What Is a Tax Levy in California Legislation?

What Is a Tax Levy in California Legislation? By Chris Micheli

            There is often confusion regarding whether a bill is a tax levy or not, and what a “tax levy” means. A common misconception is that a tax levy is a bill that proposes a tax increase. The determination of whether a bill is a tax levy is determined by the Office of Legislative Counsel. Readers of California legislation will see a section at the end of a bill that reads as follows:

 

This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.

Under Article IV, Section 8(c)(3) of the California Constitution, “statutes calling elections, statutes providing for tax levies or appropriations for the usual current expenses of the State, and urgency statutes shall go into effect immediately upon their enactment.” This begs the question of what is a “tax levy”? Unfortunately, the term is not defined in either the state Constitution or in statute.

Again, common misunderstanding is that a “tax levy” is a tax increase bill. However, that is not always the case. While a tax levy is usually a collection tool used by the government, for California bills, a “tax levy” means any bill that imposes, repeals, or materially alters a state tax. A tax levy bill can increase taxes, but a tax levy bill can also reduce taxes. Legislative Counsel generally defines a tax levy as a measure that primarily changes the base, rate, or burden of a tax.

The Office of Legislative Counsel indicates in the Title and Digest of the bill whether the bill is a tax levy. Specifically, the Title of the bill will contain, at the end of the Title, the following phrase: “… relating to taxation, to take effect immediately, tax levy.” In addition, the Legislative Counsel’s Digest will contain the following statement, generally at the end of the Digest: “This bill would take effect immediately as a tax levy.”

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