One of the End-of-Session Casualties
One of the casualties of the cat fighting and bickering that mark the close of every legislative session was a measure that would allow more Californian first-time homebuyers to receive tax credit.
The program was created when the budget for the current fiscal year was passed in February in legislation carried by GOP Sen. Roy Ashburn of Bakersfield.
Assemblywoman Anna Caballero, a Salinas Democrat, carried the bill expanding the pool of homebuyers who could benefit. Her bill, AB 765, was to take effect immediately, which requires a two-thirds vote. Reaching that threshold requires GOP support.
Caballero’s bill remains in the Senate. Some say Ashburn and his fellow Republicans were miffed a Democrat was scoring political points with the program. Ashburn is a principal co-author of Caballero’s bill.
In February, Ashburn’s bill created a one-time tax credit for persons buying a new house between March 1 of this year and March 1, 2010.
The credit is the lesser of 5 percent of the purchase price or $10,000. It is applied in equal amounts over three tax years, beginning in the year the purchase was made.
A cap of $100 million was placed on the credit, which is given out on a first-come, first-served basis.
Within four months, the Franchise Tax Board reported nearly 12,000 applicants whose credits exceeded the $100 million limit.
According to the California Budget Project, a $10,000 credit shelters $107,527 of taxable income.
“Receiving the full $10,000 benefit would require a much higher income, since taxpayers also claim personal and dependent credits and other deductions,” the budget project notes.
The tax board discovered the truth in that assessment.
Taxpayers won’t have enough liability over the three-year period to use $100 million of the credit, according to the board. The board thinks 70 percent of the credit will be eaten up, leaving an additional $30 million, which would extend the credit to another 4,300 first-time buyers.
Supported by the California Builder industry Association, Caballero’s bill would have allowed the $30 million in remaining credit to apply to homes purchased from the effective date of her measure through March 1, 2010.
Her bill began as a more ambitious proposal, extending the effective date for qualified home purchases to December 1, 2010 and boosting the cap on the credit to $300 million.
But the state’s budget debacle required the scaling back of all spending measures affecting the general fund and Caballero’s bill got scaled back.
Filed under: Legislature/Legislation
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