Attorney General No.


Secretary of State No.



PERSONAL INCOME TAXES. INITIATIVE CONSTITUTIONAL AMENDMENT AND STATUTE. Adds section to constitution permitting Legislature to refer to federal laws for the purpose of simplifying reporting and computation of California personal income taxes. Adopts statutes, effective in 1985, that: Provide that federal income tax law shall be used to determine taxable income and filing status for California taxpayers except for several specified exceptions. Modify existing tax rates, raising some and lowering others. Provide, in absence of legislative action, for tax rate adjustments to compensate for future federal law amendments resulting in projected state revenue increase or decrease of 3.5% or more. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Revenue effects through adoption of federal law. Impact on state revenues can only be roughly approximated because of several unknowns. Adoption of the initiative could result in state revenue loss of up to $300 million in 1985. Beyond 1985, revenue effect is indeterminable. Revenue effects due to future federal law changes. There is a potential annual revenue loss or gain of up to $370 million if federal law changes impact on state revenue is less than 3.5%. There is also the potential for major administrative cost increases due to federal law changes after state tax forms have been prepared.


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