Income taxation: Loophole Closure and Small Business and Working Families Tax Relief Act of 2019.
The bill's modifications are geared towards increasing the effectiveness of the California Earned Income Tax Credit (EITC) by allowing a percentage of earned income to produce a greater credit amount for qualifying taxpayers. Furthermore, the introduction of the young child tax credit is anticipated to provide substantial financial support to families, hence positively impacting economic well-being among the working poor in California. Additionally, new provisions concerning qualified ABLE accounts and student loan debt relief are expected to create a more favorable economic environment for individuals with disabilities and those dealing with educational debt.
Assembly Bill No. 91, titled the Loophole Closure and Small Business and Working Families Tax Relief Act of 2019, aims to enhance personal income tax benefits particularly for low-income families and small businesses in California. This bill modifies existing tax law to better align with recent federal tax reforms, specifically the Tax Cuts and Jobs Act, and introduces new credits and allowances designed to support working families. Notably, it revises the earned income tax credit calculations to increase potential credits for eligible individuals and instates a refundable young child tax credit, thereby expanding access to financial relief for families with young children.
The sentiment around AB 91 appears to be largely positive among proponents, particularly among legislators advocating for low-income families and small businesses. They see the bill as a necessary step towards closing tax loopholes and ensuring that tax relief benefits reach those who need them the most. However, there may be contention among critics who could argue against the fiscal implications of increased appropriations from the Tax Relief and Refund Account and potential long-term funding challenges for state programs stemming from this expanded tax credit system.
Some points of contention focus on the extent to which this bill may increase financial liabilities for the state due to enhanced tax credits and the urgency that has been placed on its passage. Critics may express concern about the sustainability of funding these new credits in the long term, especially given the immediate effect clause of the bill, which emphasizes urgency in tax relief despite potential future budget constraints. Moreover, as the bill aims to harmonize state tax law with federal standards, the implications for various demographics and small businesses are also a matter of debate.