Capitol Alert

See California’s largest tax breaks

California Gov. Jerry Brown holds up Assembly Bill 1839, The Expanded Film and Television Job Creation Act, after signing the legislation into law in September 2014. The credit is among about $55 billion on the books in California.
California Gov. Jerry Brown holds up Assembly Bill 1839, The Expanded Film and Television Job Creation Act, after signing the legislation into law in September 2014. The credit is among about $55 billion on the books in California. AP

California’s portfolio of tax credits, deductions and other tax breaks totals about $55 billion, according to a new tally by the Legislature’s nonpartisan fiscal analyst prompted by some Democratic lawmakers’ concerns during a recent budget hearing.

If there were no tax breaks for personal income, sales, corporate and other taxes on the books, California’s estimated general fund revenue through June would total about $165 billion instead of $110 billion, the Legislative Analyst’s Office reports.

Many tax breaks have become entwined with California life over the decades. Those include the largest: the sales-tax exemption for most types of food, gum, candy and other food products, representing about $5.5 billion in lost revenue.

Other multibillion dollar tax breaks exist for employer contributions to health plans, mortgage interest, Social Security benefits, and prescription medicines.

The list got longer last year when lawmakers expanded a tax credit program for film and TV production in the state, and also approved legislation to attract a strategic bomber production line.

Tax breaks can be simpler to administer than a spending program, the analyst’s report said. Yet spending programs typically feature much more oversight and review, and it can be difficult to change tax breaks once they are in place, the LAO said.

State Sens. Richard Pan, D-Sacramento, and Loni Hancock, D-Berkeley, had requested the LAO review during a Jan. 22 hearing of the Senate Budget and Fiscal Review Committee.

Call Jim Miller, Bee Capitol Bureau, (916) 326-5521. Follow him on Twitter @jimmiller2.

California tax breaks

Here are California’s five biggest tax breaks:

1. Sales tax break on food, candy and gum; $5.6 billion per year.

2. Income tax break on employer contributions to health plans; $5.5 billion per year.

3. Income tax break for mortgage interest; $4.7 billion per year.

4. Income tax break on employer contributions to pension plans; $3.6 billion per year.

5. Income tax break on social security benefits; $3.2 billion per year.

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