Disclosure Requirements, And Minor And Technical Changes To The Utility Statutes.