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Tax News
Election Results

The November election had several key propositions on the ballot related to taxes. Those measures and their outcomes are as follows:

Proposition Description Result
Proposition 19 Legalize Marijuana No
This proposition failed.
Proposition 24 Repeal Allowance of Lower Business Tax Liability No
This proposition failed. Business tax provisions that were recently changed will not be affected. As a result of maintaining current law:

(1) A business will be able to deduct losses in one year against income in more situations.
(2) Most multistate businesses can choose to have their California income determined based only on a single sales factor.
(3) A business will be able to share its tax credits with related businesses.

Proposition 25 Simple Majority Vote to Pass Budget Yes
This proposition passed meaning the Legislature's vote requirement to send the annual budget bill to the Governor is lowered from two-thirds to a majority of each house of the Legislature. However, it retains the two-thirds vote requirement for taxes.
Proposition 26 2/3 Vote for Some State/Local Fees Yes
This proposition passed increasing the legislative vote requirement to two-thirds for state levies and charges. The definition of taxes is broadened to include many payments currently considered to be fees or charges. As a result, more state and local proposals to increase revenues will require approval by two-thirds of each house of the Legislature or by local voters.

Proposition 26 also contains this language:

Any tax adopted after January 1, 2010, but prior to the effective date of this act, that was not adopted in compliance with the requirements of this section is void 12 months after the effective date of this act unless the tax is reenacted by the Legislature and signed into law by the Governor in compliance with the requirements of this section.

The FTB is assessing the impact that Proposition 26 may have on recently-passed tax legislation, in particular the federal conformity bill (SB 401, Ch. 14 of the Statutes of 2010). Updated information regarding SB401 will be posted on our website. Go to ftb.ca.gov and search for conformity.

Back to December 2010 Tax News