Tax Credits and the Budget Debate

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Budget discussions this year keep coming back to the issue of tax credits and tax loopholes, and closing some of each to help resolve the state's $15 billion shortfall in the fiscal year that begins on Tuesday.

There are more than 300 tax credits on the books, valued at about $50 billion. But can a budget solution really hinge on removing tax credits?

That's one of the questions examined in my report on this morning's edition of The California Report. And the answer seems to be: probably not.

The big problem is the size and scope of tax credits, exemptions, and deductions on the books. To get the most financial bang, lawmakers would have to go after tax savings laws that are enormously popular. But if lawmakers choose tax credits that aren't widely popular, then they have to erase a heck of a lot of them to make a real fiscal impact.

The discussion also highlights an enormous problem surrounding tax credits and exemptions: they can be placed on the books through a simple majority vote in each house of the Legislature, but taken off the books only with a supermajority vote... becasue such an action is considered a tax increase.

You can hear this morning's story below (a couple of minutes in to the newscast).

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About John Myers

John Myers is senior editor of KQED's new multimedia California Politics & Government Desk.  He has covered California politics for most of the past two decades -- serving previously as Sacramento bureau chief for KQED News and, most recently, as political editor for KXTV News10 (ABC) in Sacramento. He moderated the only gubernatorial debate of 2014, and was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.

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