Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: John L. Maltbie, County Manager
Connie Juarez-Diroll, Legislative Officer
Subject: Federal Income Tax Reform
RECOMMENDATION:
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Approve a resolution opposing the proposed repeal of State and Local Tax (SALT) deductions, tax-exempt advance refunding bonds, tax-exempt private activity bonds, and the adoption tax credit.
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BACKGROUND:
State and Local Tax (SALT) Deductions-Under current law, taxpayers who itemize (rather than claim the standard deduction) are permitted to deduct certain nonbusiness tax payments to state and local governments from their taxable income. An individual may choose to deduct either state individual income taxes or general sales taxes, but not both, and may also deduct any real or personal property taxes. Most filers elect to deduct their state and local income taxes rather than sales taxes because income tax payments tend to be larger, but those who reside in states which forego an income tax, or who have uncommonly high consumption expenditures in a given year, may opt to deduct sales taxes instead. These deductions (both standard and itemized) ultimately reduce the amount of income that gets taxed by the government. Filers have been able to deduct state and local taxes since federal income tax was conceived in 1913.
Tax-Exempt Advance Refunding Bonds-Under current law, tax-exempt refunding bonds issued more than 90 days prior to the redemption date of the refunded bonds are classified as advance refunding bonds. Advance refunding allows counties to refinance outstanding bonds to take advantage of better terms and rates. Additionally, counties are only able to engage in tax-exempt advance refunding once over the life of the bond.
Tax-Exempt Private Activity Bonds (PABs)-PABs are widely used to attract private investment for projects that have some public benefit. Under current law, the inte...
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